Monday, 13 January 2014

2014 predictions sandbox #2: point-and-shoot declines, but it’s not yet time to shutter the camera market

I’m in the process of developing some predictions for what will happen in digital in 2014 and thought that I’d post them here to get some wisdom from my readers! Some of these will be positive, some might be busting some myths about categories that have captured the zeitgeist. Now, more than ever, comments will be greatly appreciated.

Last time out, I focused on personal health monitoring. On a somewhat different tack, here’s some thoughts about the camera market in 2014.

My prediction

Unit sales of ‘point and shoot’ digital cameras will fall by around 25% in 2014; however sales of specialist camera devices such as interchangeable lens (for example, SLR) and wearable cameras will offset this decline, meaning that although shipments will fall, the decline will not be catastrophic and the total standalone camera market will by around 80m units.

Why do I think this?

It’s no secret that the smartphone has reduced the need for point and shoot cameras in the last two or three years. Cameras remain a key selling point of smartphones to mass market consumers. Now that the novelty of application stores has worn off, I expect the majority of consumers to default to a fairly conservative range of uses for their smartphone. If I was guessing, I’d expect that about seven activities will be the norm: browsing, instant messaging, two social networks, one game (played obsessively for about a month and then replaced), a news application and taking photographs.

Although point-and-shoot (or ‘fixed lens’) cameras remain superior for taking photographs by a considerable margin, I’d guess that the vast majority of photos taken today are incidental snaps that are designed for immediate posting on a social network, sending to a friend or to record information for later use. So the reason for taking the majority of low-to-medium quality photos that point and shoot cameras were designed for has changed in a way that makes smartphones a disruptor.

Even so, about 60 million point-and-shoot cameras were sold in 2013. I wouldn’t expect precipitous decline in this number as there will always be a substantial base of consumers who have habitually used these cameras and will replace them periodically. The trouble for camera makers is that outside of these developed market, middle class consumers, the new middle class in developing markets are unlikely to see a camera as an aspirational purchase in the same vein as a tablet, large screen TV or PC.

Where’s the upside?

There is some good news for camera-makers in that as tablet and smartphone sales plateau, consumers are looking for new places to spend on tech. Smartphones have definitely reinforced the meaning of photographs to consumers and a subset of them may yearn for a more specialised device.

Last year, sales of ‘mirrorless’ cameras with interchangeable lenses, which cost less and are physically smaller than professional SLRs, but offer 90% of their functionality, grew 100% YoY to 4.6m units. Their manufacturers have done an excellent job in harnessing some of their current trend for retro design and materials to make them desirable to affluent tech’ addicts, so I expect continued growth next year.

At the opposite end of the market, compact, resilient cameras designed for sports or specialised applications like life monitoring will show strong growth. Available for $100 or less, these devices are the perfect source of narcissistic supply for the ‘check this out’ generation. A 5m unit market in 2013, I expect demand to double in 2014.

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