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Digital Still Camera Market Pauses at $18 Billion Plateau

Emphasis shifts to enhanced image processing and ‘hybrid’ still/video models

After years of spectacular growth, the market for digital still cameras appears to be leveling off at about $18 billion per year now that most photographers and camera-toting consumers have switched from film to digital photography, concludes IC Insights’ new 2007 IC Market Drivers report (Figure 1).

About 81.9 million stand-alone digital still cameras are expected to be sold worldwide in 2007, which will be a 7% increase from 76.6 million cameras in 2006, according to IC Insights’ new report. Digital still camera unit sales are forecast to increase 13% in 2006.

Figure 1

Lower average selling prices (ASPs) will result in no revenue growth for digital still cameras in 2007, based on IC Insights’ forecast. Digital still camera revenues are expected to grow 5% in 2006 to $18.1 billion from $17.2 billion in 2005.

While digital camera market growth has been nothing but phenomenal in the first half of this decade, the rate of increase is dramatically slowing because of market saturation and competition from improved camera cell phones. Unit shipments of stand-alone digital still cameras increased by an average of 38% per year in the 2000-2005 timeframe, but the cumulative average growth rate (CAGR) is forecast to be less than 6% in the second half of this decade.

The digital camera market is no longer a film-camera replacement business. IC Insights believes significant additional sales are dependent upon consumers looking to upgrade their photo-taking capabilities. The camera-upgrade movement will increase the emphasis on powerful image processors, faster analog-to-digital (A/D) converters, wireless connections for transferring pictures, more nonvolatile flash NAND memory, and—of course—higher resolution image sensors.

To boost sales, camera makers are developing new "hybrid" models, which will capture high-resolution still pictures while also recording high-definition full-motion movies. Many of these hybrid still/video cameras will contain high-speed CMOS image sensors. Currently, charge-coupled devices (CCDs) dominate stand-alone digital camera designs. About 79% of today’s digital still cameras employ CCDs. IC Insights’ projection shows CMOS image sensors gaining share and finally surpassing CCDs in digital still cameras during 2009. (CMOS image sensors already account for nearly all embedded cameras used in cell phones.)

After first being introduced in consumer markets during the late 1990s, digital still cameras overtook film-camera sales in 2003. IC Insights estimates that digital still cameras will outsell film cameras by a ratio of 4-to-1 in 2006 with 4- to 6-megapixel point-and-shoot models being the sweet spot for consumer compact cameras. During 2010, over 89 million digital still cameras are expected to be sold, accounting for more than 90% of all still-picture cameras bought worldwide.

The 2007 edition of IC Insights’ IC Market Drivers is now available. The report provides a study of emerging and major end-use applications fueling demand for ICs in the second half of this decade. Packed with numerous tables providing 10,000 market data points, the IC Market Drivers report is available in both a three-ring binder and on CD-ROM, costing $2,685 for the first bundled set. Additional individual copies of the disk or binder sell for $495 each. A single CD-ROM or binder copy is available for $2,190 each. The report is also available under a multi-user corporate license for $5,490.

About IC Insights

IC Insights, Inc., based in Scottsdale, Arizona, is dedicated to providing high-quality, cost-effective market research for the semiconductor industry. Founded in 1997, IC Insights offers coverage of global economic trends, semiconductor market forecasts, capital spending and fab capacity trends, product market details, and technology trends, as well as complete IC company profiles and evaluations of end-use applications driving demand for ICs.

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