Digital Camera Sales Surged At CE Stores

NEW YORK— Digital cameras racked up impressive sales at electronics specialty and computer/ office superstores in 2001 accounting for fully 57 percent of all units sold this year through September, according to NPDTechworld.

Both market segments grew from the same period last year at the expense of the photo specialty channel, which dropped down from 23 percent to 19 percent during the same period.

The digital camera market as a whole grew in 2001, though not as robustly as previous years. According to the Photo Marketing Association, 6 million units will sell this year compared with 4.5 million in 2000. NPD puts this year's sales figures slightly higher, at 6.4 million units.

The 2-megapixel market witnessed the most growth, up from 17 percent of all units in 2000 to 31 percent in 2001, mostly due to dropping prices, according to NPD.

Two price sweet spots emerged during this time period, reflecting the intense market share war among the major competitors.

Cameras priced between $100 and $200 occupied 15 percent of the total dollar share through September, up from six percent during the same time last year. Cameras in the $300-$400 range jumped to 17 percent from 5 percent last year.

The top end did not fare as well, with $500-$1,000 cameras falling from 36 percent of the dollar share in 2000 to 25 percent in 2001.

Manufacturers have been attuned to the price flux and have attempted to court consumers via two distinct strategies. Sony and Olympus, on the one hand, went with expansive product lines ranging in price from $200-$1,000, with models ranging from 1 to 5 megapixels.

While Sony's digital imaging product manager Jim Malcom noted that the company intends to stick with this strategy, an Olympus spokesperson indicated that 2002 would see the company make fewer product introductions than 2001, when it made 10.

The other two market leaders, HP and Kodak, focused on the sub-$500 market in an attempt to push the camera through the mass channel. Kodak's EasyShare line and HP's PhotoSmart line were geared by price and promotion at an entry-level audience.

The year 2002 will see if either business plan will be vindicated or if both can co-exist indefinitely, said Jeff Hopper, director of marketing for HP's digital imaging organization. "There are pros and cons to having this price war," said Hopper. "The consumer definitely wins but the retailer and manufacturer struggle to keep up the value. On the plus side, it ushers in a wave of digital imaging related purchases."

Hopper noted that holiday sales of HP's PhotoSmart photo printers were outpacing last year's numbers. "Companies that can play broadly in other areas of digital imaging, like printers, will do well in this market," said Hopper. "Other traditional photo companies might have more trouble."