Camera Phones Taking Market Share From Digital Camera Makers

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March 29, 2004 (5:23 PM EST)

Camera Phones Taking Market Share From Digital Camera Makers

Manufacturers of digital still cameras are expected to steadily lose market share to camera phone makers, market analysts said Monday.

The impact of cellular phones capable of taking and sending pictures will mostly be felt in the market for digital cameras costing $250 or less. Consumers are expected to move away from these low-end cameras in earnest as cellular phone makers introduce products with comparable resolutions.

"It's a disruptive event," David Kerr, analyst for Strategy Analytics, said. "These are a whole new class of competitors for the digital camera guys to worry about."

By 2009, nearly 70 percent of all handsets are expected to be embedded with cameras, with a majority shifting to multi-megapixel resolutions, according to ABI Research. A megapixel equals a million pixels.

Most camera phones today have resolutions of 300,000 pixels, but manufacturers are moving quickly to improve the picture quality. Among the companies announcing plans to ship megapixel handsets soon are Audiovox, Kyocera, Nokia, Samsung and Sony-Ericsson.

Of the top three camera makers, Canon and Olympus are most vulnerable to the potential damage these higher resolution camera phones would have on the low-end digital camera market, while Sony can potentially make up the loss revenue through sales of its own camera phone.

"Canon and Olympus are going to feel the greatest pressure," Kerr said.

Digital camera makers, however, are expected to continue dominating the high-end of the market.