Camera Phones To Galvanise European Mobile Market

The research firm estimates that by 2006, sales of camera-capable phones across the region will exceed 70 million. Some 66% of mobiles will come with an in-built camera, up from 9% in 2003. However, clip on cameras will see their share of the market fall from 5% to 1.5%.

“The initial shortage of camera chipsets and colour displays, caused by component manufacturers under-estimating demand, that has been putting pressure on the average price of embedded camera phones has now been resolved. This, combined with promotions that operators are running in Western Europe to promote Multimedia Messaging Service (MMS), mean that prices have started to come down, making camera phones more affordable,” said Carolina Milanesi, analyst at Gartner.

Although handset sales are growing again after a period of stagnation (see INSIGHTanalysis: Mobile Sector Seeks To Maintain Growth), the mobile industry is setting great store by colour and camera phones, regarding them as a potential spark for the whole sector (see ‘Smart’ Phones To Shake Up Mobile Sector, Says Analysys). The technology is improving all the time and Gartner acknowledges that the arrival of new models should help to drive up replacement rates.

However, there is a warning for European mobile manufacturers who have ground to make up on their Asian rivals. Camera phones are well established in Japan and South Korea (see Far East Driving Camera Phone Sales, Says Strategy Analytics) and providers there have a head start in the development of colour screens, digital imaging, batteries and integration.

“Their lack of brand awareness among end-users in Western Europe, that might have been perceived as a weakness, has turned to their favour,” said Milanesi. “As brand loyalty is not yet an issue for these new entrants, mobile operators have been able to highlight their own brand over the manufacturer’s brand when adding products to their portfolio. A lack of willingness from more established manufacturers to work under these terms, as well as better technology has favoured the Asian vendors.”

Camera-capable Mobile Terminal Shipments In Western Europe
	2002	2003	2004	2005	2006
Units (000s)	2,626	14,770	24,657	48,159	70,036
Embedded Camera Phones (% Of Total Market)	1.7	9	21	45	66
Camera Accessories (% Of Total Market)	0.8	5	3	2	1.5
Source: Gartner Dataquest, June 2003