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| Digital still cameras about to go |
July 6, 2006 |
Camcorders will unseat current champ of the photo arena
Worldwide sales of digital cameras will exceed 100 million in 2008, according to work from IDC and Lyra Research, but the market is about to undergo a profound shift.
IDC predicts 30 million digital cameras will be sold in the U.S. in 2006, compared to six million camcorders. The average price of cameras is less than US$300, while camcorders price tags average US$600.
But digital camera sales are slowing. While 9.7 million digital cameras were sold in the U.S. in the first half of 2005, a healthy 20 per cent more than 2004, that was down from the 50 per cent growth during the first half of 2004, compared to 2003.
While most industries would love 20 per cent growth, for camera makers the message is clear: the market is maturing. Radical new value will have to be added to entice consumers and maintain growth rates. Two factors are the main drivers behind the current slowdown.
1. Camera phones are chewing up the low end: In 2005 almost 300 million camera phones were sold worldwide, 100 million in the U.S. In Japan, 92 per cent of all mobile phones sold in 2005 included a camera. Europe came in at 55 per cent, the U.S. 47 per cent. Two megapixel is the norm for new phones and new high-end mobiles with 3.2 megapixel cameras — such as the Nokia N80, N90 and N93, and Sony Ericsson K800 and K790 — will be available in 2006. And this eats away at the low end of the camera market.
2. Quality has peaked: Digital camera resolution is now as good as most consumers need. In 2006, the average camera sold will be 6 megapixels, which exceeds the quality 35mm film cameras used to provide. While camera makers will offer better resolution in the future, megapixels will no longer compel consumers to upgrade.
Camera convergence
To keep consumers buying newer digital cameras, vendors are working to converge still and video cameras. For instance, a Casio Exilim EX-S600 is the size of a credit card, yet it’s a 6 megapixel camera with 30 frame-per-second video recording capability. This means anyone can carry a video camera.
One factor enabling this size device is SD cards which are about the same width and thickness as a quarter. A 4GB SD card can be had for about $130, and 8GB cards will be available in early 2007, 16GB in mid 2007 and 32GB by the end of 2007. Imagine, by 2008, being able to store almost two and a half hours of VGA video on a media card the size of a quarter.
Winners and losers
So the days of the digital still camera are numbered. They will still exist as single-function devices for high-end photographers who need 12 megapixels, but for consumers, the convergence of camcorders and cameras will be the big draw.
That means companies which specialize in high-priced camcorders are going to lose market share, as cheaper cameras with video capacity erode the low end of the camcorder market. To maintain margins and profitability, camcorder makers will have to increase quality and features.
The upshot is cellphone makers are adding cameras, camera makers are adding video functions, camcorder makers are adding still functions and everyone is ramping up quality. I predict within 10 years that a credit-card sized device will deliver quality sufficient to shoot the nightly news.
One casualty will be companies that make prints. Digital camera owners print less than 25 per cent of the photos they take. For the last few years the actual numbers of photos printed by digital camera owners has been falling by about 10 per cent a year compounded. Once we move to video from still this trend will only accelerate.
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