IDC Report Says Digital Camera Retail Price War Has Begun

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A digital camera pricing battle seems to be taking place at retail, according to a fourth quarter pricing report from the market research firm IDC.

The battle could very well see 2-megapixel cameras selling at industry-first price points of less than $100, the report noted.

The holiday selling season, when approximately 40 percent of all digital camera shipments occur, will see its predictable share of price-drops and rebates as vendors muscle for share, but digital camera manufacturers and retailers will be particularly aggressive, according to IDC.

The firm expects select models of 2-megapixel cameras to reach an industry first of price points less than $100. Candidates include Hewlett-Packard, Kodak and Fujifilm, who currently have among the cheapest 2-megapixel SKUs on the market.

"In year's past the sub-$200 prices for digital cameras did not guarantee volume due to the fact that most cameras priced below $199 were inferior to those above $200," IDC noted. "However, with a more price-sensitive consumer on the prowl, and the fact that some 2-megapixel SKUs from top brands are expected to dip below $99, this could change."

The report claimed that ever since HP hit on a key combination of affordability and core-features with its PhotoSmart 315 — which IDC described as "a bare-bones 2-megapixel camera priced at $299 in the fourth quarter of 2000" — holiday camera pricing has been fierce.

Some vendors with strong brand names, like Canon and Sony, had been averse to dropping prices in the past, reasoning that brand strength and product designs would entice consumers to pay more. What is different in 2002, noted IDC, is that the popularity of the digital camera category has given smaller players shelf space in popular sales channels and that all players have embraced price drops in a effort to sustain or gain market share.

Here are early examples of what fourth quarter pricing will look like: Nikon has lowered the price of its entry-level CoolPix 2000 from a suggested $249 to $229 and Kodak has lowered the price of its 2-megapixel DX4330 by $50, from $349 to $299.

"If these drastic pricing actions lead to a price war, there will be no winners," IDC concluded. "The larger vendors will be hurt in terms of profitability, and the smaller ones may be forced out. The fact is that the megapixel race has slowed and the value proposition for digital cameras will diminish during a price war."

Separately Toshiba announced aggressive price reductions on two of its digital cameras recently. The suggested retail of the 2.2-megapixel PDR-M25 drops from $229 to $199. In addition, Toshiba will cut the price of the PDR-3300 3.2 megapixel camera from $329 to $299. Both cameras feature optical zooms and color LCD screens. Both models have been on the market for the better portion of 2002.


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