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The continuing surge in digital SLR sales and a throng of savvy second timers have kept the digital camera market in double-digit growth mode despite early worries of a softening market.
Such a leveling is still in the cards, vendors and analysts predict, but it will likely be in 2008 or possibly still further out if consumers continue to respond to enhanced functionality and new styles.
"I don't believe the analysts, for the last two years we've beaten expectations," said Steven Cordova, sales and marketing VP, Samsung.
The market has shrugged off pessimistic forecasts because camera usage models are changing, said Bill Heuer, digital imaging division, senior VP, Casio. "There are multiple cameras in a household and people, especially kids, are more engaged in photography."
Yet the single largest driver of growth, vendors admit, is the improvements in performance and image quality between the cameras of 2006 and the models of several years back. Sixty percent of all camera buyers are repeat purchasers enticed back into the market by new technology, according to the Consumer Electronics Association.
"The replacement cycle is much faster with digital and consumer see the value they get now," said Eliott Peck, sales VP and GM, Canon.
Indeed, the market is bifurcating, with the strongest growth in the low end, sub-$100 category and in digital SLRs, said Chris Chute, senior analyst, IDC.
What's encouraging to vendors is the interest in digital SLRs from consumers who, in the film era, would never have owned an interchangeable lens camera, said Ned Bunnell, marketing VP, Pentax.
Digital SLRs are partly credited with the growth in digital camera SKUs at retail. According to Current Analysis, there were 302 camera models on store shelves this past November versus 252 in November 2005. Higher priced SLRs, while still a fraction of store placements, are growing while point-and-shoot placements have dropped.
Digital SLRs have not only been embraced by photo specialty and CE stores but by mass merchants as well, said Antoinette Marty, digital camera analyst, Current Analysis. In fact, the mass merchant and club channel accounted for roughly 16 percent of digital SLR placements in November, just behind the photo specialty channel.
While SLRs have just begun ascending their growth curve, point-and-shoots have nearly pinnacled. Despite a slew of new camera based technologies — face detection, image stabilization, exotic scene modes — familiar technology and a sexy paint job may motivate a larger share of the market in 2007. Video recording will receive greater emphasis thanks to the unfathomable wellspring of Internet narcissism that is YouTube and a host of related Internet video/social networking sites.
"We don't know how big of niche video will be," Bunnell said, adding that the company plans to promote its DiVX video recording technology like its waterproof cameras — to carve out a space for the company in the increasingly commoditized point-and-shoot market.
High-definition video is likely to make the leap from camcorders and hybrid video recorders to digital still cameras in 2007, predicted Kanika Ferrell, digital camera solutions marketing manager, Texas Instruments.
There will also be a greater variety of color incorporated across vendor lines. Kodak will launch one camera at CES that will be available in eight colors while Sony began putting greater emphasis on multi-colored cameras later in 2006.
"It's about personalization," said Nancy Carr, VP, Kodak. "You'll see more colors, more accessories, more style."
While multi-colored models have been around for years, there will be a much broader commitment to rainbow assortments, which puts the onus on vendors and retailers to properly manage inventory, said, Phil Lubell, digital still camera marketing director, Sony.
The resilient megapixel race will continue to defy rumors of its demise as vendors offer more 8- and 10-megapixel models in 2007. "The resolution wars aren't over," said Liz Cutting, digital imaging analyst, NPD. The pie keeps shifting in favor of higher megapixel models, Cutting observed, with 7-megapixel-plus cameras and d-SLRs capturing 21 percent of the market this year versus only 12 percent last year.
One technology that looks to remain fairly dormant in 2007 digital cameras is Wi-Fi. Canon has no plans to introduce a successor to its wireless SD430, Peck said. Kodak will continue to support both EasyShare One models, but likewise will not be refreshing the model in 2007.
"The market is still not there for Wi-Fi," Carr said.
"It's a nebulous question" when — or even if — wireless cameras will take off, Peck observed.
Part of the trouble, Sony's Lubbell said, is consumer perception. "When people hear Wi-Fi they think it means you can surf the Web."