Monday June 30, 2008 – Stewart Wolpin

The camcorder market is in a time of transition right now, and HDD and pocket flash models are winning out over their more expensive AVCHD beer-can sized alternatives. Because of falling prices however, rising capacity and a smaller sexy size for flash media, the market will quickly be dominated by this popular format.

Although DTC anticipates that flash will be the clear format winner by the end of our forecast period, the camcorder market is currently a mess. Considering all the recording formats (high def, standard def, VGA def) and media types (hard disk drive (HDD), DVD, MiniDV, imbedded flash, removable flash), and combinations thereof, there are nearly 24 different types of camcorders fighting for dwindling market share. Long gone are the days when consumers were limited to a choice between Hi8 and VHS-C.

DTC estimates that in 2008, the worldwide camcorder market will total about 18 million units, 4 percent more than 2007. However, this increase is due solely to sales of sub-$200 compact flash camcorders such as those made by Pure Digital; sales of so-called mainstream models from traditional market leaders Sony, Canon, JVC, Panasonic and Samsung have dropped almost 19 percent from about 14.8 million units in 2007 to a projected 12 million in 2008. And the sales situation doesn’t figure to improve for the top makers as they drift increasingly toward higher-priced models; in 2009, DTC estimates worldwide sales are expected to increase another 4 percent, but sales from the top five will drop 6 percent.

Even with the low-priced flash insurgence, the leading camcorder media is HDD. But HDD’s plurality isn’t likely to hold, and the cost of low capacity blank media is depreciating the perceived value of DVD models. Last week, JVC became the fourth top 5 camcorder maker to announce a flash-based AVCHD model, leaving only Samsung of the top five camcorder makers resisting the AVCHD surge. While AVCHD models currently represent only 4 percent of all camcorders sold in 2007, the combined marketing efforts of Sony, Canon, Panasonic and JVC is likely to boost AVCHD’s market share to 16 percent next year.

Flash memory also offers greater advantages to consumers. Flash-based camcorders, either with embedded flash, removable flash or both and regardless of video resolution, are smaller, lighter and sexier than their bulkier HDD counterparts. Consumers have already shown a desire for sub-$200 palm-sized flash-based camcorders from Sanyo, Aiptek and models made by or licensed from Pure Digital, which continue to eat into the market share of the traditional camcorder market leaders.

Finally, flash memory prices continue to drop like a cement-weighted stool pigeon in a murky river. At some point in the next two-to-three years, prices of high-def flash models from the top four makers will draw even with current HDD models.