Sony's focus: digital cameras

Interest in digital cameras is exploding, according to research firm International Data Corporation, with Sony, Kodak, and Olympus the early leaders. The market has an annual compound growth rate of 50 percent, according to IDC.

PC makers have seized upon digital imaging as an application which actually makes use of the extra speed and processing power computers offer today, potentially leading to increased sales of higher margin, more powerful PCs. Apple Computer, for example, recently unveiled a version of its iMac computer with desktop digital video capabilities, targeted at home users.

Sony's strategy in the computing market has been to leverage its dominance in the audio-visual realm, a tactic which has largely paid off in the digital camera business. The consumer electronics giant had 35 percent market share in the third quarter of 1999, according to IDC.

"Both the digital still and PC camera markets have increasingly made inroads into the consumer segment," said Kevin Kane, research analyst for IDC.

Kodak, Sony's closest competitor, followed with 20 percent market share. Olympus garnered 17 percent of the market.

Sony's Mavica digital camera line stores images on a floppy disk, a storage method customers have responded to with enthusiasm, despite newer and fancier storage technologies on the market.

Sony's success also reflects that the digital camera market is apparently not as price sensitive as the PC market. Mavicas, which are priced from $700 to $900, outsell much more inexpensive cameras. Still, the company reportedly has dropped the price on its Cybershot DSC-F55 camera to $599, according to Carl Holec, a retail analyst with ARS.

"Now that the model has dropped to $599, ARS believes that the DSC-F55 is finally priced competitively, if not slightly aggressive," according to Holec's report, which noted that the DSC-F55 offers 2 million pixel resolution, a high-end feature usually seen in more expensive cameras.