Sony Steps Up To SLR
New York - In the fierce fight for first place in the digital camera market, Sony finally delivered its first digital single-lens reflex (SLR) camera today. Hey, it's better late than never.
The appropriately named Alpha DSLR-A100, a sophisticated 10.2 megapixel camera with built-in image stabilization, is designed to appeal to upper-end consumers and enthusiasts who prefer customizable features over point-and-shoot models.
Available today, the A100 packaged with an 18-70 mm zoom lens will sell for $1,000. Additionally, Sony (nyse: SNE - news - people ) unveiled 19 accompanying lenses that range in price from $200 to $1400.
"We've evaluated the market and have determined there is a strong demand for SLRs," says James Neal, director of digital imaging products at Sony. "By placing the camera at entry level to the enthusiast and professional market, we think the A100 represents a great opportunity for Sony and our customers."
A great opportunity indeed. While Sony currently holds second place in digital camera sales both worldwide and in the U.S., industry analysts say that the market is quickly maturing. In 2005, U.S. point-and-shoot camera sales reached $6 billion. By the end of 2006, that number is expected to drop to $5.8 billion. And by 2009, sales will have fallen even further still to $3.3 billion, according to technology research firm InfoTrends.
Though the digital SLR market is far smaller, it is still growing. U.S. sales in 2005 were $950 million and are expected to rise to $1.3 billion by year's end. That trend is expected to slow as hardware prices drop, but the segment will still see continued growth: 2009 sales are forecast at $1.8 billion.
Sony is hardly the first company to notice the trend. Other firmly entrenched camera companies like Canon (nyse: CAJ - news - people ), Nikon and Olympus--which respectively hold first, second and third place in SLR global market share--have already built strong customer bases.
And that customer base is key to profits. Even as point-and-shoot and SLR camera prices drop, SLR users will continue to buy expensive accessories. And once they have made the initial investment in the camera, customers tend to upgrade to the same brand to keep using all their add-ons. "People who buy SLRs are the most attractive kind of digital camera user," says Christopher Chute, digital imaging analyst from IDC. "Vendors make a ton of money off these things."
Sony won't find it too difficult to break into the market; the company got a lucky break back in January. Konica Minolta, a well-respected digital SLR manufacturer, announced it was bowing out of the photography industry all together (see " Konica Exits Photography Business"), and it turned its SLR business over to Sony. Since Konica Minolta cameras will be interchangeable with the new Sony accessories, the company already has a sizable built-in consumer base.
"It's a group of consumers Sony can go after right away," says Ed Lee, digital imaging analyst from InfoTrends.
The company's strategy of first aiming at the mid and low ranges of the SLR market--first-time SLR buyers and advanced amateurs--is an "extremely savvy" approach to entering the market, since more than 80% of all SLR sales are $1,000 and under, Chute says.
Canon, "the 1,000-pound gorilla in the SLR market," uses a top-down approach to its SLR market strategy. "I definitely see this as a threat to Canon's SLR business," Chute says. "On a worldwide scale, as far as point-and-shoot camera market share, Sony and Canon are neck and neck. Add in SLR sales, and Sony could give them a run for the money."
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http://www.forbes.com/technology/2006/06/05/sony-slr-digital_cx_dl_0605slr.html
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