“The transfer of digital images from one device to
another without the use of cables.” Clearly the most exciting example today
is the camera-phone — images from anywhere, to anywhere, instantly. But
there are numerous others that qualify as well. Transferring images from
Palm to Palm at six inches, from a camera to a printer from three feet away,
from a set top box to a digital frame somewhere in the same house, from a
laptop to a desktop computer in the same office building — all are
applications of wireless imaging.
While we expect all manner of image capture devices to
get wirelessly enabled, and we expect a wide variety of wireless
communications devices to get camera enabled, what is currently driving the
Mobile Imaging market are mobile phones with embedded cameras —
• Sales of traditional film cameras — excluding
single-use — are trending inexorably downward. According to numbers from the
GfK Group, from a peak of 71 million units in 2000, sales in 2004 were 43
million, down nearly 25% from 2003, and they’ll drop another 15% this year
to 37 million units — that’s just slightly more than half their peak just
five years ago. Half the world’s analog cameras are now sold outside the
three major markets — Europe, U.S., and Japan. The Photo Marketing
Association says film sales have dropped from a peak of 800 million rolls in
1999 to an estimated 438 million last year. They’re projected to fall to 315
million rolls this year.
• Sales of digital cameras, on the other hand are
growing — strongly — at more than 60% a year — from 11 million in 2000 to 18
million in 2001 to 30 million in 2002 to 50 million in 2003, 77 million last
year, and a forecast of nearly 100 million this year. Europe has become the
top market, with 40% of the sales last year, followed by the US with 30% and
Japan with 13 % (ROW = 17%).
• Those numbers, however, are dwarfed in both scale and
velocity by camera-phones — sales have more than doubled every year since
their introduction in November 2000 — from fewer than a million in 2000 to
more than 200 million last year (industry estimates are as high as 250
million) and roughly 500 million this year — 2/3 of all mobile phones sold
will include at least one camera.
Forecasts for the coming years vary, but they’re uniformly mind-boggling,
what’s unusual about those forecasts is that, so far, virtually all of them
have proven to be too conservative.
The good news for the imaging industry — and we
continue to believe that it is good news — is that the number of
capture devices — of all kinds — is growing rapidly. What’s obvious from the
graph below, however, is that the combination of analog and “pure play”
digital cameras (cameras not embedded in some other device) is not adding to
the total in a significant way, as increases in digital sales are largely
offset by decreases in analogue sales. It’s camera-phones that are driving
the dramatic increase. Starting last year, mobile phones added more new
cameras to the mix than digital and analog combined — almost 90% more. This
year, they’ll add four times more.
By the end of the forecast period, there will be
roughly eight times more camera-phones sold than film and digital cameras
combined. As always, that’s excluding single-use cameras. But it’s
interesting to note that in Japan, where the camera-phone penetration is by
far the highest, sales of single-use cameras are on the decline (from 78
million in 2002 to less than 70 million this year). OTUC (one-time use
cameras) sales are on the decline in the U.S., too — down 14% in 2004
according to the PMA and continuing their decline in 2005, down nearly 10%
through April. We expect that to spread to the rest of the world as well. By
2007, we believe camera-phones will outsell all standalone cameras — film,
single-use, and digital — combined. From essentially a gadget fad confined
entirely to Japan in 2001 to the most popular picture-taking device around
the world in six years. That fact continues to be unprecedented and quite
So what does this mean?
This year (2005), there will be about 600 million
digital cameras sold. Five out of every six of them will be embedded in
mobile phones. We believe the dominance of camera-phones will impact the
imaging market in a variety of ways that will benefit the industry.
• Sales of camera-phones will erode sales of low-end
digital cameras. The big-name imaging brands are already exiting the sub-2MP
space. Camera-phones have simply accelerated the exodus. The sweet spot for
digicams last year was 3–4MP. This year, it’s jumped to 5–6MP and shows no
signs of stopping there. And, as we’ve seen, whatever pure-play camera sales
are cannibalized by camera-phones are more than compensated by an
exponentially larger universe of cameras. That’s good news for the industry.
• Sales of one-time use cameras — OTUCs — have been
holding steady as the last stronghold for film, but we believe camera-phones
will eventually all but replace OTUCs. People will still buy OTUCs as a
substitute for their other cameras, to protect the ‘real’ cameras from loss
or damage when engaged in activities such as water sports, but OTUCs will no
longer be necessary because you forgot to bring your camera. Instead of
OTUCs on each table at the wedding reception, there will simply be sign that
directs you where to send your camera-phone pictures and videos.
• The mass-market appeal of camera-phones will
accelerate the mass-market acceptance of digital imaging, educate consumers
about the benefits and advantages of digital over film, and drive demand for
better cameras — both those embedded in the phones and those that are not.
For many consumers, a camera-phone will be their first digital camera. These
users will inevitably want to get a traditional digital camera as well as
their camera-phone. Leading DSC manufacturers report that camera-phones are
actually driving higher sales of their products.
• To counter the popularity of camera-phones, pure play
camera manufacturers will have to alter their product development and
marketing plans. Digital cameras will compete less on their pocketable,
take-anywhere, “fun” attributes and more on their serious imaging
capabilities — optics, performance, and image quality. They’ll be better
cameras. More good news: People are more inclined to preserve and share
pictures when they’re better pictures.
People carry their cell phones with them wherever they
go. If you’ve got a camera in that phone, it means you’ve got a camera with
you whenever a picture-taking moment arrives. “Boy, I wish I’d had my
camera!” becomes “Look what I saw!” The ubiquity of camera-phones will mean
an explosion in the number of pictures taken.
• A significant proportion of those camera-phone
pictures will be saved to a PC, peripheral device, or on-line archive for
later viewing and sharing.
• How many of them will be printed is the 64 thousand
dollar question (times have changed — it’s more like a 64 billion dollar
question) for the industry, but despite the current imaging value chain that
relies heavily on processing and printing film exposures, printing is not
the only way to extract value from digital images.
• The explosion of digital images being fueled by
camera-phones presents an unparalleled opportunity to find new ways to help
picture takers — both business and consumer —save, manage, use, view, and
enjoy their photos.
This rosy future will only come to pass, however, if
the remaining barriers to mainstream usage are either removed or
significantly reduced. Not mainstream adoption — it appears nothing can stop
that train — but mainstream usage. How can we make camera-phones better and
easier to use, make them full citizens of the imaging ecosystem, and grow
the market for all concerned? The Future Image MIR (Mobile Imaging Report)
continuous information service is the research tool you need to maximize the
opportunity and find your piece of the digital imaging pie. Click here for
more info. Click here to subscribe.