Cameraphones pass milestone in digital photo market.

For the first time, global sales of cell phones with built-in cameras surpassed sales of conventional digital cameras in the first half of 2003, a milestone in the mobile phone industry's drive to capture a chunk of the photography market, new research by the Wall Street Journal shows.

Driven by surging demand in Japan and South Korea, mobile phone makers shipped 25.0 million handsets with built-in cameras worldwide in the first half of the year, compared with 4.0 million in the year earlier period, according to research firm Strategy Analytics. In the same time frame, shipments of conventional digital cameras, the fastest-growing segment of the traditional camera market, doubled to 20.0 million in the first half, the firm says.

Research firm InStat/MDR reports, for all the year 2002, cameraphone shipments totaled about 18.2 million units, and first quarter 2003 shipments were 7.8 million. Shipments of handsets with an integrated digital camera will show a compound annual growth rate of 53.2 percent through 2007, says the report. It also says, by 2007, cameraphones should be ubiquitous and, by 2008, new handsets will include a variety of wireless computing capabilities, and a built-in camera will be standard.

Strategy Analytics says NEC Corp. and Matsushita Electric Industrial Co. of Japan, and Nokia Corp. of Finland were the top three suppliers of cameraphones in the first half. NEC and Matsushita both have 15 percent of the market, and Nokia has 14 percent, says the report.

According to Dow Jones Business News, mobile phone service providers are subsidizing the retail price of cameraphones in the hope they will be used to send lots of pictures across their networks, generating additional service revenues. But some analysts say there are signs the novelty of cameraphones quickly wears off.

Figures released by NTT DoCoMo Inc., Japan's largest mobile phone service provider, suggest consumers with suitable handsets sent an average of only four pictures each during July. Analysts at Citigroup Inc.'s Smith Barney unit estimate the equivalent figure in Western Europe is five pictures per individual user per month.

Another survey in Japan by Nikkei BP Consulting Inc. found many users expect cameraphones to have performances and capabilities as high as those of digital cameras. Thus, market observers expect competition between camera mobile phones and digital cameras will be more fierce, reports Nikkei Business Publications. The cameraphone market is already seeing 1-megapixel models and is likely to see models with even higher resolutions in the future. Lee Kun-Soo, senior analyst, Credit Lyonnais Securities Asia-Pacific Markets, forecasts people will see models with more than 2 million pixels in 2004, and more than 3 million pixels in 2006.