Abstract

Digital Photo Frames Enter Latter Stages of Growth Phase of Product Lifecycle; Price Competition Continues to Intensify

Over the period 2008-2013, the digital photo frame industry will scale down a shipment value CAGR to 23.7% and a shipment volume CAGR to 28.2%. The reduction in the shipment value CAGR is significantly higher than the shipment value CAGR, indicating that growth in digital photo frame shipment volume is dwindling. During the next few years, the digital photo frame will move into the latter part of the growth phase of its product lifecycle, and vendors will focus on sharpening brand image and strengthening business operations. Shipment volume CAGR is expected to be slightly higher than shipment value for some years to come, indicating that price competition in the industry is expected to remain fierce.

Price-Benefit Trends Key for New Product Rollouts

Price-benefit analysis and analysis of vendors' competitive strategies have shown that the primary benefit affecting digital photo frame price is display size, daily updates on news, local weather forecast, sports etc., print, built-in memory capacity, image correction, touch border, and calendar picture mode. In comparison to the previous year's analysis model, it was found that there was a significant change to product benefits. Product benefits displayed significant explanatory power with respect to digital photo frame prices included daily updates on news, local weather forecast, sports etc., print, built-in memory capacity, image correction, touch border, and calendar picture mode. Product benefits that lost explanatory power with respect to digital photo frame price included: display performance, ability to send photos directly from camera phone, wireless enabled functionality, and the ability to automatically receive pictures from the Internet.

The digital photo frame market features a high level of standardization, causing the display performance benefit to lose explanatory power. As for the wireless enabled functionality, even though several brand-name vendors have taken an aggressive move in enhancing the wireless feature of their digital photo frame products, the wireless enabled functionality is yet to become primary benefit for digital photo frame buyers. One point worth noting is that one of the product benefits - daily updates on news, local weather forecast, sports etc - has significant explanatory power with respect to digital photo frame prices. However, users buying digital photo frames aim to receive daily updates on everything that's happening around them instead of gaining or transmitting digital image data.

Another product benefit, touch border, also has positive explanatory power with respect to digital photo frame prices. Triggered by the introduction of iPhone, the touchscreen interface design has been introduced in digital photo frame products. Whether or not that the touchscreen design will replace remote control to become new standard item remains to be seen. Meanwhile, the image correction and calendar picture mode product benefits will only be seen in mid-range and high-end digital photo frame products. Whether or not that these product features can successfully help these product differentiate with mid-range and value-line models needs to be closely monitored.

When developing new digital photo frame products, vendors need to keep a close eye on price-benefit issues in order to keep an edge over their competitors by rolling out new products catering to customer demand. By doing so, leading vendors can efficiently trigger the digital photo frame purchase, further expanding the market presence of digital photo frames.

Share of 8-inch and 10-inch Models to Grow and 7-inch and 9-inch Products to Decline

It is anticipated that 7-inch and 8-inch digital photo frames will maintain their status as the market mainstream for some years to come. In comparison to the forecast for the period 2008-2012, MIC has revised up 8-inch mode's share of total digital photo frame shipments while revised down 7-inch models' share. This is due to the fact that leading brands recently have begun shifting their product deployment from 7-inch to 8-inch products. Meanwhile, it is also found that the share of total shipment volume held by 9-inch digital photo frames will see a significant decline to 3.0% in 2009, down from 11.9% in 2008. 

One significant development is that the 10-inch models' share of the total shipments will increase to 14.9%, up from 14.3% in 2008. it is evident that leading brands have planned to leapfrog 9-inch panels to 10-inch panels, taking an aggressive move in developing the 10-inch segment of the market.

Vendors Change Digital Photo Frame Aspect Ratio from 15:9 to 4:3; Resolution from 800x480 to 800x600 pixels

It can be seen from the analysis of leading brands' digital photo frame product development strategies that they are changing digital photo frame products' aspect ratio from 15:9 to 4:3, while resolution from 800x480 to 800x600 pixels. This is due to the fact that most digital photo frames featuring either CCD (Charge Coupled Device) sensors or CMOS (Complementary Metal Oxide Semiconductor) sensors have 4:3 aspect ratio. The digital photo frames with 4:3 aspect ratio and resolutions of 640x480, 800x600, 1024x768, 1600x120, 2048x1536, 2595x1944, 3072x2304 pixels will remain as the mainstream models. However, if the digital image is a 4:3 aspect ratio image, there will likely be black bars presented on the screen and the image will be get stretched to fit the widescreen format, either 15:9 or 16:9 aspect ratio, resulting in image distortion and a loss of sharpness.

In order to avoid issues related to image distortion, a loss of sharpness, or black bars, reduce production costs for chips, leading brands have begun using digital photo frames with 4:3 aspect ratio and 800x600 resolution.

Appendix

Research Scope

This report analyses the product specifications of 67 digital photo frame models from six vendors: Kodak, Sony, Philips, Ceiva Logic, Pandigital, and Smartparts, along with the results of a survey administered to users of these 67 models, with an effective sample size of 239. Multiple linear regression analysis is used to analyze competitive positioning in terms of price and product benefits, with the aim of identifying those product benefits that have the most impact on the prices of digital photo frame products.

Glossary of Terms

List of Companies