Japan's Megapixel Phones Eye Digital Cameras' Turf
Fri March 7, 2003 02:04 PM ET
By Edmund Klamann
reuters.com
TOKYO (Reuters) - Japan's cellphone makers, pioneers of the camera-equipped handset, look set to intrude into digital camera makers' turf as a fierce battle for market share draws them toward photo-phones with million-pixel resolution. No one is yet consigning digital cameras to the high-tech scrap heap, but some of the dozen or so handset makers that crowd the Japanese market are preparing to launch "megapixel" photo phones this year with picture quality good enough to make prints.
"They're hoping that megapixel phones will be a hit and they can leapfrog ahead in market share," said WestLB Securities analyst Kun Soo Lee.
He expected smaller players such as Fujitsu Ltd. or Mitsubishi Electric Corp would be the first to make the leap to megapixels, hoping to emulate Sharp Corp's success last year with innovative camera-phones.
But analysts pointed to limitations such as battery life and network speed that will hobble the high-resolution camera-phones -- highlighting the risks in the obsession over market share that drives much of Japan's innovation.
"It's a high-risk, high-return strategy, but they have nothing to lose," Lee said.
Camera-phones have already been a hit in gadget-hungry Japan, where nearly one-quarter of handsets have a built-in camera.
Sharp, one of the most aggressive camera-phone developers, saw a more than 50 percent rise in its domestic cellphone shipments in the first half of the April-March business year, rising to the number-three spot in market share from fourth.
HIGH-RESOLUTION, HIGH-RISK
In recent months, Japan's camera-phone makers have been jumping to 300,000 pixels from 100,000, achieving the same resolution as early personal computer monitors.
Some industry observers think Japan's consumers, who use their color-screen camera-phones both to send photos to friends over the Internet and as a portable electronic photo album, are ready to go further.
"In recent interviews with cellphone users, virtually all of them thought 300,000 pixels wasn't enough," said Hideaki Yokota of Tokyo-based market researcher MultiMedia Research Institute.
"For pictures they want to keep, they have to use a digital camera.... If they had a megapixel camera-phone, they'd only have to carry one item with them, so I think there'll be good demand." Kyocera Corp., a second-tier handset maker and the top shareholder in Japan's number-two wireless carrier KDDI Corp, will launch a megapixel handset in Japan this autumn, Kyocera President Yasuo Nishiguchi told reporters last week.
"Mobiles are the only gadget besides wristwatches that people always have on them, so they want a good product," he said.
That would put handsets at the edge of digital camera territory, where compact megapixel models first appeared just five years ago.
The digital cameras of today have moved far beyond their humble beginnings, however, and Kyocera's Nishiguchi, whose company also makes digital cameras and recently launched a six-million-pixel model, agreed megapixel camera-phones posed little threat to the still-booming digital camera market.
"Camera-phones won't be able to do everything the digital still cameras do," he said.
PENT-UP DEMAND
Digital cameras took a further leap forward with the recent launch of tiny, high-resolution models by Casio Computer Co Ltd. and Pentax Corp -- second-tier players that, like the megapixel phone pioneers, are keen to gain market share.
Pentax's share price has nearly doubled over the last month, after it unveiled a new digital camera no bigger than a stack of credit cards with 3.2-million-pixel resolution.
On Friday morning the shares rose to 370 yen, their highest in nearly three-and-a-half years.
Analysts also say megapixel phones face a slew of limitations in lens and microprocessor technology, battery life, network speed, handset memory and the availability of printing equipment.
High prices and wireless carriers' focus on video may also relegate high-resolution camera-phones to a domestic niche.
"Whether they can get the masses to buy at that price is not likely, so I don't see it as a product that has high penetration across the world," said ING Securities analyst Richard Chu. "A megapixel camera-phone may work in Japan, but ... my feeling is the market is probably going to go to video first."
Analysts nevertheless expect loss-making Sony Ericsson, a 50-50 venture between Sony Corp and Ericsson that is under intense pressure to reverse a market share slide, will be among those launching a megapixel camera-phone this year.
Executives at Sony Ericsson, like those at most Japanese handset makers, are cagey about future product plans, but Sony President Kunitake Ando and others have said new products will be key to lifting the handset venture into the black this year. WestLB's Lee expected the Japanese handset market leaders, NEC Corp. and Panasonic phone maker Matsushita Electric Industrial Co., would take a more cautious stance on megapixel phones, waiting to see if others can drum up demand.
(Additional reporting by Yoshiyasu Shida, Kiyoshi Takenaka, Nathan Layne) |
