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Business

Smile Pretty for the Cell Phone

Thanks to digital cameras, picture taking has been revitalized. At this year's Photokina, the world's largest photography trade fair, digital cameras dominate the picture.

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Say cheese!

"Smile, please!" That shouldn't be too difficult for this year's exhibitors as they expect sales to continue rising. This year the German photographic and imaging industry anticipated taking in €10 million ($12 million) in sales, an increase of almost 8 percent.

Although the traditional film business has crashed in recent years, the increasing trend toward digital cameras, which have gone up by 20 percent, has more than compensated for the loss. However, even more popular than digital cameras are cell phone cameras.

Cell phone cameras: the latest trend

The photo industry expects to sell 13 million cell phone cameras this year -- three times more than last year.

Photokina in Köln Neuheiten 2004

Olympus' Mju mini digital camera

"Young people are much more communicative, and the cell phone camera is a device for snapshots and entertainment," said Wolfdieter Gries, head of Sony in Germany.

At the fair, Sony presented a fold-out mobile phone with a 2.3-inch screen and a built-in 1.3 megapixel camera. The device also has radio reception over the headset and can even act as a MP3 player.

"The camera phone will, sooner or later, surpass snapshot cameras, however not normal analog cameras," predicted Helmut Rupsch, a member of Germany's national photo industry association. "As a branch there will be potential again since the pictures will need to be printed."

Due to the fusion of electronics and optics, there is an increasing number of newcomers to the photo sector. Sony, Hewlett Packard and Adobe are all trying to snap up a share of the booming market.

On the other hand the likes of Kodak, Agfa and other traditional photo companies are struggling with declining turnover. Agfa, a Belgian company, cut its losses and sold its film and picture businesses. There was no help for Ilford, a bankruptcy judge has taken over for the British film manufacture's management.

Digital gadget innovation continues

Meanwhile, innovations for digital camera gadgets continue outdoing each other. New models are released almost every third month and the price battle is becoming more and more competitive all the time.

"It is very regrettable that our growth market has to fight with increasingly tighter margins," said Rainer Schmidt, general manager of Germany's national photo industry association. "This hurts the industry, and it hurts retail sales."

Photokina in Köln Neuheiten 2004

Fujifilm's S3500

Selling printing paper for a few cents below purchase cost doesn't make sense either, he lamented, but others in the photo industry say there is still room for profit in the digital camera market, despite its knockdown prices.

Digital camera market concentration is still below 30 percent, compared to 80 percent for analog cameras, and a survey showed every fourth German is considering buying a digital camera within the next 12 months.

Plenty of market potential

Compact cameras in the four to eight megapixel range with built-in zoom lenses remain the consumers' favorite. The average German consumer spends about €290 for a digital camera.

"The erosion of prices is quite dramatic," Sony head Griess said. "Its a very competitive market with tight margins."

Further enhancements will no longer focus so much on the number of pixels but on lenses, shutter speed and other features. Analog single lens reflex cameras will also profit from the advancements. Thanks to their affordable prices, sales from 500 percent in the first half of 2004.

Photokina in Köln 2004

Testing cameras at Photokina

But the photo industry association also sees great potential in non-camera technology.

"The camera market pushes the market for storage media, film, memory cards, as well as lenses, software, ink jet cartridges, printing paper and let's not forget printers and mini-labs," he said.

At the moment only about 20 percent of stored images are being printed. One reason is that up to now ,a computer and a picture printer were needed for the lengthy home-printing process or consumers had to send their pictures to a developing service. But this is also set to change... sooner or later.

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