Industry Reacts To Gateway Cams

By Greg Scoblete

NEW YORK — Will Gateway's introduction of very low-cost digital cameras broaden the market for the technology and by extension give Gateway a needed lift? Or will it spark a price war around the crucial holiday season when prices are already under pressure by manufacturers seeking share? TWICE solicited reaction from a cross-section of industry players.

Chris Chute, senior analyst, IDC: "PC vendors have been talking about making easier sales and increasing volume and this is a good category to do it in. The timing is right, launching the models right around Christmas where not only the bulk of digital cameras are sold (some 40 percent) but where consumers are more interested in comparing price points than specs. I don't see their pricing having a big impact on the industry at large, though I was surprised by it.

"They're positioning themselves as the value alternative to the pricier brands they are still going to offer on their shelves."

Dave Dimont, VP, Ritz Camera Centers: "While Gateway's introduction of a 5-megapixel camera at $299.99 has broken a new price barrier, consumers who are looking for that feature range will most likely be better served by many of the other cameras in the category that offer a higher feature set.

"Features such as longer optical and digital zoom ranges, faster video modes and larger LCD screens will make many consumers choose slightly more expensive models offered by other manufacturers. In addition, there will be a few 3-megapixel cameras in the marketplace that will start priced at $99.99 without optical zoom that will meet many customers needs as well."

Tim Martin, sales and marketing VP, Veo: "I don't believe that the pricing will hurt or help the overall industry significantly. I do believe that Gateway thinks that it will help their sales in the fourth quarter and short-term upside is what they need at the moment. You will see price movement from brand name digital imaging companies before Christmas that will somewhat mute Gateway's announcement."

Michelle Slaughter, senior analyst, InfoTrends: "It was a good move given the product's rapid growth and excitement among consumers. Digital imaging is also a top application for PC users, and so they're betting on price. But with the competitive market and Gateway's limited distribution they won't have a big impact on the overall vendor rankings."

John Solomon, VP, marketing, Hewlett-Packard Imaging and Printing Group: "There are already a myriad of players in the U.S. market who bring low-cost digital cameras to market through out-sourced manufacturing arrangements with OEM partners. While price point is one of the factors that initially attracts consumers to purchase a digital camera, our consumer research indicates that consumers are most interested in great image quality and ease-of-use in their overall digital imaging experience. There is, in fact, some risk to the rate of overall adoption of digital imaging technology through consumers being generally disappointed by the overall performance and image quality of these low-end digital cameras."