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High-spec mobiles 'threaten digital-camera sales'


Reuters
June 10, 2004, 15:45 BST


Mobile handsets able to take photos with up to three megapixels of resolution may lead consumers to drop digital cameras


Asia's top mobile-phone makers are rolling out handsets equipped with cameras so advanced that many consumers may come to the conclusion they don't need a separate digital camera any more.




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That prospect should worry digital camera makers such as Canon, which could lose potential customers to a slew of snazzy new phones that take pictures with up to three megapixels of resolution, analysts say.


Megapixels are the measure of how many million picture elements are captured in a digital snapshot and are one of the key ways in which digital camera makers differentiate their products.


"Camera phones are advancing to the point where they can attract consumers away from digital cameras," said Koo Hee-jin, an analyst at LG Investment & Securities.


Analysts have been warning about the threat camera phones pose to the digital camera industry since the first one was launched in Japan in late 2000. But so far there has been little impact -- even Sharp's introduction of the world's first megapixel phone in May 2003 didn't appear to affect demand.


The first handsets had cameras capable of taking 110,000 pixel pictures, good enough for photos posted on a Web site but far short of the two megapixels needed to produce a sharp postcard-sized print.


Now many of Asia's leading phone makers -- from Samsung Electronics Co Ltd to LG Electronics Ltd to NEC Corp -- have camera phones with one, two or even three megapixels, bringing them closer to digital camera turf.


South Korea's LG, the world's fifth-largest cellphone maker, rolled out a two-megapixel camera phone last month and local rival Samsung, the world's third-largest handset manufacturer, plans to follow suit this month.


But Japan's Casio will trump them all when it comes out with the first 3.2-megapixel handset through telecoms carrier KDDI Corp later in June. In terms of pixel count, it will be on par with some of Casio's own cameras.


"The emergence of the 3.2-megapixel phone will have a direct negative impact on the digital camera market from three megapixels on down," said J.P. Morgan analyst Hisashi Moriyama.


"Demand for the three-megapixel category should naturally begin to shift from digital cameras to camera-equipped phones."


Sales of camera-equipped mobile phones outnumbered those of digital cameras last year for the first time, rising almost five-fold from 2002 to 84m.


US-based market research group Strategy Analytics estimates the market will double this year to 174 million phones. Digital camera shipments are expected to grow a slower 40 percent to 68.5 million units this year, according to UBS analyst Ryohei Takahashi, who sees the market peaking at 77.5 million units in 2005 before falling slightly in 2006.


Still, even the most advanced camera phones match up with a segment of the camera market that is waning in importance. Only about 5 percent of all camera shipments are in the two-megapixel category, meaning Samsung and LG's new phones would be addressing a very small portion of potential demand.


Some of the best-selling digital cameras are of the four- and five-megapixel variety. Six- and even eight-megapixel cameras are gaining in popularity, as are digital single-lens reflex cameras.

http://news.zdnet.co.uk/hardware/0,39020351,39157407,00.htm