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Analyst: Cameras need networking--pronto

With smartphone cameras, photography is moving from memory preservation to in-the-moment sharing. Camera makers must respond, InfoTrends said.

COLOGNE, Germany--Camera makers must wake up to the competitive threat of mobile phones by embracing networking technology or face unpleasant consequences as photography habits shift profoundly.

That was the warning from Ed Lee, an InfoTrends analyst speaking to a photo industry audience at this week's Photokina imaging show here. Change has been unceasing in recent years, with the arrival of digital photography paving the way for electronics manufacturers to join traditional camera companies. Now, camera makers face new disruption.

"The digital camera vendors need to be much more aggressive about getting their cameras connected," Lee said. "Otherwise, I can see a world where the mobile phone will be king and the digital camera will be relegated to just taking pictures. I don't think that's a world the camera vendors want to see happen."

Fundamentally, mobile phones and social networking sites such as Facebook have transformed the practice and purpose of photography so it's less about preserving memories and more about sharing what's happening.

"Smartphones allow people to capture an image and share it with an online site or a social network. You're allowing your friends and family to be in the moment with you as the event is still going on," Lee said.

Indeed, smartphones are advancing rapidly. Apple's iPhone, a standout product when it comes to Internet connectivity, rapidly ascended the Flickr ranks of most-used cameras because it makes sharing images easy. With Android and other operating systems, such smartphones are spreading rapidly. At the same time, their cameras' quality is steadily improving with higher resolution, built-in flashes, and in the case of the iPhone 4, a new HDR mode for high-dynamic range shots.

Some cameras today have network abilities, but it's not enough, he said.

"Wireless connectivity has been around since 2005, but most of it's been one-way," Lee said. "In the future we have to make bidirectional communication where you can pull information back down to the camera as well as upload it."

Another caution for a photo industry looking for revenue: markets are increasingly saturated.

For digital cameras, "household penetration is 80 percent in the United States and 70 percent in the U.K., France, and Germany," Lee said. "Ninety to 95 percent of purchases in coming years will come from people who owned a previous digital camera."

And often in developing countries, potential customers often enter the digital photography market through mobile phones, making that technology the incumbent means of taking pictures.

But there's a bright spot, Lee added. One is the new generation of compact interchangeable lens cameras (ILCs) from Panasonic, Olympus, and now Samsung and Sony as well.

"We expect over 12 million ICLs to be sold worldwide this year," he said, but more important than the absolute number is their disproportionate financial importance, he said.

"From the numbers, the ILC cameras will account for about 9 percent of unit sales this year but account for 26 percent of the revenue," Lee said. "That's a good number if you're chasing after the dollars."