The digital camera market has enjoyed some growth the last few years but I think it is reaching a point where sales will be flat or in a slow decline with the exception of DSLR. Digital camera has almost completely replaced earlier film models, and already camera makers have begun emphasizing DSLR or special features for customers to upgrade to.
I believe the digital photography business is reaching an industry breakpoint much like film business 10 years ago.
First camera phones are already a market 2-3 times larger than the compact camera business and many are now 5mp to 8mp. Expect to see 15mp this year. The logic tells me we don’t need it, but some people do. My son’s phone is the Sony Erickson 8mp model and takes pretty good pictures. I think 5mp phones will become ubiquitous and there is no reason for them to carry a separate point-and-shoot model. Today they cost $120-$300 depending on features and mps. No one would spend any money on those anymore. Even they do, the margin is there anyway. The music phone didn’t kill the music player thanks to iPod, but it will kill the low-end camera market.
So the middle market needs to justify the $250-$400 price point. Either it is water-proof or has some unique features just as party shots or super wide lens etc. This is a small market anyway as many would want to quickly move to the middle high end DSLR market. That is not to say they don’t have problems.
The mirrorless DSLR will create some excitement but comes with challenges. It is essential throwing the open-source idea and allow any one to use any lenses. I don't think Nikon or Sony like the idea, they want to use the lenses as lock-in. Right now, the digital revolution puts the digital photography business the same lifecycle as other consumer electronics, once 24-36 months life cycle now 5-6 months, ruthless competition from the low end, and harsh and fast elimination of any players that made a bad move.
Most innovation will happen in the middle high end market. There will be new paradigms of image capturing, in another words rethinking “camera”, these new image capturing device will be hybrid of still camera + video camera + player. There are many human factors considerations given how we are used to using a still camera, a video camera and a media player. These devices will allow you to use any lenses you want, whether they are your old Leica M lenses or your collection of Nikors.
Speaking of which Samsung will be launching the NX10 with an adapter that lets you put almost any lens on the front, Nikon, Canon, Leica, Sony and whatever. The adapter could be the most disruptive widget in the camera market. Overall Sony is in the best position for this scenario since they own the professional market. I will call this market the Personal Imaging Device for the lack of a better name.
Canon is in an excellent position to stay on as market leader. The modern mount is well designed, the line of good lenses, a strong user base thanks to the current line of high performance DSLRs and stong in-house sensor research capabilities. Nikon has a lot of catch-up to play but the range of lenses are superior than others. Sony has a sensor advantage (many including Nikon use Sony’s sensor) and I am not a fan of the Minolta lenses. Pentax and Olympus have brand name problems and will mostly be bought by the Koreans or Chinese. Panasonic has a good line-up of cameras and I have half a dozen of them, because I love the Leica lenses that comes with all Lumix. Will Leica survive? Can they keep selling these M10 body for $5000? I am not sure. I would like to have the opportunity to rethink and redesign the idea of “camera” from the ground up. I’ve lots of ideas for it.