The digicam deluge

Updated: Mar 31 2007, 07:23am hrs
Much like the rest of the world, Indians are buying digital cameras like they are going out of business. Thanks mainly to falling prices and stiff competition among big brands like Kodak, Sony and Canon, who together hold about 66% of the Indian market. The options are abundant although the market is quite fragmented. The next 21% share of the market is accounted for by a large number of players like Sahara, Samsung, Nikon and Olympus who offer lower prices, greater variety and savvy technical features all pushing the digicam growth.

Photography has gone through the churn globally. It has reconfigured, says Canon India chief Alok Bhardwaj. Until 1997, the worldwide camera market was more or less stagnant at 30 million units a year. Since then, in one decade, the digicam market has gone from zero to 100 million units a year, the Indian market itself nearly doubling every year.

Rising incomes and easy availability of consumer loans and EMIs have made digicams a must have' life style product. Actually, falling prices have played a crucial role in the growth of India market. The average selling price (ASP) declined to below Rs 13,000 from over Rs 15,000 a few years ago in 2005. Says IDC analyst Aarti Gahlaut, This trend is expected to continue well into 2007 and beyond, because the digicam is moving away from a luxury product to the must-have gadget. It is expected that 5-6 megapixel cameras will become entry-level products, available for under Rs 10,000.

IDC projects that even this year, and possibly for a couple of years more, digicam growth in India will continue to be about 70%. Significantly, this is happening at a time when the international market seems to be leveling, largely on account of saturation in mature markets and competition from improved camera cell phones.

India itself is witnessing a sharp growth in sales of phones with cameras. Of the 65 million cell phones sold in India last year, ICA estimates that 35% were camera phones. This year, about 40% of the estimated 90 million cell phones are likely to have cameras, mostly digital.

Camera phones are quickly improving on mega pixels, offering fairly good picture quality. Three mega pixel camera phones are already available in India. But industry experts dont view that as a major threat yet to digicams. They believe that as camera phones spread, they whet the appetite for digicams and that is good for the camera industry. IDC estimates that in 2004, 13-odd vendors shipped under 1.5 lakh cameras, but by 2006 the number was up to 4.5 lakhs. This year, the number may be near 7.5 lakh units. These numbers do not include the grey market, estimated about 30%.

Indeed, this rapidly growing digicam market will witness fierce competition among companies like Kodak, Sony and Canon, who are shooting for a decisive leadership position. Kodak is defending its No.1 turf (with a small margin) with the very aggressive Sony and Canon nipping at its heels. All companies are working on strategies that range from adding new features to expanding retail and marketing. Consumers can thus look forward to falling prices, improved features and wider choice.

Says Sony Indias digicam division head Ken Nakazawa: Up to last year Sonys strategy was focused on improved megapixels so that people could take large prints with sharp and crisp quality. But this year onwards the market is expected to see greater focus on more applications like editing of pictures, printing and improved slide shows with MP3 music in the background.

Nakazawa says the digicam market this year will see greater emphasis on slimmer and lighter cameras, with larger LCD screens and anti-blur technology. Agrees Alok Bhardwaj of Canon, Technology functionalities, image processing and form factors have become the core drivers causing a churn in market standing of various brands.

But as Canon grows aggressive and tries to take on the market leader Kodak, its focus, like Sony, will be on strengthening retail. Says Bhardwaj, Our main strategy is to take this product to as many retail shelves as possible, penetrating all channels of distribution down to retail chains. For instance, Canon is creating 80 demo points where customers can experience on the spot photo taking and printing.

Kodak, for its part, will try to make sure that strong rivals Sony and Canon, narrowing the gap rapidly, do not overtake it eventually. The company recently slashed digicam prices (the company says the move is largely dealer driven) in a well-publicized campaign, cashing in on its strong brand recall from its easy to use analog cameras that cost about Rs 1,000.

Says Ravi Karamcheti, MD and country business manager of Kodak, Our entry-level models are designed in such a user-friendly manner that a first time user switching from an analog camera to a digital one finds it very easy to do so. Kodak is also aware of the importance of retail and reach -- its strong point historically. But Canon and Sony are aggressively reaching places beyond the big metros. We are revamping Kodak Express Stores in select cities and equipping them with all services, says Karamcheti. The stores will enable users to print, share and email images. We are also pushing home printing options.

Interestingly, digicam growth is having a spill over effect on other industries besides printing, paper and ink. One such beneficiary is the consumer memory market. As people go on a shooting spree, they have to buy more and more memory. Says Manisha Sood of SanDisk, the worlds leading manufacturer of flash memory cards, The digicam market has grown very big as far as memory cards are concerned. She says that among other things consumers should understand that card speeds are an important factor in digicams because cameras have varying speeds. To help customers make an informed choice, SanDisk categorizes chips that conform to the various price points and speeds of the cameras. It also tries to make available lists that indicate the number of pictures various cards can store. After all, pictures are all about memories! And as people travel and party more and more they need to store memorable experiences.

Major trends driving the digicam industry

Variety in the selection of products and services
Digital cameras becoming a common lifestyle accessory in larger cities
Printing of images captured on multiple devices will happen. We will see more pictures being printedfrom digital media this year onwards
The rising penetration of sophisticated camera phones will add to more digital images being captured
Style, looks and functionality will influence purchase decisions
The organized market has spurred digital camera sales, which is expected to account for 70 per cent of the total 7.lakh units this year
Four and five mega pixel (high resolution) cameras have now become the entry-level purchase against the two or three mega pixel cameras