By Lisa Johnston
New products on display at the American International Toy Fair, held in N
Big screens are all the rage … in digital cameras. The same fascination that is propelling consumers in ever larger numbers to big-screen televisions is also fueling demand for digital cameras with ever larger LCD screens.
"People want small, fast cameras with big LCD screens," said Jon Sienkiewicz, VP of marketing, Konica-Minolta.
Martin Lee, VP of marketing, Olympus, agreed, noting that "consumers are using their digital cameras to not only capture images but to display them as well. As a result, LCD specs will play a bigger role in the overall purchase decision."
Among the top sellers through the first two quarters of 2004, Sony's 5-megapixel T1 sports a 2.5-inch LCD screen and is almost $200 over the average selling price, said Greg Young, GM, marketing, Sony. "People will buy for more than just price."
"Image quality has driven mass adoption more than price. People will pay a premium for better quality," said Chuck Westfall, director of technical information, Canon.
Overall the market has been, as in years past, robust through the first two quarters.
Through May of this year the category is up 23.7 percent in units and 15 percent in dollars over the same period in 2003, according to NPD.
"Over the past two quarters of 2004, Olympus has witnessed an overall price stabilization in the low-to-mid range product category in addition to an increased demand for products in the Ultra Zoom category," said Lee.
Michelle Slaughter, digital photography trends service director, InfoTrends Research Group, said that digital camera unit sales are expected to reach 22.8 million units in the U.S. this year.
A report issued in May by ChangeWave Research stated that 30 percent of surveyed respondents said they planned on purchasing a digital camera over the next six months, topping a list that included cellphones (24 percent), laptops (23 percent) and LCD flat panel televisions (17 percent).
Digital cameras also "showed the most momentum," gaining 12 points over a similar survey conducted in January, ChangeWave said.
Much of the buying is being done by digital camera owners going back for camera number two or three, said Young. "The kind of growth we're experiencing could continue longer than we expected" because industry penetration numbers don't account for repeat buyers, Young said. Digital cameras are forecast to reach close to 40 percent market penetration by the end of the year.
"There's been a strong demand for digital SLRs and for 3-megapixel cameras," said Jerry Grossman, VP, marketing, Nikon.
NPD sell-through figures show that through May of this year, 3-megapixel models represented 42 percent of unit sales, up 9 percent from the year-ago period. The largest growth segment is 5-megapixel cameras, which grew 12 percent over 2003 to account for 18 percent of the market through May of this year.
The resolution mix will shift through the holidays, Slaughter said. "We expect the 3-megapixel, 4-megapixel and 5-megapixel segments to be the leading segments with over 25 percent unit share each. In the past, one segment has typically dominated with 50 percent or more, but this year we expect to see more even distribution between these three segments," Slaughter said.
Credit for pushing up the resolution notch goes in part to the new sub-$1,000 digital SLRs which, thanks to introductions by Canon and later Nikon, have hit price points formerly reserved for high-end fixed lens models.
The influx of new d-SLRs has also injected life back into photo specialty retailers who cater to more advanced customers and can stock a wider assortment of lenses, said Grossman. However, consumer electronics retailers are enjoying success with d-SLRs, he noted, as both offerings from Canon and Nikon offer the lens with the camera body.
The competition from d-SLRs at high-end fixed lens price points will impact that later category in the short term, forcing prices down, but the long term prospects for the high-end fixed lens category are positive, said Grossman.
The fixed-lens 5-megapixel and 8-megapixel models that occupy the same price band as the d-SLRs still have a role to play in the market, said Chris Chute, senior analyst, IDC. "You have two different sets of customers for these cameras," he said.
The fixed-lens models appeal to dealers who don't want to stock all the lenses and accessories that accompany an SLR but still want to offer their customers a high-end camera, said Westfall.
Nikon's Grossman concurred, noting that the high-end fixed lens category has an important role to play — offering advanced features that a digital SLR cannot, such as video capture, in a smaller form factors.
As for the ever-lingering worry over fourth quarter supply, vendors report that the year should not witness the drastic shortages of years past. And all are optimistic that the aggressive forecasts will be met, or exceeded, and that double digit unit growth will again ring in the New Year.
"Now our challenge is to accurately predict overall market volume," said Phil Scott, marketing director, Digital & Applied Imaging, Kodak.
"Looking forward, Olympus expects that more and more consumers will factor their individual lifestyles into the decision-making process with regard to new digital camera purchases," said Lee.
"Look for consumers to concentrate more on style and design in addition to technology and hardware," he added.
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.