Camera phones vie for share in digital market

Cell phones equipped with in-built, high-quality cameras are gradually stealing the show from digital cameras, giving their makers a run for their money and market share.

Sample this: India sold close to 40 million units, accounting for around Rs 12,000 crore (or $3 billion) in sales value, in the first six months of 2007, according to industry estimates.

According to GfK Asia, a leading research company, within the colour camera phone category, India reported a growth rate of 296 per cent in volumes alone. On the other hand, the digital camera market is likely to touch 1 million units by 2008, with the total imaging market in India estimated at around Rs 3,500 crore.

Mobile phones today generally have 2-megapixel cameras attached to their belly. Some models from Nokia, Sony Ericsson, Samsung and LG have 5-megapixel cameras that should become the standard in 12 months.

"Sales of camera phones have clearly taken the shine off the low-end digital cameras. Already the imaging brands are exiting the sub-2-megapixel space. Camera phones have simply accelerated the exodus," says Asim Warsi, Samsung's marketing head.

The sweet spot for digital camera makers last year was the 3- to 4-megapixel category. This year, it's 5 to 6 megapixels and it shows no signs of stopping there. Even LG, a recent entrant in the phone market, feels that the camera handsets could mean trouble for the stand-alone camera brands.

Anil Arora, head (GSM and Kitchen Appliances), LG India, says, "The cost of megapixels on the phone has gone down to as low as Rs 5,000 for a 1.3-megapixel camera to Rs 8,000 for a 2-megapixel camera. It does not make sense for amateur users to buy a separate camera unit anymore."

Retail sales of colour camera phones will continue to dominate the imaging market in India. But the camera market refuses to acknowledge the increasing pressure on its digital imaging product margins.

Digital camera makers such as Canon and Kodak are not fretting over losing potential customers to a slew of snazzy new phones that take pictures with up to 3 megapixels (even 5 megapixels, in some handsets).

Ravi Karemcheti, managing director, Kodak India, asserts, "Better pictures do not depend only on the number of megapixels. They also depend on camera-specific features that include auto-focus, red-eye reduction and xenon flashes."

"As we have seen, whatever pure-play camera sales are cannibalised by camera phones are more than compensated by an exponentially larger universe of cameras that is created. That's good news for the industry," explains Alok Bharadwaj, vice-president, Canon India.

Karemcheti agrees. "Camera phones, as we see, will be a huge catalyst for people to convert to digital photography."

Meanwhile, mobile operators from Airtel to Reliance are making the market tougher for standalone camera makers. They have been promoting services that allow customers to upload photos from mobile phones to online sites, where the pictures can be stored or sent off to be printed.

Manufacturers such as Hewlett-Packard, Epson, Canon and even Kodak are rolling out inexpensive colour photo printers that connect wirelessly to handsets, which do not require storing pictures first on a PC. Just snap a photo, zap it to the printer via Bluetooth short-range radio, and 15 seconds later you have a copy to send to friends and colleagues.

"We think it is the imaging-printing business that will get us revenues in the next couple of years. That's the reason we are actively promoting printers along with our digital cameras," says Bhardwaj.

Canon and Kodak remain buoyant despite Gartner figures, which suggest that only about 2 per cent of pictures taken on phones today are actually printed out.