Camera Phone Market to Soar - Report

The future for camera phones is bright and serious incremental revenues may be realized if wireless operators commit to understanding and addressing subscriber wants and needs in terms of hardware and services. According to a new forecast from IDC, the number of camera phones will continue to climb, with worldwide shipments increasing from 19 million in 2002 to 298 million in 2007. But the success of related digital image services hinges on user satisfaction.

According to IDC survey results, 44% of respondents planning to purchase a camera phone in the next six months would be willing to pay more than $21 per month (in addition to their standard service charge) for the ability to send and receive images over their mobile phone. However, history shows that one- third of current subscribers stop taking advantage of this functionality in just a few months. Increasing user satisfaction to stabilize retention rates is critical for the long-term success of the camera phone market.

"Operators and device vendors are beginning to recognize the importance of lowering the barriers to camera phone adoption and usage for subscribers," said Chris Chute, senior analyst, Digital Imaging Solutions and Services at IDC. "Everyone wants to grow their revenue streams, but if prices are high and subscribers aren't compelled by the offerings - either service or hardware - they'll quickly lose interest."

Vendors are doing their part to address these roadblocks by developing easy-to-use camera phones that require a minimal number of button taps to capture and transmit photos. They're also entering into partnerships with operators, such as the recent Nokia, T-Mobile, and Amazon partnership, which effectively allowed new subscribers to obtain a new camera phone at no cost. On the operator side, low-cost/no-cost image transmission services are being offered to new subscribers on a limited-time basis to encourage early adoption among users.

"Given the potential benefits of camera phones to end-users, device vendors, and wireless operators, we expect digital capture technology to quickly become a standard feature within most mobile devices," said Alex Slawsby, IDC Mobile Devices analyst. "Although an increasing number of subscribers will own mobile devices with digital capture technology - regardless of whether or not they sought such capability - success or failure of digital imaging services will depend on end-user education and efforts to remove barriers-to-adoption."

Posted to the site on 10th October 2003