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Thursday, Aug. 21, 2003
Digital cameras claim ever bigger chunk of market
Shipments of traditional film-using units outstripped by pixelized cousins for first time in 2002
Yet another tidal wave of digitization has swept Japan's camera sector, forcing makers of conventional products to compete for a share of the burgeoning new market.
While the digital market grows, the conventional camera market is shrinking, forcing the five mainstay makers -- Nikon Corp., Canon Inc., Pentax Corp., Minolta Co. and Olympus Optical Co. -- to adapt for the sake of survival.
To date, the five major firms have dominated both the domestic and overseas film-camera markets. Only Canon and Olympus at present can be described as leaders in the digital sector, according to GfK Marketing Services Japan Ltd.
The other digital giants are Fuji Photo Film, Sony Corp. and Casio Computer Co.
Total shipments of digital cameras for the first time exceeded those of conventional cameras in 2002 in unit terms, according to the Camera and Imaging Products Association.
Digital cameras are replacing film-based models because users can view images immediately after they are captured, and they don't necessarily need photo labs to process their images.
Competition within the sector has intensified since spring, when cellular phone handsets equipped with megapixel digital cameras started to make their presence known in a big way.
Cellular handset digital cameras are now eating into demand for disposable cameras and low-entry digital cameras, holdout turf for the mainstay camera makers, according to industry sources.
The electronics giant Sharp. Corp., for example, reportedly now plans to launch a handset featuring a 2 million-pixel camera in the fall.
According to Fuji Photo Film Co., a major photo film maker known for its Utsurun-desu brand, sales of disposable cameras have logged a decline of between 4 percent and 5 percent this year from 2002.
A Fuji Photo spokesman voiced doubt, however, that this decline was caused by the emergence of camera-equipped cell phones, citing the fact that sales of other film products began to show similar declines even before the newcomers' debut.
Nonetheless, film-related firms have been forced to rise to the challenge.
Fuji Photo Film was quick to diversify operations in order to reduce its dependence on traditional film-related business.
Despite its corporate name, Fuji's film-related trade now accounts for just 10 percent of total sales. Revenue is mostly generated by products such as copiers, printers, fax machines and other information systems.
Even camera makers that have already entered the fierce digital market see cell phone cameras as a serious threat to their products, especially their low-entry models.
Indeed, the potential size of the cellular handset market is so huge that it dwarfs that of entry-class digital cameras.
Digital camera shipments in Japan came to 6.55 million units in 2002. Meanwhile, cellular handset shipments in Japan stood at 11.9 million units in the second quarter of 2003 alone, according to high-tech marketing research firm Garter Inc.
Some 74.5 percent of the handsets sold were equipped with digital cameras.
Minolta forecast that the digital camera market excluding cell phone cameras will keep its current double-digit growth at least until 2005, when it will eventually slow down as it is exceeded by cellular handsets featuring digital cameras, a company spokesman said.
Based on this scenario, Minolta halted production of low-entry, low-price digital cameras this year.
Instead, the firm has decided to focus on relatively high-priced, high-tech digital products, such as the Dimage X series, a high-quality compact line.
Even Pentax Corp., whose main product line has centered on conventional compact lens-shutter cameras with high-powered zoom functions, has been forced to make a big decision.
"Most of the research and development budget is spent on digital cameras," said Shunpei Shigeki, manager of the firm's marketing department.
Earlier this month, Pentax launched its first digital single-lens-reflex camera, which the firm touts as the world's smallest and lightest digital SLR, with the body weighing only 550 grams.
The strategic model, the *ist D, will debut Sept. 6, carrying an estimated price tag of 200,000 yen, a relatively low price compared with rival digital products but still higher than film-based SLRs.
"Much of the film SLR market will be replaced by digital SLRs when the prices go down," Shigeki said.
He believes digital SLR prices will soon drop under 100,000 yen -- a move that many industry observers view as a psychological line that could trigger a buying spree.
Pentax predicts that worldwide sales of digital SLRs will increase to 600,000 units in 2003, and will hit 2.5 million in 2006.
The company aims to capture a 20 percent market share with the *ist D series.