November 25, 2002 11:36 AM PST
Holiday price drop seen for digicams
Prices for digital cameras have been steadily declining as the market grows, but with camera makers competing to pump up holiday sales, more drastic cuts could be in store, IDC analyst Chris Chute said.
Cameras with resolution of 2 megapixels--usually considered the minimum for good snapshot-size prints--could be selling for as low as $99 in a few weeks, Chute said. Current prices for such cameras bottom out at around $199.
Chute said camera makers would likely be losing money at such prices.
"I don't think it's possible when those cameras were made that the bill of materials would allow you to put it together for under $99," he said.
But that might not be a problem for big companies like Kodak and Hewlett-Packard, if they decide it's more important to boost their market share and increase sales of ancillary products, such as photographic paper and printer supplies.
"HP is a good example of someone who can make money even if they sell the cameras for a loss," Chute said. "I don't think it's going to be a broad push to drive camera prices down this quarter. It would be a couple of companies looking to make a move and grab some attention by becoming No. 1 for the quarter."
While rock-bottom prices are likely to boost sales, they probably aren't the best thing for the camera industry, Chute said. Sub-$100 prices will attract buyers who aren't that interested in digital photography and thus won't use the camera much or generate sales of prints and supplies. And bargain-basement prices will make it harder for camera makers focusing on high-end and high-style models to command a premium for their wares.
"I think it would be detrimental to price things before their time," he said. "Once the perceived value of an item declines, you're less likely to do anything with it. So the camera just sits there; you're not taking photos, you're not making prints."