Monday August 4, 2008 – Stewart Wolpin

Mobile phones are designed for communications. Digital cameras are designed for imaging. And yet, slowly but surely, the mobile phone seems to be replacing the digital camera as a primary, day to day picture-taking and video-recording device.

Camera phones outsell digital cameras around four-to-one. More than a billion camera/camcorder phones are likely to be sold worldwide in 2010. In comparison, DTC estimates that 119 million digital cameras will be sold this year. And folks holding up a mobile phone to snap a picture or capture candid video has become a common sight around the world.

DTC estimates that global digital camera sales will drop 5% in 2010 compared to 2009. By comparison, DTC expects global sales of mobile phones with digital imaging capabilities to rise significantly this year.

According to PMA, camera phones were present in 46% of U.S. households in 2007, up dramatically from 35% and 26% in the previous two years. In a recent survey, photo sharing site Flickr reported that nearly a quarter of shots uploaded to its site came from mobile phone cameras, and nearly 41 percent of users were uploading pictures taken by a mobile phone camera.

These trends are likely to continue. Mobile phone cameras have been vastly improving, moving from VGA to 1.3 megapixels (MP) to 2.0 MP. A growing number of phones now include 3.2 MP cameras, and a handful have 5 MP cameras. In the fall, Sony Ericsson will begin shipping the 8 MP Cyber-shot C905. Considering its imaging ergonomics, lens and advanced feature set, the C905 is more a digital camera with a built-in mobile phone than vice versa.

Mobile phones also add the convenience to send just-shot videos via messaging or email, or to upload them directly to video sharing sites such as YouTube, a feature only one or two digital cameras can match.

Is the standalone digital camera doomed?

Source: DTC

AVC/H.264 to the rescue?

One way digital camera makers can battle this erosion is to offer higher-resolution video recording. Yet, DTC estimates only about 19% of current digital camera models include MPEG-4 Visual video recording capabilities, and at this writing only Casio offers models with AVC/H.264 HD video recording.

What’s even more surprising, prominent digital camera makers Canon, Polaroid, HP, Panasonic and Pentax sell NO digital cameras with MPEG-4 Visual video recording. Instead, all offer Motion JPEG, which allows users to extract still frames.

Canon and Panasonic make and sell AVCHD camcorders, so are quite capable of adding HD video capture to its digital cameras. But the two companies are likely fearful of camcorder cannibalization if they added AVC/H.264 video recording to their digital cameras.

These no-AVC decisions run counter to consumer desires. According to a 2008 J.D. Power Digital Camera Usage and Satisfaction Study, 40%of users used their digital camera to record video, but 52% wanted the capability. Sixteen percent cited high-definition video recording as one of the five most important features that would influence their digital camera selection.

With this increased competition from sub-$100 flash camcorder mobile phones with video capture, digital camera makers have gotten the message. In September, two top 10 digital camera makers will add models with AVC/H.264 video capture.

DTC expects more digital camera manufacturers will add AVC/H.264 video capture as well as some kind of uploading abilities.

If not, standalone digital cameras could soon become as much of a technical dinosaur as the vinyl record turntable, audio cassette player and the VCR.