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The prospect of digital cameras completely replacing their film counterparts, once taken for granted, may be fading fast.

The price and complexity of digital cameras, and competition from cell-phone cameras, have some predicting that unit sales of digital cameras will begin to decline as soon as 2007 and that future digital camera purchases will be largely to replace existing models.

Christopher Chute, an analyst at IDC in Framingham, Mass., believes that only about 55 percent of U.S. households will ever own a stand-alone digital camera.

The flaw in the digital-replaces-film scenario was the marketing campaigns waged by the digital camera manufacturers, Chute said.

"Digital cameras are aimed at affluent computer users who make an average of $70,000 a year," he said. "But there are only so many people like that. The digital camera industry missed the boat because they never looked for the next segment of users."

Others, including Chris Crotty, a consumer electronics analyst at market research firm iSuppli Corp. of El Segundo, Calif., foresee digital camera sales growth tapering off beginning in 2009.

Still, when the dollar value of digital camera sales surpassed the sales of film cameras three years ago, the question was inevitably asked: Is film dead?

Apparently not, and analysts point to several reasons why digital cameras haven't lived up to their initial promise. For starters, they are too difficult for many people to use, particularly when it comes to printing pictures.

Digital cameras cost too much -- $140 to $947 last year, according to research firm IDC, with the average selling price $354. And stand-alone digital cameras face competition from improved cell-phone cameras that soon will offer 5-megapixel picture quality, up from today's 2 or 3 megapixels.

Dan Moe, Best Buy's vice president of digital imaging, acknowledges that some consumers are baffled by digital cameras, but he predicts that digital camera sales will continue to grow for another two to three years.

"People walk into a Best Buy store every day with a camera memory card and say, 'What do I do with this?' " Moe said. "The manufacturers are prone to put features into a camera that are not well explained." To help, Best Buy offers both in-store and home training on how to use a digital camera, he said.

Not all analysts agree that only a slim majority of consumers will want a digital camera.

"In the next five years, the large majority of people are going to move from film to digital photography," said Mike Wolf, an analyst for InfoTrends/CAP Ventures of Weymouth, Mass. "Digital camera sales growth will slow, but we believe that about 80 percent of households will own a digital camera by 2010. After that, new digital camera sales will be upgrades, like PCs are today."

Part of what will fuel continuing digital camera sales is their increasing ability to take the place of videocameras, Wolf said. As the capacity of removable flash memory cards increases, digital cameras will be able to take one-hour movies instead of today's relatively short video clips.

Even those who see digital cameras failing to replace their film counterparts say the camera manufacturers still could shift digital camera sales into high gear by changing their marketing to appeal to people who aren't computer-savvy.

But the manufacturers have focused on selling greater camera complexity rather than simplicity. Complexity comes in the form of a higher-priced "single-lens reflex" digital camera (costing just under $1,000 today but expected to decline to $500 or $600 by the holiday season), Chute said. The digital single-lens reflex, like its 35-millimeter film counterpart, can use interchangeable lenses.

Another tack taken by manufacturers is to shrink digital cameras to the size of a credit card. These $220 to $430 cameras that have more limited battery life than larger digital cameras but up to 5 megapixels of picture quality.

Besides these two new approaches, manufacturers are continuing to ratchet up the megapixels in their stand-alone digital cameras in order to compete with the growing picture-taking quality of camera phones, even though analysts say that adding more megapixels won't help the average photographer.

"The 5-megapixel camera is the sweet spot for this year, but next year it will be 7 or 8 megapixels," Crotty said. "But the truth is that a camera that shoots 4 or 5 megapixels is enough for most people, because you can't tell the difference in the picture unless you really enlarge it."

What's more, at least some analysts say the megapixel race between stand-alone digital cameras and camera phones may be unnecessary because the two products appear to be more complementary than competitive.

Camera phones are good for spur-of-the-moment shots but are limited in their ability to share photos because users typically must pay to use the cell-phone network in order to transmit photos to other wireless phones or to conventional e-mail addresses, Chute said. Stand-alone digital cameras are more likely to be used for important photos, and the cameras make it easier to transfer a photo to a computer, from which it can be e-mailed or printed, he said.

"If you use a camera phone in the U.S., you are more likely to buy a digital camera," Chute said. "That's because camera-phone users discover digital photography and the immediate gratification it gives you."

Article source: by Steve Alexander

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