Digital Photography - Market Impact

Market Impact

In late 2002, 2 megapixel cameras were available in the United States for less than $100, with some 1 megapixel cameras for under $60. At the same time, many discount stores with photo labs introduced a "digital front end", allowing consumers to obtain true chemical prints (as opposed to ink-jet prints) in an hour. These prices were similar to those of prints made from film negatives. However, because digital images have a different aspect ratio than 35 mm film images, people have started to realize that 4x6 inch prints crop some of the image off the print. Some photofinishers have started offering prints with the same aspect ratio as the digital cameras record.

In July 2003, digital cameras entered the disposable camera market with the release of the Ritz Dakota Digital, a 1.2 megapixel (1280 x 960) CMOS-based digital camera costing only $11 (USD). Following the familiar single-use concept long in use with film cameras, the Dakota Digital was intended to be used by a consumer one time only. When the pre-programmed 25 picture limit is reached, the camera is returned to the store, and the consumer receives back prints and a CD-ROM with their photos. The camera is then refurbished and resold. Since the introduction of the Dakota Digital, a number of similar single-use digital cameras have appeared. Most of the various single-use digital cameras are nearly identical to the original Dakota Digital regarding specifications and functionality, although a few include superior specifications and more advanced functions (such as higher image resolutions and LCD screens). Most, if not all, of these single-use digital cameras cost less than $20 (USD), not including processing fees. However, the huge demand for complex digital cameras at competitive prices has often resulted in manufacturing shortcuts, evidenced by a large increase in customer complaints over camera malfunctions, high parts prices, and short service life. Some digital cameras offer only a 90-day warranty.

Prices of 35mm compact cameras have dropped with manufacturers further outsourcing to countries such as China. Kodak announced in January 2004 that they would no longer sell Kodak-branded film cameras in the developed world. In January 2006, Nikon followed suit and announced they would stop production of all but two models of their film cameras. They will continue to produce the low-end Nikon FM10, and the high-end Nikon F6. In the same month, Konica Minolta announced it was pulling out of the camera business altogether. The price of 35mm and APS compact cameras have dropped, probably due to direct competition from digital and the resulting growth of the offer of second-hand film cameras. Pentax have reduced production of film cameras but not halted it. The technology has improved so rapidly that one of Kodak's film cameras was discontinued before it was awarded a "camera of the year" award later in the year.

Since 2002, digital cameras have outsold film cameras. However, the use of 35mm cameras is greater in developing countries. In Guatemala, for example, extremely high import duties on all digital products serves to encourage sales and use of film cameras.

The decline in film camera sales has also led to a decline in purchases of film for such cameras. In November 2004, a German division of Agfa-Gevaert, AgfaPhoto, split off. Within six months it filed for bankruptcy . Konica Minolta Photo Imaging, Inc. ended production of Color film and paper worldwide by March 31, 2007. In addition, by 2005, Kodak employed less than a third of the employees it had twenty years earlier. It is not known if these job losses in the film industry have been offset in the digital image industry.

In addition, digital photography has resulted in some positive market impacts as well. The increasing popularity of products such as digital photo frames and canvas prints is a direct result of the increasing popularity of digital photography.