Another major shift worldwide is in the type of digital camera that consumers are purchasing. In Japan, digital single lens reflex cameras (DSLR) now hold nearly seven percent of the country’s DSC unit share. In 2005, DSLRs in the U.S. and Europe had 5.2 and 4.2 percent unit share, respectively. That same year in the U.S., DSLRs reached sub $900 and sub $800 price points for the first time, motivating the advanced amateur to purchase an upgrade. Those prices have continued to drop in 2006.  DSLR cameras should give the worldwide digital camera market a big boost in the coming years. Retailers and the overall industry will benefit with the possibility of achieving higher profit margins as well as increasing their accessory sales.

Household penetration is also set to rise above half for the first time, at 55 percent. One of the biggest growth sectors is the DSLR category.  InfoTrends says that the consumer DSLR market grew to approximately 81 percent in 2005.

Research also shows that the market has matured greatly since the introduction of digital cameras nearly ten years ago, and that by the end of this decade nine out of ten buyers will be previous owners.

InfoTrends projects the market will peak in 2006 when it reaches just under 28 million cameras, and will begin to decline thereafter.

New Challenges for Suppliers
The digital camera market has entered the midpoint of it cycle, and with that comes new challenges and new opportunities for camera suppliers. Return buyers are looking to upgrade their starter cameras with a focus on better resolution, longer battery life and longer zooms.

Camera suppliers have done a good job increasing value for consumers in an effort to maintain average selling prices, but will need to continue to pony up from a performance and features stand-point moving forward to encourage upgrades. One way to do this is to add new features such as wireless LAN connectivity, which InfoTrends predicts to grow in popularity during the next several years.

Ranking Suppliers
According to IDC Research, top digital camera players rankings by shipments were in 2005: Canon with 17.2 percent market share, followed by Sony with 15.0 percent, Kodak with 14.0 percent, Olympus 9.7 percent, Nikon 9.3 percent, Fujifilm 7.8 percent, HP 4.4 percent, Casio 4.1 percent, Samsung 3.8 percent, Panasonic 3.2 percent, Konica Minolta 2.9 percent, Pentax 2.3 percent and the remaining others combined at 6.4 percent. Look for Sony to be a bigger player in 2006 and beyond with its recent acquisition of Konica Minolta. 

DSLRs Have Bigger Growth Potential
One of the biggest projected growth product areas for digital camera vendors has been the DSLR. Photo hobbyists and prosumers alike have been attracted to the powerful features of these cameras. According to NPD Techworld, sales of DSLRs continue to grow rapidly as more advanced amateurs and professional photographers switch to digital. From 2003 to 2004, unit sales more than doubled to reach approximately 578,000 units. Sales are on track to set further records in 2006; through April 2005 they already surpassed 200,000 units. As DSLRs continue to improve and become more affordable, sales will maintain growth.

DSLR User Trends
PMA’s 2005 U.S. Consumer Photo Buying Report offers demographic information to help retailers better understand the current profile of these new DSLR users. The report finds that males have adopted DSLRs at a faster rate than females, representing about 60 percent of users. According to report, the average age of a DSLR user is a few years older than the compact digital camera user (48 versus 44 years), but younger than 35mm SLR users (52 years). The average household income of a DSLR user is above that of a compact camera user, which makes sense considering the higher investment involved with DSLRs. A high percentage of DSLR owners print their photos. The report says they also use their camera more often and take many more pictures than owners of other types of cameras. They print a smaller percentage of their photos than other segments, but due to the high quantity of pictures they take, they still print more photos.