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A snapshot of the digital camera market

Digital cameras are fast becoming a must-have accessory for PC owners, according to a new survey, but high prices are keeping people from tapping into upgrades of the devices.

    Digital cameras are fast becoming a must-have accessory for PC owners, according to a new survey, but high prices are keeping people from tapping into upgrades of the devices.

    Digital cameras can be found in 5.4 million U.S. homes, and 12.7 million households plan to buy a digital camera by the end of the year, according to the new survey from market researcher Gartner. The popularity of the cameras reflects higher picture quality, dropping prices, and the widespread availability of relatively inexpensive high-powered PCs that can manipulate and process digital images.

    The PC industry has long identified digital imaging as a potential "killer app" meant for powerful computers with high-speed processors and more memory than most people will ever use. As prices for these PCs have dropped during the past five years, companies such as Microsoft, Apple Computer and Intel have expanded digital imaging applications. Windows Me, the next-generation consumer operating system from Microsoft, will feature enhanced digital video editing and digital photography.

    However, because of the relatively high prices of digital cameras, which start around $200 but average around $600, many buyers will not upgrade their cameras in the near future, the report says. Half the digital camera purchasers last year were first-time buyers, and 40 percent of buyers were from households with incomes of more than $75,000.

    One reason for the continuing high prices: Digital cameras, like cell phones, handheld computers and PCs, use flash memory, a high-demand component in short supply. Palm, for example, has been unable to meet demand for its popular devices because of the supply issues.

    Like PCs, digital cameras are improving so rapidly that few people will be able to take advantage of all the features. For example, although cameras offering a resolution of 1 million pixels per image were common only a few years ago, today's high-end cameras offer 3 million pixels per image. These cameras are priced near $1,000, around the same cost as a new PC.

    "Without an 'upgrade market' to tap into, incumbent vendors such as Sony, Kodak, Olympus and Nikon will not be able to directly leverage their loyal following into new sales this year," Andrew Johnson, vice president of Gartner's digital imaging group, said in a statement. "Consumers planning to buy a new PC are also likely to purchase a new digital camera, so digital camera and PC vendors should co-market with in-store or in-box cross selling tactics that take advantage of this synergy."

    Today, Toshiba announced a $100 mail-in rebate designed to spur interest in the PDR-M70, which offers a resolution of 3 million pixels per image, or three mega-pixels. With the rebate, the camera costs $799.