Camera firms aim to capitalise on appetite for upgrades

Tokyo : It was one of the gadgets of the decade. From sales of a few million basic models in 1999, the digital camera market exploded to a peak of around 130 million before the global recession hit.

The market is now reaching maturity. Most consumers have now replaced their old-style film-loaded cameras; volume growth is levelling off and the mega pixel arms race — used as a crude measure of quality in the early days — is over.

But digital camera technology is still far from mature and makers are exploring a range of new directions, while consumers are showing strong appetite for upgrades.

"There are pictures that people have thought of that they haven't been able to take at all," says Masaya Maeda, chief executive of Canon's camera division, the world's largest.

"It's a digital system so there are still many things we can change."

One of the biggest trends is a shift towards expensive digital single-lens reflex (DSLR) cameras, which have changeable zoom lenses, much larger image sensors and respond faster than compact cameras when users press the shutter.

Japanese makers shipped 85.8 million digital cameras in the first ten months of 2009, according to their trade body. But while shipments of compact cameras were down 17 per cent on the previous year, digital SLR shipments fell just 5.8 per cent.

That shift in consumer preference is to the benefit of Japan's traditional camera powerhouses, Canon and Nikon, which dominate the digital SLR market.

‘Critical'

"Presence in the DSLR market is critical to makers' revenue and profitability growth," wrote Nam Park, an analyst at HSBC, in a recent report, noting that last year, digital SLR accounted for 8.2 per cent of unit shipments, but 24.3 per cent of shipment value.

Maeda says there is still great scope to improve cameras' functionality. "A camera… has certain limits: on distance, on brightness, or on speed. What we can do for users is expand those limits," he says.

Now that most consumers have a digital camera, makers are improving on functions to tempt them to upgrade. Olympus recently sparked a boom in compact cameras with optical zoom of more than 20 times.

"Rather than picture quality getting better it will be more the number of failed photos getting lower," says Jin Nakayama, the head of Casio's camera business.

Casio now offers high-speed "burst" cameras that take 30 shots in a second, and can then automatically select the shot in which the subject is smiling and has their eyes open. Similar technologies mean many digital cameras can now shoot short video clips, allowing them to encroach on the camcorder market.

Both Maeda and Nakayama downplay the threat to standalone digital cameras from their inclusion in mobile phones.

Maeda compares the phenomenon with disposable film cameras, which were a huge success in the 1990s, but never undermined demand for higher-quality equipment.

"In the future there is a good chance that ... pictures will automatically upload to the network as they are taken," says Nakayama, an approach so far limited by the cost and speed of networks.

Nakayama says that the ultimate digital camera will have an image sensor so precise and processing so powerful that optical zoom lenses and flash will become unnecessary.

"I don't know how long it will take but I think that SLR will eventually disappear," he says.

Maeda thinks that compact and digital SLR technologies will co-exist for the foreseeable future. One area where the two men agree, however, is that a lack of volume growth will create some pressure for makers to consolidate.

— Financial Times