Industry Looks To Spur P&S Camera Growth

By David Elrich On Jan 10 2012 - 11:53pm

LAS VEGAS — It’s been a rough ride for compact point-and-shoot digital cameras. A key staple of every CE retailer, digicams were buffeted by natural disasters, a saturated customer base and the onslaught of camera phones in 2011, just to name a few of the almost-biblical plagues visited upon the category. Yet a new year has dawned, a wave of models is about to be introduced, and manufacturers are guardedly optimistic. Would you expect anything less at International CES?

No matter who’s queried, digicam dollar and unit sales dropped double-digits last year. According to The NPD Group’s Retail Tracking Service, for the first nine months of 2011 (January through September) pointand- shoot revenue was $1.4 billion, down 17 percent.

Even as point-and-shoot digicams overall took it on the chin last year, sales of d-SLRs and compact system cameras continue to grow nicely.

Chris Chute, research manager/analyst at IDC, projected an increase of almost 20 percent to 4.5 million interchangeable-lens cameras with their much-higher average selling prices in 2012. He predicted total sales of 30.4 million for all cameras, down from 31.8 million last year.

“2011 was a tough year given the supply issues and consumer attention turning to other devices such as smartphones and tablets. If we don’t see some compelling changes,” sales of compacts will continue to fall, said Chute.

The analyst said he expects to see more cameras with Wi-Fi capability, more powerful ultra zooms, lowlight CMOS sensors, and FullHD video to entice consumers and emphasize the quality differences between cameras and camera phones.

“The compact digital camera category has seen continuous erosion as smartphone penetration and share of all images taken continues to rise. Consumers still report resolution is the single most important feature to motivate them to purchase a camera, and while smartphones certainly have improved over the years, cameras march a few steps ahead,” said Liz Cutting, NPD senior imaging analyst and executive director. “Cameras that continue to thrive possess characteristics that smartphones, while improving, don’t — such as high-quality images in low light, longer zooms, decreased shutter lag — will continue to see positive growth in 2012.”

There’s no question camera phones like the iPhone 4S are changing the way people take photos. In just a few months after introduction, the new iPhone rose to the top as the most popular camera in the Flickr community, followed by four traditional d-SLRs. And consumers continue to embrace social networks and upload images like crazy.

According to Pew Internet & American Life Project surveys, 38 percent of adults used social networks in May 2010, compared with 27 percent in 2009. Throughout genders and generations, there was a 10-percentage-point increase in social-network usage in one year. The numbers show the culture to share images as a communication tool is now established. Facebook has 690 million members, among them 250 million mobile members, with 2.5 billion photos uploaded each month.

In the face of this sea change, manufacturers are focusing on the strengths of digital cameras vs. their smartphone competition. While the iPhone can claim 8-megapixel resolution, the sensor is extremely small and its digital zoom hardly competes with the 36x optical zoom of the most potent mega-zooms.

“There’s no doubt smartphones have been embraced for visual communication and the casual snapshot. However, for memory keeping and deliberate picture taking, the digital camera remains king,” said Mark Weir, senior technical and marketing manager, Sony Electronics. He believes smartphone users were value purchasers of digicams and that’s where it’s having its biggest impact. “One of the true bright spots last year was pocketable zoom cameras and models with CMOS sensors that take great shots in low light. Ruggedized cameras did well — and will continue to do so in 2012,” he said.

Sony will introduce three point-and-shoots at CES — the company typically until waits until later in the year to unveil its more sophisticated models. The top model is the 16.1-megapixel CCD DSC-W650, which will be available in silver, black and red this February for about $140.

“Overall 2011 was a challenging year given the high saturation levels of digital cameras (80 percent-plus). But good things are happening as consumers appreciate the value of step-up features such as CMOS sensors and larger zooms,” added Reid Sullivan, Samsung’s digital imaging senior VP As for the impact of smartphones, he said there haven’t been any quantifying studies, so it’s difficult to pin down, but “we know the consumer is changing and they’re much more engaged with sites like Facebook. Camera phones may be great for online applications, yet consumers know they can’t get same image quality as a dedicated camera. That’s why we worked closely with our wireless division and are adding Wi-Fi to more than 50 percent of our 2012 lineup in order to bridge the gap. Everything else is getting connected — why not cameras?”

Panasonic’s Dave Briganti didn’t sugarcoat the situation when he said industry sales were down 22 percent vs. last year, lamenting “this used to be one of the highflying categories.”

He too couldn’t quantify the impact of camera phones but said iPhone commercials telling consumers to leave their cameras at home didn’t help. Briganti stressed there were bright spots, such as long-zoom models. To counter camera phone inroads, he said Panasonic would stress zoom-lens quality, optical image stabilization and low-light capability. “There’s not a smartphone in the world with those features on it.”

Nikon has a presence at CES yet the company wouldn’t reveal its 2012 plans prior to the show. Bo Kajiwara, Nikon marketing director, said consumers are stepping up to more advanced features and felt they would continue to look for long-zoom cameras and those with low-light capability.

Like other imaging executives, he felt the more camera phones exposed people to photography, the better it would be for the industry. Whether he and others are whistling past the graveyard, only time will tell, but he did point out all Nikon Coolpix cameras are compatible with Eye-Fi cards, so consumers can use that optional method to upload their images.

“Looking down the road, we see smartphones being a complement to dedicated digital cameras,” said David Troy, FujiFilm North America digital camera marketing director, in what seems to be the new mantra for camera company executives.