Camera Phones

Launched just in time for the holiday season, CVS disposable digital cameras gained double-digit share in the one-time-use category. Through its partnership with Pure Digital, the retailer introduced in December two one-time use cameras--one with a delete function, the other with preview and delete functionality--with price tags of $9.99 and $19.99, respectively. Both are priced modestly in comparison with even drug-friendly digital still cameras, such as the new 3.1-megapixel Concord 3346, which retails for $99.

Competitively priced, multifunctional, single-use digital cameras with the latest technology could stem, for the short term, decreasing sales of traditional one-time-use cameras. The Photo Marketing Association International reported that unit sales of single-use cameras dropped 13 percent during the first 10 months of 2004. Adding to that, over the next five years, camera phones could put increasing pressure on the category. InfoTrends/CAP Ventures projects that by 2009, camera phones could account for 89 percent of all mobile phones worldwide.

"I think, in many respects, the value proposition in one-time-use cameras in terms of affordability, convenience and an acceptable quality picture could easily be supplanted by a camera phone, particularly if it has more advanced imaging functionality. Over the next three-years to five years, you 11 see a large portion of camera phones capture images and make prints that are comparable--or in some cases, superior--to onetime-use cameras," said Jeff Hayes, director of market research for InfoTrends.

Price barriers, however, should level the playing field because camera phones are still a high-ticket item. Sales also initially will skew to high-end consumers, some of the least frequent purchasers of single-use cameras.

Forecasts predicting that camera phones will render disposable cameras obsolete do not, however, take into account just what makes disposable cameras so attractive. There s something about the worry-free nature of the disposable camera that captures a consumer need," said Simon Fleming-Wood, vice president of marketing for Pure Digital. "[Consumers] buy them for uses where they really don't want to worry about losing something that they have any economic tie to. That dynamic has actually increased and not decreased in the digital age."

Fleming-Wood noted that where he sees camera phones stepping in for single-use cameras is the "I forgot my camera" scenario, which represents about 15 percent to 20 percent of single-use sales.

Indisputably, however, the growth of camera phones over time will provide more people than ever with the ability to take pictures. That creates new avenues of revenue for retailers.

"Carriers are looking for ways to get more data and traffic on their network. Part of that can come from forwarding images on a camera phone to a drug store for photo processing," Hayes said. "You can even have things like when your prints are done, you can have a text message or voice message sent to the consumer saying: 'Your photos are ready. Come pick them up.'"

Later this month, Fujifilm will showcase a new service agreement with cellular phone carrier Nextel. The service builds upon Fujifilm's current partnership with Sprint through its Get the Picture Online service, which lets subscribers send their mobile images directly to a participating retail photofinisher.

Vancouver, British Columbia-based PhotoChannel Networks currently offers printing solutions for 10 retail partners across Canada, including Wal-Mart Canada, London Drugs, Uniprix, Familiprix and Brunet drug stores, that let wireless customers print their camera phone photos at 2,000 retail locations across Canada.

InfoTrends estimates that currently about 10 percent of consumers are printing their camera phone pictures. That number is dwarfed, however, by consumers printing still images from digital cameras. Digital photo processing at retail and self-service kiosks grew more than 200 percent and 350 percent, respectively--compared with a 35 percent increase in at-home printing--according to PMA's year-over-year figures ended Oct. 31.

A new one-time-use camcorder, launched in test markets late last month, will hit retail this Memorial Day and potentially could skyrocket digital photo processing at retail further. Pure Digital will introduce a disposable digital camcorder that consumers purchase just as they would a single-use digital camera, but when they return it for processing, instead of photos, they receive a DVD they can watch on their TV or computer. The suggested retail price is $29.99, which will provide consumers with 20 minutes of video. The price for processing is approximately the same as a roll of film, about $10 to $12. If current sales of video cameras--which generate about 25 percent of new camera sales--are any indication, the disposable version could generate a nice chunk of sales, topped off by a sizeable margin.

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