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InfoTrends Predicts US sales of Digital Cameras to Peak in 2006

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*February 27, 2006 - *The number of digital cameras sold in the United States will peak in 2006, leading to a more competitive market, lower prices and possibly the departure of more companies from the digital camera business, according to Ed Lee, director of InfoTrends, a Weymouth, Massachusetts-based marketing research firm specializing in digital imaging.

"2006 is going to be an interesting year, and for some, a challenging one," Lee said.

Lee says that digital camera sales grew by as much as 50 percent one year of this past decade,

but slowed to 15 percent growth last year, and will decline in coming years. Camera companies will face a challenge as their largest market is not comprised of consumers shopping for their first digital camera, but of ones who are considering a second camera or a replacement for their first one.

Lee predicts that prices and profit margins will decrease as the industry adapts to market changes, driving some companies from the business. He noted Konica Minolta's recent selloff of its camera program to Sony. "The strong will get stronger, but the weak may perish," he added.

"[New] features may bring people back into the market," Lee said. "The industry can't be complacent about what [products] they have." DSLR sales are a bright spot, Lee noted. Last year, a million DSLRs sold in North America, and Lee predicts that yearly sales will hit 3 million in 2010, for 15 percent of cameras sold.

DSLR growth comes from sales to consumers rather than pros and enthusiasts. Falling prices and greater ease of use are driving consumer adoption of DSLRs. Lee noted Pentax's price decrease for the *istDL as an example.

With falling prices, Lee says, comes decreasing profit margins. He says that the industry will have to look to accessories – from lenses and flashes to bags and memory cards – for higher profit margins.

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