Digicam Category Expands As Camera Phones Make Gains

San Jose, Calif.— Consumers will leapfrog from buying 3-megapixel cameras to 5-megapixel cameras between now and 2005, largely bypassing 4-megapixel units, according to Michelle Slaughter, digital photography trends service director, at the Norwell, Mass.-based InfoTrends Research Group.

Slaughter revealed her company's forecast at the Digital Imaging '03 conference, held here last month.

The resolution trend reflects compressing price points which have quickly brought higher resolution camera models down the price ladder and into the hands of the mass consumer, Slaughter said. According to InfoTrends, the average selling price (ASP) of digital cameras fell 5 percent in 2002-2003 to reach $352. Slaughter said to expect another 4 percent dip in 2003-2004 bringing the ASP to $338.

Digital camera penetration stands today at 30 percent, moving to approximately 42 percent in 2004, Slaughter said. Of these users, 52 percent of them do "digital photo activities" at least once a week, and 43 percent of users spend between 30 minutes to one hour on these digital photography activities, Slaughter said.

"What we don't know is if that's because they're enjoying it so much or because it's a tedious, time-consuming process," Slaughter said.

Concurrent with the growth of digital cameras has been a slow but steady increase in digital printing infrastructure at retail. According to Kerry Flatley, senior research analyst, InfoTrends, there will be 5,420 digital minilabs shipped to North American retailers this year vs. 1,993 in 2001. Flatley expected digital minilab shipments to hit 7,089 units in 2005.

Growth of photo kiosks has been even more robust: from 5,009 units shipped in 2001 to 19,174 units expected to ship in 2003, according to InfoTrends. Flatley said kiosk shipments would hit 27,609 in 2005.

Photo kiosks will soon extend beyond serving digital still camera owners to accommodate the growing population of camera phone owners, Flatley said. Of photofinishers surveyed by the research firm, 26 percent said the ability to upload photos from a camera phone was an important feature in a kiosk. There are already kiosks in Europe and Japan that can produce photo prints directly from camera phones using infrared, Bluetooth or removable flash memory cards.

"We don't need to radically change the digital printing infrastructure to accommodate camera phones, we just need to expand it," said John Prendergast, VP, digital imaging strategy, Fujifilm.

Though U.S. household penetration of camera phones is at just 5 percent today, shipments of camera enabled cellphones will exceed digital camera shipments this year.