Tuesday, April 06, 2004

Cellphone Cameras - They're Here, They're Staying

Techdirt links today to several clueless analysts who say that cellphone cameras are just a "fad" or that they should be stomped out (Dvorak is becoming more and more a curmudgeon in his old age). Techdirt (rightly) dismisses these claims, and I am posting here the same comments I left in the Techdirt comment section
These analysts need to get out more as well as look at the history of the digital still camera (DSC), which surpassed film cameras in volume last year. The first DSCs had really poor quality - barely better than toys. Add a learning curve, customer demand and Moore's law and you have great, low cost DSCs on the market today. Same thing is happening to camera phones. Here a few of the camera phone trends:

- 1.3 Megapixel camera phones will be the dominant resolution by numbers sold by the 4Q of this year. In fact, ALL new camera phones by the majors going into production use at LEAST 1.3 megapixels. The only phones with lower resolution are for secondary markets and by the lower tier cellphone manufacturers.

- 2 Megapixel camera phones are already hot items in Japan. Quality on these things is GREAT. The screen swivels back and around so it is pretty close to handling a "real" DSC.

- Market data has worldwide penetration of cameras in cellphones at 25% this year and 33% next year, and it would probably be higher if the supply chain could be managed. Individual cellphone vendors - think the top brands - plan to have as many as 2/3 of the phones they produce to have cameras by the end of this year with no plans to back off that number in 2005, 2006, 2007...in fact it will go up.

- The carriers (Sprint, Verizon, etc.) love them since it raises ARPU - average revenue per user - so are going to eventually give the camera away for free anyway to make more in the monthly statements, which is already pretty much the case in Japan and Korea.

A fad? Just like cellphones themselves are a fad, I guess
The interesting part will be seeing how all the players in the camera phone supply chain work out and which business models succeed. This is what I am getting paid to do and it is extremely interesting to both watch and participate in.

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