Smartphones killing camera sales

High-resolution, Net-connectable newcomers put point-and-shoot makers on defensive

by Hiroshi Hiyama

AFP-JIJI

The soaring popularity of smartphones is crushing demand for point-and-shoot cameras, a once-vibrant sector that is scrambling to stay alive with Web-friendly features and higher quality, analysts say.

A sharp drop in sales is marking digital compact cameras as the latest casualty of the smartphone boom, which is challenging video game consoles and portable music players with their all-in-one convenience, led by the likes of Apple’s iPhone and Samsung’s Galaxy.

Just as digital cameras all but destroyed the market for photographic film, the rapid shift to picture-taking smartphones has torn into a camera sector dominated by Canon Inc., Olympus Corp., Sony Corp. and Nikon Corp.

“We may be seeing the beginning of the collapse of the compact camera market,” said Nobuo Kurahashi, analyst at Mizuho Investors Securities.

Figures from Japan’s Camera and Imaging Products Association echo the analyst’s grim prediction. Global shipments of Japanese digital cameras sank by about 42 percent to 7.58 million units in September compared with the previous year, with compact models falling 48 percent, the association said.

Higher-end cameras with detachable lenses fell a more modest 7.4 percent in that time, it said.

Part of the decline was due to the weakness in debt-hit Europe and a territorial dispute with China that has sparked a consumer boycott of Japanese products in the Chinese market.

But smartphones have proved a mighty rival to point-and-shoot cameras, analysts say, offering an all-in-one phone, computer and camera with comparatively high-quality pictures and Internet photo downloading.

Those features have also dug into such video game leaders as Nintendo Co., which has just released its new Wii U game console, as smartphone owners increasingly download free online games or store music on the devices instead of using standalone MP3 players.

“The market for compact digital cameras shrank at a faster speed and scale than we had imagined as smartphones with camera functions spread around the world,” Olympus President Hiroyuki Sasa said this month.

Olympus said its camera business lost money in the first half due to the growing popularity of smartphones and the strong yen, which makes Japanese exports less competitive overseas.

Digital camera makers have thus scaled back their sales targets for the year to March to deal with the “collapsing” market, said Tetsuya Wadaki, an analyst at Nomura Securities.

“Order volumes at parts suppliers currently appear to be down more than 30 percent year on year,” Wadaki said.

Firms are scrambling to improve picture quality, offer durability and water-proofing features and expand Internet capabilities, such as allowing people to share shots through social media networks.

Camera makers say growth areas include emerging economies — where many own neither a camera nor a smartphone — along with replacement demand from compact-camera owners.

The falloff in demand has not been as stark for the pricier models with detachable lenses favored by avid photographers and growing ranks of retirees, particularly in rapidly aging Japan, they say.

Another emerging battleground is for mirrorless cameras, which can be made nearly as small as compacts but with a picture quality that rivals their bulkier counterparts.

Canon insists the market has not been abandoned to smartphones. “Demand for quality snapshots is there, like taking pictures of your friends’ weddings, an overseas vacation, or your children,” a Canon spokesman said.

“We believe there are many people who need compact cameras,” he added.

Mizuho analyst Kurahashi acknowledged that compact cameras “will not disappear.”

“But we see the current trend continuing as image quality in smartphone cameras steadily improves,” he said.