Digital camera market peaked too soon

The digital camera industry has reached maturity early, and the heady growth rates will slow, according to a report.

Sales will be strong in the next couple of years but will slow and then dip over the long term, research firm IDC forecast in a report on Thursday. Indications are that the market will peak prematurely, missing the opportunity to replace film cameras as the predominant method of taking photos -- instead the market will be made up of a more diverse range of devices with photo capturing abilities, such as cell phones and other combination devices.

"Digital cameras won't become as ubiquitous as film because manufacturers became obsessed with features instead of the unmet market," said Chris Chute, digital imaging analyst with IDC. "They were rewarded with market growth, but once they filled that bucket there wasn't any other bucket to fill."

Though sales will continue to be strong throughout 2006 -- reaching 94 million units -- growth will slow then begin shrinking in 2007. By 2009, shipments will decline to 82 million units, Chute forecast.

The digital camera is still viewed as a PC peripheral limiting its reach over the long term. Consumers are also shifting their buying patterns and instead of focusing on megapixels, they're turning to prices, which are also dipping. Average selling prices for cameras in America will fall from last year's $340 to $295 by the end of 2005 and $200 by 2009.

Manufacturers will be re-evaluating their roles in the digital camera market during the next 18 months, Chute said.

The top digital camera makers worldwide and in the US are Canon, Hewlett-Packard, Kodak, Olympus and Sony.