Imaging Vendors See Mixed Market

By Greg Scoblete On Feb 9 2009 - 8:00am

As the imaging industry gears up for the annual PMA trade show, held here March 3-5, the 500-plus expected exhibitors are learning that photography is not immune to the economic contraction besetting the globe.

The news, however, is not uniformly glum as digital SLRs, accessories and photo output are expected to register continued growth.

Two of the industry's major players, Kodak and Canon, both announced bleak earnings at the end of January.

Canon's net profit for the fourth quarter plummeted 91 percent to $127 million vs. the year-ago period. For the year, net profits fell 36.7 percent to $3.4 billion and sales slumped 8.6 percent vs. the year-ago period. Looking ahead, the company said it expected its digital camera unit sales to be down 7 percent in 2009.

Things weren't much better at Kodak, which in addition to a fourth-quarter loss of $137 million, said it would slash between 14 percent and 18 percent of its workforce (between 3,500 and 4,500 positions). The cuts will occur by the first half of the year.

Kodak's sales slumped 24 percent to $2.4 billion, including a 23 percent decline in digital sales to $1.8 billion and a 27 percent drop in traditional revenues to $652 million vs. the year-ago quarter. Kodak ended 2008 down 9 percent in revenue. Digital revenues for the year dropped 4 percent while traditional revenue slid 18 percent.

Sales from the consumer digital imaging group fell 5 percent for the year to $3 billion and decreased a sharp 30 percent in the fourth quarter vs. the prior year's quarter. The group posted a $40 million loss for the quarter.

The losses reflect an industrywide contraction in compact digital camera sales. According to the Camera & Imaging Products Assocation (CIPA), Japanese digital camera shipments are predicted to fall for the first time since CIPA began making forecasts.

Japanese manufacturers are projected to ship 118.9 million cameras globally in 2009, down 0.7 percent vs. 2008.

Digital-SLR shipments, however, will grow 6.8 percent to 10.3 million units, while compact cameras will drop 1.3 percent to 108.6 million units, CIPA predicted.

Shipments of SLR lenses are also expected to grow through 2009, hitting 16.6 million units for a growth rate of 6.1 percent. Lenses enjoyed a 25 percent growth in 2008, following the growing install base of SLR cameras.

Another growth area is output. PMA's Monthly Printing and Camera Trends report for November 2008 noted that the overall volume of all digital prints grew 10 percent vs. the year-ago period. The growth was powered by online ordering, which jumped 30 percent, followed by retail mini labs at 5 percent, instant kiosks at 4 percent and home printing at 2 percent.

Revenue from online photo printing is expected to top $1.5 billion in 2012, according to a recent study from InfoTrends. The revenue growth will be driven by custom photo gifts and merchandise, which will account for 70 percent of the total.

While growing, the market for photo output will encounter its fair share of challenges, the research firm noted, particularly as consumers embrace social networking and alternative means of viewing images beyond printed output.