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Canon hit by rising popularity of smartphone cameras

The world's largest camera maker is seeing sales fall as smartphones with increasingly sophisticated optics gain in popularity.

Brooke Crothers Former CNET contributor
Brooke Crothers writes about mobile computer systems, including laptops, tablets, smartphones: how they define the computing experience and the hardware that makes them tick. He has served as an editor at large at CNET News and a contributing reporter to The New York Times' Bits and Technology sections. His interest in things small began when living in Tokyo in a very small apartment for a very long time.
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Brooke Crothers
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Canon EOS digital camera. The world's largest camera maker is facing a 'severe' business environment, a company executive said.
Canon EOS digital camera. The world's largest camera maker is facing a 'severe' business environment, a company executive said. Best Buy

The demand for Canon cameras is shrinking as smartphones become the de facto camera for consumers.

A report in the Japanese-language online edition of Nikkei doesn't paint a pretty picture for the world's biggest camera maker.

The company cut its annual profit and sales forecasts Wednesday as demand slows for its cameras.

"The changes in the business environment are very severe," the newspaper quotes Canon Vice President Toshizo Tanaka as saying.

While Nikkei cites a slowdown in the Chinese economy as one of the factors affecting Canon's camera business, the larger reason stems from the "spread of smartphones."

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Standalone digital camera users are, for example, "deprived" of the social networking and photo sharing that drives the popularity of smartphone cameras, according to Nikkei.

And data cited by Bloomberg is damning: worldwide camera shipments fell 29 percent in the first five months of 2013, according to the Camera & Imaging Products Association in Tokyo.

The Bloomberg report also says analysts are souring on Canon. "The...effect on compact cameras by smartphones has become quite serious," according to Toshiya Hari, a Tokyo-based analyst for Goldman Sachs, which cut its share price forecast for Canon.

Things aren't likely to improve either. Smartphone cameras will only continue to get better, offering less reason for consumers to buy a Canon camera. (Kodak's decline and fall can be attributed, at least partly, to the rise of the smartphone.)

Apple, Samsung, and Nokia continue to boost the feature set of their integrated smartphone cameras. The iPhone 5S is rumored to have a better camera and Nokia just rolled out the Lumia 1020 with a 41-megapixel camera.

Meanwhile, Samsung's newest high-end smartphone, the Galaxy S4, now packs a 13-megapixel sensor.