Changing Photographic Landscape

Top consumer electronics companies put the squeeze on traditional camera makers

3 min read

The once orderly camera business is undergoing a sea change, as digital photography consolidates a near-total victory. Altogether, Japan delivered about 73 million digital units in 2006, accounting for about three-quarters of global sales, but shipped just over a million film cameras. Though companies like Canon continue to sell film cameras, they are no longer developing new ones, and it seems only a matter of time until they drop the business.

Meanwhile, as if the picture were not already worrisome enough for those Japanese camera makers that have dominated the market for decades, their turf is being invaded by hungry consumer electronics companies, including Casio Computer, Matsushita Electric Industrial, Samsung Electronics, Sanyo Electric, and Sony. These and others are using semiconductor and miniaturization skills to bring innovative designs and new features to their cameras, such as the antishake systems and automated zoom lenses now found on even the smallest cameras.

”The digital camera has become part of the consumer electronics market,” observes Christopher Chute, a research manager with IDC Corp., based in Framingham, Mass.

With so many companies now crowding the market, manufacturers unable to adapt quickly enough or to compete in producing vital electronic components will surely face the same fate as Konica Minolta, which dropped its entire film business this year and sold much of its remaining camera operations to Sony. Konica cited its inability to compete in such areas as image sensors, particularly charge-coupled devices (CCDs), as a reason for its retreat.

Until recently, the newcomers were content to attack the low end of the market, with point-and-shoot cameras that are relatively inexpensive, easy to use, and easily slipped into a jacket pocket or purse. Now Sony and Matsushita have turned their attention to the more profitable higher-quality cameras, launching digital single-lens reflex (SLR) models.

Introduced in July, the US $1000 Sony 10.2-megapixel Alpha DSLR-A100 model grabbed more than a 20 percent share of Japan’s digital SLR market during its debut month, according to Tokyo-based market researcher BCN [see photo, "Don't Just Point and Shoot"]. Sony’s success here has been aided in large measure by its acquisition of Konica assets, including the right to use Konica’s lens-mounting technology; its lens-manufacturing facilities; and its design, development, and production teams. Besides producing its own lenses, Sony is also making lenses for the A100 in cooperation with Carl Zeiss, of Oberkochen, Germany.

Sony and Konica had been working together since last year on the new camera, which has been specifically designed to use the interchangeable Konica Maxxum/Dynax lenses, of which 16 million have been sold over the years. Many of the initial buyers of Sony’s new A100 product are believed to be owners of these lenses.

Canon and Nikon—which together account for around 80 percent of the global digital SLR market, according to IDC—have since followed up with their own offerings, which for the first time give ­middle-income customers the opportunity to get digital SLR cameras at affordable prices. Because of the competition from Canon and Nikon, Sony’s sales have leveled off.

With Sony targeting the digital SLR entry-level segment, Matsushita has come out with a model for the high end. To do so, it teamed up with traditional camera maker Olympus Corp., in Tokyo, last year to jointly develop a digital SLR camera, including the underlying technologies and some novel components, like the Live MOS sensor. The Live MOS is a new kind of image sensor that the companies claim provides the high image quality of a CCD and the low power consumption of a complementary metal-oxide semiconductor (CMOS) sensor.

In July, the two companies introduced the Panasonic Lumix DMC-L1, a 7.5â''­megapixel model that accepts lenses made to the Four Thirds System standard, which was developed by Olympus and Rochester, N.Y.�based Eastman Kodak Co. That standard is backed by various manufacturers, including Leica Camera, in Solms, Germany. The DMCâ''L1 is aimed at the advanced amateur market and costs about twice as much as the Sony ­product—the reason that sales have been sparse to date.

The traditional camera makers have responded to new competitive threats partly by introducing ultracapable cameras like the Fujifilm FinePix S3 Pro UVIR. Priced at about $1800, it can take pictures in ultraviolet and infrared as well as visible light and is geared to professionals such as police.

Longtime market leader Canon professes not to be unduly concerned about the growing competition from the consumer electronics companies. ”The newcomers are aiming to offer something new, which can expand the market,” says Tomonori Iwashita, director of a major Canon division.

Nonetheless, for rivals to remain competitive, they need to gain a 10 percent share of the market, says IDC’s Chute. Those that don’t will see their prospects dimming as fast as film is fading.

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