Camera phone sales set to rocket

Camera phones are set to take-off in 2003 with sales of handsets more than doubling to 55 million, according to new figures.

Sales of handsets were around 25 million during 2002 but research from wireless analysts ARC Group shows that the market will more than double this year.

ARC Group puts down the change down to a new sales focus, with operators encouraging existing mobile phone owners to jettison old handsets in favour of upgrading to new models with the latest features, as well as a growing enthusiasm amongst users for MMS.

David McQueen, senior analyst at ARC Group, told silicon.com that in future most vendors will only produce camera-enabled phones, which provide them with a relatively inexpensive way to encourage extra average revenue per users (ARPU) out of subscribers.

"For vendors, with the lower-price chipsets and so on, it's cheap enough to make it worthwhile for them to put cameras in their phones", he said. "For the youth and young adult users, the handsets have to be cheap enough for them to switch from using SMS to MMS – if they can't afford the handsets, they won't use it and it'll mean a loss for operators."

While MMS looks like it may go from being SMS's poor relation to the next cash cow for telcos, it's doesn't look like becoming a pattern that video can repeat. The painfully slow roll-out, network teething problems and handsets that are priced out of consumers' reach are all hampering 3G's attempts to emulate the camera phone success story, said McQueen.

But it's not just camera phones that are on the up – digital cameras are also enjoying an explosion in popularity. Research from IDC shows that Europeans spent $3.4bn on digital cameras last year – an increase of more than 100 per cent.

That trend looks set to continue upwards, with analysts predicting sales of digital cameras doubling again by 2004. And, like camera phone sales, the increase has been driven by a desire for interactivity, according to McQueen.

"In the email and internet age, users want to be able to take pictures and send them to their granny or their friends – it enhances the whole experience", he said.