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Digital Trend Challenging Camera Makers
Associated Press Writer

"Some members are very sad because they've been using Minolta for a long, long time," club liaison Tadashi Hasegawa said. Some club benefits are being phased out, including discounts on used camera gear.

Many of the big names in photography were once startups in their own right as they rushed to market in the 1950s with the advent of 35 mm cameras, undercutting and stealing market share from European makers.

Now they are the ones having difficulty adapting to the technology used in digital cameras: image processing chips and sensors called charge-coupled devices, or CCDs, which capture light and transform it into digital signals.

"In today's era of digital cameras, where image sensor technology such as CCD, which we don't have, is indispensable, it became difficult to timely provide competitive products," Konica Minolta spokesman Minoru Ikehara said.

Some names, such as Kodak, Nikon and Olympus, farm out manufacturing of digital cameras to high-tech firms with expertise. Sanyo Electric Co. and Taiwan's Premier Image Technology Corp. and Altek Corp. are among the ghost makers.

One key exception is Canon Inc., which successfully made the transition from film by investing heavily in digital technology.

Canon shipped about 12.6 million digital cameras in 2004 to lead the world with a 17 percent market share, according to U.S. market researching company IDC.

The company has leaned on marketing to make sure consumers don't forget its well-established brand name amid the onslaught of digital newcomers, IDC analyst Chris Chute said. Thus, Canon's camera division accounted for only 35 percent of the company's overall sales last year, but 42 percent of total operating profit.

That performance has helped Canon record six straight years of record earnings and boosted its president, Fujio Mitarai, to cultlike status in Japan, where he was recently tapped to lead Japan's most powerful business lobby.

Global shipments of digital cameras are expected to peak at 92.7 million units this year, then start declining due to market saturation, according to IDC. That means a smaller pie to divide among even more producers.

Traditional camera makers like Nikon are hoping to keep a toehold in high-end digital SLR, or single-lens reflex, cameras. They are favored by professionals, use interchangeable lenses and tend to have higher profit margins.

But newcomers like Matsushita Electric Industrial Co., which makes Panasonic products, are already unveiling their own SLRs.

Meanwhile, camera-equipped mobile phones are crowding the low-end, point-and-shoot market.

And Hewlett-Packard Co. plans to further undercut Kodak and Fuji by supplying retailers with kiosks so customers can simply plug in their digital camera's memory chip and instantly print pictures. Kodak is currently the world leader in this field, with 75,000 kiosks, but HP says its system will be cheaper because it's based on inkjet technology instead of dye sublimation.