The market for cameras with an LCD viewing screen grew to 6.5 million units in 2001 from 5.4 million in the previous year, market researcher IDC said. Meanwhile, simple VGA models--sub-$100 cameras that lack a viewing screen--declined by nearly a million units to 1.5 million.
"The simple VGA market is really going away very quickly," IDC analyst Chris Chute said. "It's basically turning into a toy market. Nobody can make money with products like that, and it's easy for the consumer to spend another $50 to $100 and get a real camera."
Overall market share leaders for the year were Sony at 23 percent, Olympus at 16 percent andat 15 percent.
Eastman Kodak, which held the No. 4 spot for 2001, made a big jump at the end of the year. In the fourth quarter, Kodak climbed to second place with 17 percent market share. The final quarter of the year was strong for the entire industry, accounting for more than 40 percent of overall digital camera sales for the year.
Chute credited Kodak's late surge to its EasyShare system for transferring and printing photos, which includes a docking cradle that plugs into the PC.
"The way they displayed the product at retail really helped because you saw it in the dock and that set it apart," he said.
Chute added that Kodak still has a ways to go, however, to deliver on itsto become a digital-centered company.
"The tough part in becoming a digital company for Kodak is to build out the infrastructure to make these cameras as easy to use as film has been," he said. "That takes a lot of work in building a network, finding the right partners, getting the kind of systems in traditional retail outlets to allow people to print images as easily as they can get film processed."
The digital camera market reached an important crossroads between price and image quality last year, Chute noted. Cameras in the $299 to $399 range, favored by mainstream consumers, now boast resolution of 2 megapixels or better, enough for satisfactory snapshot-sized prints.
The real challenge for the industry, Chute said, will be to make it easier to get those prints, through online or in-store services or by printing at home. He said more than half of digital camera owners still use film cameras for easy processing and printing.
"There's still a trade-off with digital cameras in the convenience of printing and sharing photos," he said. "The key is to convince the consumer that the digital camera is an easy, fun thing to use."