Abstract

Global Market Growth Slowing, Focus on Potential Growth in Asia and Emerging Markets

In the mid- and long-term, growth in the DSC market will be driven by replacement demand in mature markets and new product demand in emerging markets. The markets in Europe, North America, and Japan have already entered maturity, are growing more slowly or declining; so in the future, demand will be for replacement goods, and these markets will look to breakthroughs in functions and applications to stimulate demand.

In the Asia-Pacific region and other emerging markets, such as China and India, the middle classes are growing, and consumer markets in Eastern Europe are opening up. These markets are expected to post the highest growth in coming years.

Product Positioning and Market Segments Less Distinct

As the consumer camera market gradually matures, vendors are actively developing new features like image stabilization, Wi-Fi transmission/printing, high-resolution VGA 640X480 MPEG4 video recording, water resistance, and GPS (Global Positioning System) satellite positioning. Vendors are hoping that these features coupled with low prices will attract consumers in both replacement and new camera markets, but whether or not these measures can spur consumer demand remains to be seen.

In response to price competition, digital camera vendors are constantly seeking new products and new market opportunities, and have formed relationships with lens makers and expanded into the DSLR market in the hopes of increasing profits. And as vendors take a more active role in the DSLR market, they are attempting to expand the market downwards into prosumer territory. As the prices of entry-level DSLRs approach those of high-end prosumer digital camera models, the line between the two markets is blurring, though DSLRs have higher performance and expandability.

Entry of EMS Companies Will Increase Competition

In the long run, the participation of the two EMS companies in the value-line and mid-range digital camera market will affect the competitiveness of Taiwan's digital camera manufacturers. Taiwanese companies have responded by adopting a variety of countermeasures. Asia Optical for example has terminated numerous value-line and mid-range products and is focusing on high-end products to maintain profitability. Altek is expanding its consumer base to prevent the risks associated with excessive concentration. Altek and Ability are using vertical integration and increasing in-house production of lenses and key components to lower costs. The two EMS vendors are expected to increase competition in the digital camera market and the industry is expected to become even more concentrated, potentially forcing some small- and medium-sized Taiwanese manufacturers to make considerable changes.