How Low Will Digicams Go?

By Greg Scoblete -- TWICE, 1/8/2009

LAS VEGAS — The decline in digital camera selling prices will accelerate in 2009 as the market nears maturity and vendors look for ways to entice repeat buyers to keep repeating.

Average selling prices in the compact camera market "have crashed," observed Chris Chute, research manager, IDC. In 2006, ASPs were $281. In 2008, they hit $146.

"It's a race to the bottom," said David Briganti, Panasonic national marketing manager.

This race, in turn, is reshaping the competitive landscape, Chute noted. Vendors such as Samsung, Kodak and Nikon are benefiting, and others, such Sony and Canon, are under more pressure, he said.

"We're concerned about how premium products will perform during the downturn," said Jerry Magee, future product marketing manager, Kodak.

"We expect that there will be some amount of drop-off in the market, but overall, cameras are resilient," said Steve Heiner, Nikon senior technical manager.

Depending on how the economy shakes out, unit sales may still grow through 2009, according to some forecasts.

Through October, The NPD Group's retail tracking service was showing a unit sales growth of 3 percent, with dollar volume declining by 3 percent.

InfoTrends is predicting a 3 percent rise in unit shipments in North America, to 44 million, said Mette Eriksen, research director.

Revenues for the category peaked in 2007, she added.

IDC is targeting 40 million units for the year, up from 35.6 million in 2007. Digital SLRs will grow from 2.2 million in 2007 to 2.7 million in 2008.

Whatever the trajectory of the market, camera vendors will continue to pour new technology in to entice consumers back into the market, Erikson said.

One key driver will be processing power, said Peter Labaziewicz, Texas Instruments digital imaging chief technical officer. Thanks to more robust processors, cameras will increasingly offer more sophisticated scene recognition features. HD video capture, available now at 720p, will improve to 1080p and proliferate to lower price points, Labaziewicz added.

Geo-tagging will play a larger role in the market, in part because it improves image organization, Labaziewicz said. "The next big trend to join smart cameras is smart organization."

Even more conventional specs, like zoom, are drawing consumers, Magee observed. "10x zooms are a hot category right now."