Digital camera sales clicking

U.S. sales of digital cameras jumped more than 50 percent in 2002 because of attractive pricing and savvy advertising, according to a report released Wednesday.

Sales of digital cameras that have an LCD viewing screen hit 10 million units for the year,

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compared with 6.5 million units in 2002, according to a report from research firm IDC. Strong holiday demand pushed sales for the fourth quarter to 4 million units, compared with about 2.8 million units in the fourth quarter of 2001.

Pricing was the biggest factor, IDC analyst Chris Chute said, with the vast majority of cameras sold falling into the $200 to $400 range. Even lower prices around the holidays helped pump up interest, Chute added.

"We saw $99 digital cameras as door-busters during the holidays, and those helped get more people in the stores," he said.

The price trend wasn't kind to Hewlett-Packard, however, the manufacturer that saw the biggest change in market share. HP dropped to sixth place in 2002, from third place in 2001. Sony and Olympus remained at No 1. and No. 2, respectively, while Kodak grabbed the No. 3 spot.

HP built its position in the camera market by offering low-frills models at attractive prices, Chute said, but that strategy doesn't work so well once average prices drop across the board.

"HP really led the field in getting cameras down to the $200 and $300 price level, and that was a big advantage when other parts of the industry were closer to the $1,000 end," he said. "Now the whole channel has centered on that price range between $200 and $400."

With prices dropping across the board, consumers have focused on makers with a strong reputation in the camera field, as seen by Canon's jump from sixth place in 2001 to fourth place last year.

"It's getting to the point where people are thinking of the digital camera more as a camera than a computer peripheral," Chute said.

Chute said he expects camera makers to continue to focus on the $200 to $400 range this year, offering better performance and more features rather than cutting prices.

"I don't think the sweet spot for pricing is going to change much--you'll just get a better camera for that price," he said. "Nobody wants prices to collapse, because everyone loses in a price war."