IDC Press Release 10/08/04

Boom Times Continue in the Western European Digital Camera Market, But Tougher Battles Lie Ahead, Says IDC

LONDON, August 10, 2004 - During 2003, shipments of digital cameras into Western Europe increased by over 95% and reached almost 16 million units, which translated into $5.9 billion in end-user spend, according to a new IDC study. Consumer demand for digital imaging has once again brought healthy revenues to the key players in the industry.

“As predicted, in 2003 we witnessed another phenomenal year for the industry - prices dropped even further and vendors repositioned their products to capture the next wave of digital enthusiasm,” said Paul Withington, senior research analyst for IDC’s European Peripherals Group. “This has translated into a mass-market adoption particularly within the 3 megapixel [MP] segment, which became the area where vendors found their greatest success.”

Percentage growth into 2004 will not prove as dramatic as in previous years, as the market moves beyond its adoption stage. Across Western Europe, IDC predicts 45% overall growth in 2004 and towards the end of IDC’s five-year forecast period to 2008 we can expect the market to have matured and the vendor landscape to be carrying significant battle scars through jousts with the camera phone.

2004 saw the first 1MP camera phone introduced into Western Europe. This signified the beginning of a new competitive positioning for mobile phone vendors as they carve themselves a foothold in the digital imaging marketplace. The handset vendors will continue to increase resolution on camera phones and by 2006 IDC expects almost 20 million unit shipments in the 3MP-and-above range. “Although megapixel resolution is not the only factor in producing a good image, this is the main purchasing criteria among most consumers and by 2006 we do expect the camera phone to have had a negative impact on the camera market, but this will be localized at the low end,” said Withington. “Digital camera vendors will need to respond by offering even higher resolutions and enriched features such as increased shutter speed, higher optical zoom ratios, and onboard editing features such as red-eye reduction. There will be blood lost but both technologies will continue to co-exist.”

The photofinishing market is the other significant battleground where revenue will be won or lost. In our most recent end-user survey, 56% of digital images that were printed were shown to be printed in the home. Here the battle lines will be drawn between the major consumer printer vendors such as Canon, Epson, HP, and Lexmark and the providers of online and retail photofinishing alternatives.

Vendor highlights

Canon ? Having captured the number 1 spot in Western Europe in 2002, Canon consolidated its lead in 2003 and has worked on raising its profile among consumers and professional photographers in the European digital imaging industry. During 2003 the Canon brand carried even more weight, its proprietary technology was still being leveraged, the product range was expanded, and the product integration between its cameras, printers, and software was still drawing customers.

Sony ? Made the number 2 spot in 2003 after ousting Fuji and beating Olympus into third position. Being the worldwide market leader in digital camera shipments, Sony is striving hard to replicate its global, Asian, and U.S. leading positions in Western Europe.

Olympus ? Now occupying third spot and improving on its fourth position in 2002, Olympus developed its digital range quite considerably in 2003 and pioneered the first product to incorporate the “four thirds” standard with the launch of the E-system Digital SLR in 4Q03.

Fujifilm ? In fourth position, the company strived in 2003 to offer both consumers and professionals a complete digital workflow. It revamped its line and introduced the first 6MP point-and-shoot camera onto the market through its proprietary Super CCD sensor.

Nikon ? In fifth position, Nikon managed to attract a large number of new customers and grew its entry-level 2MP considerably in 2003, with the segment accounting for 32% of its shipments. The Coolpix SQ proved a popular newcomer in this segment, with Nikon returning to its trademark swivel lens technology.

IDC?s study, Western European Digital Camera Market Forecast and Analysis, 2004?2008 (IDC #SR09L, August 2004), explores the digital camera market, its key players and emerging technologies, and assesses the impact for the wider peripherals market on developments within the industry. For more information on the study contact Senior Research Analyst Paul Withington on +44 (0) 20 8987 7239, email [email protected]. Alternatively, contact your local IDC office.