Smartphones capture point-and-shoot market
Camera makers like Canon and Olympus now have to compete with Apple, Nokia and Samsung -- as well as each other.
In the past few years, continuous improvements in smartphone camera technology have led to vastly improved picture quality. Now some smartphone pictures reach or exceed the quality delivered by compact cameras. Under some conditions, smartphone shots might even be as good as pictures taken with a digital single-lens reflex camera, or a DSLR.
And DSLRs are already losing ground to smartphones -- at least when it comes to pictures shared on the Internet. On Flickr, the three most popular cameras are Apple's (AAPL) iPhone 4S, iPhone 5, and iPhone 4 respectively. The smartphones have pushed professional level DSLR cameras Canon EOS 5D Mark II and EOS 7D to fourth and fifth place.
While Canon and Nikon are still ranked as the No. 1 and No. 2 camera brands on Flickr, respectively, Apple is No. 3, and Samsung (SSNLF) ranks fourth. To put it into perspective, the same Flickr top six in January 2011 didn't include Apple or Samsung.
Samsung is not only constantly setting the bar higher for smartphone cameras, but it is also trying to merge smartphone and point-and-shoot camera markets.
The company has introduced LTE connectivity to interchangeable lens cameras with the May announcement of the Android-powered Galaxy NX, not to mention the recent Galaxy S4 Zoom, which is still more of a smartphone than a camera.
One of the digital imaging leaders, Canon, said in its March SEC filing that the worldwide compact digital camera market shrunk by 10% year-over-year in fiscal 2012, with one of the reasons being "the rapid penetration of smartphones."
Other players in the market have expressed similar sentiment.
"The market for compact digital cameras shrank at a faster speed and scale than we had imagined, as smartphones with camera functions spread around the world," Olympus president Hiroyuki Sasa said in November 2012.
According to "Global Digital Camera Industry Outlook to 2017," a report by Ken Research published in April 2013, global digital camera market growth was "marginal" in the last six years due to (among other reasons) the growing use of smartphones worldwide.
In October 2011, following the launch of the iPhone 4S, IHS iSupply released a statement predicting that the low-end point-and-shoot camera segment's 12.2% growth in 2010 would reverse, and become a 2.9% decline by 2015. However, the company noted that the lack of optical zoom lenses in smartphone cameras, and their low picture quality, would keep compact camera sales safe a little longer.
But that was then. Smartphone cameras have improved greatly in the past year and a half.
So the trend of smartphones cannibalizing point-and-shoot digital cameras has continued in 2013, as IHS analyst Pamela Tufegdzic stated in her July 2013 market insight.
On the other hand, the newest smartphone cameras, like the Nokia Lumia 1020, might pose a threat not only to mirrorless but also to entry-level DSLR cameras.
"With a camera as good as the one on the Lumia 1020, a separate point-and-shoot device seems superfluous," John Delaney, head of European Mobility Team at IDC, tells Minyanville.
He argues that the new Nokia smartphone could even replace a DSLR for some users.
Still, Delaney thinks that point-and-shoot cameras will remain around for a while: "Lots of people are using lower-end smartphones, and point-and-shooters will offer them a distinctive proposition for some time yet."
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