Photo Biz Deals With Core Issues At PMA

By Greg Scoblete -- TWICE, 3/4/2005

Orlando, Fla. — In a testament to the blistering pace of change in the new era of digital imaging, the Photo Marketing Association’s (PMA) annual trade show, held here, February 20-23, was no longer a forum for heralding the rise, and defending the photographic bona fides, of digital cameras.

Instead, it was a venue to tackle three core issues: how to keep profits healthy as sales of digital cameras slow, how to continue camera innovation to maintain a robust upgrade market, and what to do with all these camera phones.

According to PMA’s own forecast, digital camera sales will grow another 12 percent to reach 20.5 million units this year, but sales will “reach their peak” by the end of 2006 or 2007. Conversely, according to PMA, camera phone sales are ballooning from a 2.5 percent market penetration in 2003 to an 11 percent penetration in 2004. As still camera hardware sales level, the industry is pinning its hopes on output, particularly at retail, to monetize the vast number of digital images residing in its customers’ hard drives, as well as finding ways to tie camera phones into the printing loop.

Self-service kiosks were particularly prevalent as a lower-cost alternative to a full-blown digital minilab (see story, p. 28), many offered the ability to accept camera phone images through infrared or Bluetooth. Over a dozen companies were promoting digital kiosks to retail accounts not already gobbled up by Kodak and Fujifilm, which combined have an installation base of roughly 50,000 kiosks in the United States.

“The market is still growing, so there is some room for them. That being said, Kodak and Fuji have already installed kiosks in some of the prime locations – Wal-Mart, Costco, Walgreens, CVS, etc. so the room is limited,” said Kerry Flatley, consultant, InfoTrends, which estimates that 74.5 thousand kiosks were installed by the end of 2004. The research firm projects that number to grow to 87.1 thousand by the end of this year."

There is a boom and bust cycle to the kiosk market, said David Oles, co-founder and chief technical officer of Pixel Magic, a kiosk manufacturer. “Right now there’s a big spike, but this level of competition is not sustainable.”

While the jury is still out on the impact of camera-equipped cellphones on digital camera sales, many printing vendors were salivating at the fallow market in camera phone image printing. At the Kodak booth, for instance, the company showed a concept accessory to its printer dock that would allow select Nokia camera phones to print directly through the dock.

According to David Snook, product marketing manager, Kodak, while the product was officially still a “concept,” there was “strong interest in bringing it to market.”

Nokia and Sprint were also official exhibitors at the show, while Sony and Samsung displayed their camera phone lineup alongside their digital cameras.

On the camera side, the raft of new introductions (see story, p. 4) were focused on leveraging the computational power inherent in digital technology to perform automatic image corrections, to offer increasingly novel image effects and improved in-camera editing, alongside the perpetual imperative to drive down prices.

Vendors were also hinting at digital imaging’s next steps: integration with wireless networks and camera phones, pushing more digital SLRs below $1,000 and into the hands of a wider consumer audience, and cross-industry partnerships to gird against tightening margins.

Both Canon and Nikon have announced support for Microsoft’s Media Transfer Protocol (MTP) in late 2004. MTP allows computers on a wireless network to recognize and remotely control a digital camera without drivers. Neither Canon nor Nikon would officially confirm plans to launch consumer level cameras with built-in Wi-Fi, but a Microsoft executive indicated that Nikon would have a consumer-level digital camera with built-in Wi-Fi and MPT by year’s end.

A Canon spokesman would not say whether the company would offer a Wi-Fi enabled consumer camera this year, but noted that the company already offers a Wi-Fi attachment for its higher-end digital SLR.

At the Kodak booth, the company displayed two third-party products that will work with the company’s printer dock and recently announced ImageLink system. The first was an Olympus-branded camera and Olympus-branded printer dock. There was also a Pentax camera on a Kodak dock.