Digital camera manufacturers report that the "pixel wars" are over. No longer will digital cameras court consumers based on their resolution, as prices on 2 megapixel digital cameras have dipped below $299.
Welcome to the "ease of use" era, they say.
Manufacturers are going to great lengths to usher the digital camera into the mass market by making the process of capturing, uploading, printing and sharing images easier for those who might be intimidated by the technology.
"Educating the consumer is a priority for digital camera manufacturers because the market is growing quite quickly," said Maria Thomas, divisional merchandising manager for Camera & Photo at Amazon.com.
"As the market transitions to the mass consumer, they'll want something that is intuitively easy to use," said Matt Knickerbocker, vice president of marketing for the Consumer Markets division, FujiFilm. "One of the barriers to adoption among non-users is that digital cameras can be horribly complicated, difficult to use and difficult to understand."
He pointed to his company's FinePix Truck initiative, a supped up 18-wheeler stocked with Fujifilm digital products currently criss-crossing the country preaching the gospel of digital imaging to the unconverted.
"We've had some phenomenal success with the truck," Knickerbocker said. "People are staying in it for twice as long as we expected, and when they come out they understand digital and they're ready to buy."
Kodak has reaped some early success with its new EasyShare System, a series of cameras and a dock (sold separately) that offers a "one-touch" solution for getting images from camera to computer.
"The EasyShare system has been selling at the highest volume of any digital camera in the history of our division," claimed Nancy Carr, VP of Digital & Applied Imaging for Kodak. "Retailers underestimated sales of it and in the fourth week we had a blip where we had to quickly refill the channel."
Kodak's focus on ease of use is consistent with the company's explicit goal of targeting only the mass market consumer and producing only digital cameras in the sub $499 range.
"Digital cameras have about a 10 percent household penetration," said Carr. "That represents the early adopters. We're going after that other 90 percent, people who are aware of digital photography but might not know all the ins and outs."
Part of this targeting involves minimizing the confusing elements, such as external memory. The EasyShare cameras come with 8MB of internal memory with slots to accept CompactFlash if a user wants to store additional photos. The dock circumvents the need to buy flash memory card readers and fuddle with battery chargers, as it serves both functions for consumers. All they have to do is plug it into a computer's USB port.
"We position the removable memory as something to take on vacation if you need to a take a lot of pictures," said Carr. "But day to day, the 8MB is all they need and they can load it to a computer simply by dropping it in the dock."
Sony's Jim Malcom, senior marketing manager of Digital Imaging, pointed out that consumers are bringing varied expectations to the table and that resolution is not always the most important factor in their decision-making process.
"Our entry level Mavica, with a floppy disk, has VGA resolution and yet for the last 18 months it's been America's best-selling camera. Now, it hasn't done that on the basis of great prints at 8 x 10, but because it has a floppy disk and is easy to use and because people are simply looking to e-mail their images.
"Maybe the gold standard isn't a 35mm quality print but what you can do with an image on a computer," said Malcom.
As prices have come down, many higher-end manufacturers have recognized that the market sweet spot, considered by most to be $299-$399, is where much of the consumer play will be.
"If you look at the numbers, from 1998 to 2000, about 60 percent of unit sales sold into the greater than $600 price category," said Amazon.com's Thomas. "In the first few months of 2001, 40 percent of digital cameras on the market are selling for under $300."
The most recent numbers from NPD Intelect show that the average price from January through May of this year is $407, down 19.8 percent from the same period last year when the average price of a digi-cam was $508.
"I don't think the market is solely price driven," said Karl Wardrop, product manager for Hewlett Packard's digital imaging division. "Consumers are looking for a price-value relationship where they get a reasonable price for a certain set of features. The distribution is out there for digital cameras to become a mass market item, but it hasn't reached the point for the consumer where they can't live without one."
HP has mined the lower price points to great success, bringing in its 2.1 megapixel PhotoSmart 315 to the market at $299.
Traditional higher-end players, like Canon, Olympus and Nikon have taken notice and expanded their product lines to include lower-priced models to lure the masses. They also note that as resolution and price become less of a determining factor for consumers, other, more traditional, photographic elements will come into play. Prepare, they say, for the "lens war," or possibly the "camera design" war.
"We're at a point technologically where you can get a good photo quality image from a digital camera for not that much money," said John Knaur, senior product manager, digital products, Olympus. "As the prices go down, I think you'll see the higher-end companies have a bigger impact because of superior optics and camera design."
Joe Carfora, national account sales VP for Nikon's Consumer Digital Products division, echoed this sentiment. His company recently made its first introduction into a mass market space with the Coolpix 775, a 2.1 megapixel camera with a one touch upload button for $449. According to Carfora, it will ship in a computer and office superstore chain — a first for Nikon.
"Nikon is looking to expand the length and breadth of its line and we think the mass market is really explosive," said Carfora. "We designed the 775 with the mass consumer in mind: it had to be easy to upload pictures to the Web, it had to be light and designed with the feel of a camera, and it had to produce a great picture and be reasonably priced."
Other imaging players are concentrating on making the pieces fit together more smoothly. Epson has begun licensing out their PRINT Image Matching software to camera manufacturers to ensure better communication between camera and printer.
"Home printing will be a big part of the imaging market, and so we're aggressively promoting this technology to improve the user's home printing experience," said Epson digital camera product manager Lisa Graham. So far Epson has signed on several big names, including Sony, Olympus, Minolta and Toshiba, among others.
"Even though the household penetration is still under 20 percent, most people are ready to make the transition to a digital camera," Knickerbocker said. "They have mentally accepted and understand digital imaging. There aren't many barriers other than ease of use and price."
Non-Tethered Digital Camera Sales
UNITS SOLD (IN MILLIONS)
% CHANGE, (JAN.- MAY 2000)