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Digital Camera Growth to Continue?

That’s one way to interpret the news that Taiwanese OEMs are ramping up their production, according to this DigiTimes report (hat tip: Imaging Resource). They are expected to manufacture 50 million digital cameras this year, or nearly half the total market.

The other possible explanation for why the OEMs are going gangbusters is falling prices. Digital camera prices dipped from an average $214 in 2005 to $183 in 2006, according to NPD’s Holiday Sales report. So despite a healthy unit growth of about 20 percent, the category only grew 2 percent in dollars.

That 2 percent figure is striking because one would think that rising d-SLR sales could counter the price erosion in the point-and-shoot side of the business. One would, however, be wrong (a state of affairs I’m intimately familiar with).

Clearly prices won’t be increasing this year, which means that even if the category achieves double-digit unit growth in 2007, it will likely end the year flat or even down in dollars.