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Digital camera picture fades in U.S.

Prospects for the once booming digital camera market dim, leaving manufacturers and distributors "cautiously optimistic" about future shipments.

Prospects for the once booming digital camera market dimmed in the third quarter of 2001 and will likely stay that way in the fourth quarter, research firm IDC said in a report released Wednesday.

Erosion of the U.S. market for cameras priced under $100 and lower-than-expected growth in sales of mid-range and high-end cameras led to a 20 percent decline in shipments compared with the same quarter last year. Overall, manufacturers shipped 1.8 million units to the United States in the third quarter, and total U.S. shipments for the year will be about 7.6 million units, according to IDC.

The major blow in the third quarter was the drastic decline in shipments of sub-$100 cameras. Manufacturers shipped only 300,000 sub-$100 cameras, down from 1 million units in the same quarter last year.

The sub-$100 market was largely responsible for the tremendous growth of the digital imaging market, and its decline will be difficult for the market to overcome. But IDC analyst Chris Chute said other signs of growth are developing.

"There are signs that infrastructure is improving, which could lead to another big growth spurt for the market, but it's really up to the retailers and the companies that offer the technology to make digital imaging easier to use for consumers," Chute said.

Chute defined infrastructure as other methods of developing and using digital images, such as in-store kiosks and portable printers, without the use of a PC.

Chute added that the Sept. 11 attacks also hurt third-quarter shipments, as sales activity all but halted for the month.

Chute said manufacturers and distributors are "cautiously optimistic" about fourth-quarter shipments. The sub-$100 market is expected to decline another 60 percent next year, and sales of mid-range and high-end models will likely grow only slightly, in the range of a few percentage points.

The financial hardships of companies that were significant contributors to the sub-$100 market, such as Polaroid and Agfa, which recently exited the camera market, were significant factors in the decline of the segment.

Market share did not change in the top three spots. Sony was the third-quarter leader with 18 percent of the market, followed by Hewlett-Packard and Olympus, each accounting for 12 percent of the market.