By Lisa Johnston
New products on display at the American International Toy Fair, held in N
Digital camera analysts are calling for “another challenging year” in new product sales in 2010, even as the pressures of the economy start to ease somewhat.
Chris Chute, IDC Worldwide digital image solutions research manager, estimated that the U.S. digital camera business would tally a 9 percent decline for 2009, and that level would drop another 7 percent in 2010, despite a slight return to growth in the digital-SLR category.
Chute attributed the performance to maturity in the U.S. digital camera market that now has reached more than 70 percent household penetration. Although he believes discretionary spending will come back somewhat in 2010, he said it is unlikely to drive a lot of new growth in the camera market because there aren't a lot of breakthrough new features or performance levels to stimulate first-time or add-on camera buyers.
“Most of the business in 2010 will be in a replacement cycle,” Chute forecasted.
In contrast, Liz Cutting, NPD Group digital imaging analyst, was somewhat more bullish on the market.
“As we come out of the economy, I see people itching to get back and buy that new camera, because people have been holding onto what they have, feeling that what they've had was good enough,” Cutting observed.
Like Chute, Cutting is predicting advanced d-SLRs and point-and-shoots to see more activity in 2010, adding that the convergence of video and still capture in cameras will lead some people to use one device as their sole imaging tool. Features that should generate some traction in the year, Chute predicted, will be waterproof or environment proof models.
“That is a feature that people can understand without any previous knowledge,” said Chute.
He said cameras with larger CMOS image sensors that can improve HD video recording, and ultra-zoom cameras, will also generate some new appeal.
The advances will help to make full 1080p video recording in camera models become more of a staple feature during the year, he said.
“So, while there won't be any features to drive the market in mass, the industry is going to strive to offer new features anyway,” Chute said.
Meanwhile, on the accessories side, NPD's cutting said the digital photo frame market, continues to be flat to slightly declining in unit sales, and “way down in dollars,” as manufacturers continue to slash prices.
At the end of October, NPD's retail tracking service (which does not include Wal-Mart data) showed the industry about flat at 4.8 million units year to date compared with the same period a year ago.
“We had a big boost from 2007 to 2008, when units were up 29 percent and dollars were up 16, and we just hit that place where they were novel gift items. In 2008 and 2009 approximately two thirds of digital frame sales were for gift items,” Cutting said, adding that two-thirds of all frames are sold in the fourth quarter.
She said the market still has some room for growth. Household penetration of digital frames rose from 12 percent to 19 percent between May 2008 and May 2009. The average number of frames was 1.3 per household, among those who own frames. “I think we've reached a plateau in the novelty of the category,” Cutting said.
Cutting called the attachment rate of frames to cameras only “nominal.”
She said only 6 percent of frame owners have Wi-Fi capability necessary for more advanced frames that can access photo files from networked PCs, making it more difficult to sell more elaborately configured frame models.
“People are more motivated by price,” Cutting said.
The average selling price from October 2008 to October 2009 dropped from $102 to $73, for screen sizes measuring 5 inches and larger, she said.
This TWICE webinar, hosted by senior editor Alan Wolf, will take a look at what may be the hottest CE products at retail that will be sold during the all-important fourth quarter. Top technologies, market strategies and industry trends will be discussed with industry analysts and executives.