• Per megapixel pricing drops.
• Consumer step up to increased megapixel models.
• Ultra-zoom modes expand to more models.
• Ultra-thin digicams go for the purse.

One of the hottest consumer electronics segments during the last five years has been digital still cameras. In 2004, digital cameras were featured for the first time in CEA’s annual holiday survey as the number one planned CE gift item during the holiday season, unseating DVD. The prospects remain good for 2005, with CEA forecasts showing sales of 20.16 million unit sales dealers, accounting for more than $5.14 billion in factory revenue. The instant gratification, ease-of-use, and exceptional user flexibility in editing and printing digital images from home PCs has helped the digital camera category surpass film-based cameras as the image-capture device most preferred by consumers.

Digi Cams Show Double Digital Growth:
CEA reported that unit sales for digital cameras in the U.S. grew 28 percent in 2004 while dollar sales grew 21 percent. Factory-to-dealer sales for the category in 2004 totaled 18.85 million units and $4.7 billion wholesale.

Consumers Opt for More Megs:
In addition to buying more cameras, consumers also are replacing older digital camera models with higher resolution versions. In 2004, digital cameras with five or more megapixel resolutions sold more than 7 million units, an increase of 176 percent compared to 2003. Digital cameras with four megapixel resolutions also were extremely popular and totaled more than 3.78 million units, an increase of 141 percent from the previous year. CEA said the trend will continue in 2005 as the price-per-megapixel continues to decline, attracting more mainstream buyers

Source: CEA Market Research

Consumer Tastes Move up Market:

As the popularity of digital cameras rise, consumer’s tastes in improved picture quality and enhanced feature sets also will grow in 2005. Digital cameras that cost between $500-$599 sold more than 1.7 million units in 2004, an increase of 876 percent from 2003. More than 1.1 million single-lens reflex (SLR) models priced more than $700 were sold, an increase of 68 percent compared to sales in 2003, CEA said.

Growth Seen Ahead:
Beyond the 20.16 million units expected to be sold in 2005, CEA Market Research also forecasts growth to continue during the next several years, with 24.3 million units expected in 2008.

Electronics Stores Preferred:
Electronics stores continue to be the most popular place for consumers to purchase their digital cameras, but other outlets such as mass merchants also saw increased sales in 2004, according to CEA findings. All retailers likely are enjoying the fact that higher priced models of digital cameras are becoming more popular.

Digital Cameras Hit the Mass Market:
By the end of 2005, CEA forecasts total digital camera ownership rates will pass the 50 percent mark, up from just 31 percent of U.S. households in 2003.

New Features Drive ’05 Models:
With 8-megapixel digital cameras pacing the resolution race, vendors now are promoting movie modes, larger LCD screens and faster performance digital cameras to distinguish their lines from the blisteringly competitive pack. Camera manufacturers continue to produce models directed at distinct market segments, ranging from more experienced photo enthusiasts, who are opting for SLR models with large megapixel resolution capability, to very tiny and relatively inexpensive point-and-shoot models that appeal to families for their ease-of-use benefits.

As prices come down, resolution levels are becoming less of a differentiating feature. Camera shoppers in 2005 can find an 8-megapixel model for less than $300 or a very good quality 7-megapixel model for less than $400.

A key feature in 2005 is to offer digital cameras with ultra-zoom capabilities. Such models include zoom lenses with ranges of 5x or greater. Meanwhile, prices for such models are coming down rapidly.

Ultra-thin models, those measuring under 1-inch thick, continue to appeal to so-called “purse” purchasers, (women who want cameras they can fit into a purse easily.)

In-camera intelligence also is popular in 2005 models. This enables photographers to make edits to images such as red-eye removal, cropping, enhancements and special effects in the camera through either user-selectable or automatic tools.

Flash Memory Sales Take Off:
As digital camera sales have skyrocketed, so have sales of flash memory cards on which most digital cameras store images. Portable media in the form of Memory Stick, SD, MMC and Compact Flash has emerged as a large contributor to the industry revenue. CEA expects demand for flash memory cards (fueled both by digital cameras and MP3 music devices) to push the market to nearly $6 billion during the next 12 months, as capacities and prices shrink.

Popular features in flash memory for 2005 include higher capacities and faster speeds to handle larger data files. Average selling prices for flash memory cards has remained consistent, but that same price will buy more memory in 2005 than a year earlier. Consumers are spending an average of about $50 for flash memory cards but are getting the larger cards in that price range.