Magazine Article


State of the Industry 2006 I

As digital cameras peak in the next year or so, competition will intensify. Consumers will be faced with a dizzying array of cameras, all vying for an ever-tightening share of the market.

With digital cameras cooling off, who will sell them next year and beyond? Certainly, mass retailers will continue to support the category, but it will have to make room for new home entertainment devices like high-definition TVs, game consoles, and so on.

The photo specialty channel is poised to exploit the continuing interest in photography by providing the broad product coverage and the expertise to sell digital cameras and accessories.

Independent retailers introduced the digital camera, and early adopters go to independents when a market is evolving. In the 1980s and 1990s, high-end consumers for 35mm SLRs ended up at independents when the discounters pruned their product line. It’s not unreasonable that something similar will happen with digital cameras. Yes, mass market and internet retailers will compete, but mostly on brands and prices for their mass-market customers. Full-line and savvy independents can compete with higher levels of service and products.

Retail market structure will continue to fragment, as mass retailers work harder to become increasingly relevant to niche markets. This is why some large retailers are experimenting with lifestyle-focused concept stores, to reach some of their non-traditional customers.

PMA is in the position to help specialty retailers with a wide variety of programs and activities designed to help these retailers set themselves apart.

Stepping Back For A Clearer View
Stacie Errera, President

Digital is firmly entrenched in the lifestyle of today’s consumer. That is a given. But that is not to say that our industry is still not without its many challenges. Depending on whose eyeglasses through which you may view our business, things may look rosy or look like Armageddon. Today’s business conditions dictate that we make some key decisions: (1) We can be driven by change. (2) We can be driven out by change. (3) We can contribute to driving the change itself. Change happens swiftly. And it is relentless. It is essential to frequently step away from the maddening swirl of change in order to see what’s about to help or hurt our business activities. One way to step away from daily distractions is to stay active in trade organizations such as PMDA and PMA. Both provide numerous venues where we can step outside of our day-to-day atmosphere and learn from (and about) peers and/or competitors. Another hidden bonus? Just the act of traveling to and from industry events gets you away from the distractions of your office or store. Use that time to clear your head and embrace the luxury of just thinking. Once you have had time to think, act on your thoughts in a meaningful way to make a positive change for your business.

Focusing on Digital Imaging
Gary Shapiro, president and CEO

The Consumer Electronics Association (CEA) is increasing its commitment to digital imaging as we believe this category has great potential and we have seen increased member and CES participation. Indeed, in June 2006 CEA announced that its digital imaging special interest group (SIG) would become a new membership division to serve better our digital imaging members and their consumers. Digital imaging is converging with almost every consumer electronics category, crossing over to televisions, computers, MP3 players, and cell phones and it will only gain strength and CEA wants to help this category going forward. I encourage interested parties to become involved in CEA’s efforts by joining our digital imaging division by contacting Allyson Pahmer at or by visiting the digital imaging showcase at the Sands Expo and Convention Center/Venetian during the 2007 International Consumer Electronics Show (CES).

Six and eight megapixel cameras, digital SLRs and other SLR-like models will command the marketplace in 2007. Wi-Fi capability and touch LCD screens are poised to dictate the market as additional camera features become more important to the consumer. Digital camcorders will continue to push out their older, analog counterparts, while the cameraphone will improve in performance and capability through 2007 as it becomes easier to get photos off the devices.

CEA forecasts that U.S. digital imaging sales will exceed 31 million units in 2006 as many consumers upgrade or replace the digital camera equipment they already own. While more than 50% of households already own a digital camera, many consumers still are not backing up their imaging content. We want the public focused on digital imaging!

Cellphone Camera Comes of Age
James L. Chung, President

Worldwide 2005 sales of cellphones totaled US $120 billion, about one billion units, of which one-half were cellphone cameras. It is expected that sales will grow at the rate of 23% in 2006. At the current rate of growth, cellphone sales will reach US $260 billion in 2011.

Chairman and CEO Antonio Perez of Eastman Kodak Company, the world’s largest photographic company, recently commented that the success of the company will center on its CMOS imaging sensor and its mobile imaging business. Perez explains, “We will focus on making cellphones true consumer digital cameras.”

Early this year, Kodak announced a 10-year research partnership with Motorola to develop better printing and uploading options from cameraphones. The second largest photographic company, Fuji Photo Film Co., Ltd., stated in its first quarter fiscal year 2007 earnings release that the company recorded strong sales of optical lenses for cellphone cameras. Last fall, Fujifilm introduced a direct from handset to retail print location service for cameraphone prints.

Cameraphones have now become the most prevalent image-capture devices in the world, according to Lyra Research. The cameraphone is considered by many users to be one of the most desirable features to be used to transmit pictures or to store pictures for later use. Less than one third of cellphone camera users will share pictures wirelessly with friends and family. They treat their cameraphones as portable digital photo albums.