Not long after killing film cameras, digital point-and-shoot cameras are on the chopping block themselves.
Cell phones and feature phones are the products we typically think of as casualties in the rise of the smartphone, but another product category that’s been hammered is point-and-shoot cameras. With the built-in cameras offered by smartphones getting better every year, consumers have seen less reason to lug another device — a camera — everywhere they go.
The one bright side for the industry has been the premium market where optical zoom lenses can greatly outperform anything a smartphone offers. (Think of how bad your iPhone is at trying to zoom in on the performer on a concert stage, for example.) But Samsung (SSNLF) might have just ruined that party with the release of the Galaxy S4 Zoom, a variation on its best-selling Galaxy S4 smartphone with a built-in, 10x telephoto lens.
Ever since smartphone manufacturers started upping the ante by providing more than rudimentary cameras in their smartphones, the writing has been on the wall for point-and-shoot cameras. In 2009, Apple’s (AAPL) iPhone became the most popular “camera” used on photo sharing website Flickr. That milestone could be dismissed as being unfairly influenced by the fact that an iPhone makes it much simpler to casually share photos online than a camera, resulting in a skewed number of iPhone photos ending up on Flickr. Still, the trend toward declining point-and-shoot sales became quantified that year as digital camera sales began to decline for the first time ever.
Overall, there has been a slight recovery since 2009, but that’s been led by higher-end digital cameras such as DSLRs (professional models that will likely never be threatened by anything a smartphone vendor could release) and premium point-and-shoot models with telescopic zoom lenses.
These souped-up point-and-shoots are still pocketable, but because they offer optical zoom lenses, they let people capture the high quality close-ups everyone craves. They’ve been extremely popular with travelers and have helped to keep digital camera makers in business. According to TechRadar, while compact point-and-shoot camera sales were down 30% in 2011, sales of the point-and-shoots offering zoom lenses of 10x or greater were up 42% during the same period.
A number of companies have been offering optical zoom lens kits for smartphones, showing the demand is clearly there. As add-on devices that usually require the smartphone be housed in a special case to mount the lens, these smartphone accessories are a compromise. They’re usually priced as an impulse accessory as well, meaning they’re low-cost and relatively low quality. Smartphone manufactures like Nokia (NOK) have been pushing the envelope with high-quality sensors and optics like its PureView camera, but this system still lacks the big zoom that consumers crave.
Never one to miss an opportunity, Samsung has decided the time is ripe to make a move. The Galaxy S4 is already the best-selling Android smartphone and by integrating a 10x optical zoom lens, Samsung might have just come up with the ultimate formula for finishing off the point-and-shoot camera. By combining a 16MP image sensor and a 10x optical zoom (with optical image stabilization to reduce camera shake), this smartphone can take better-quality photos than most compact point-and-shoot cameras. It’s even competitive with the higher-quality ultra-zoom models camera makers have been relying on.
However, a Galaxy S4 Zoom owner doesn’t need to carry two devices, just one. And they don’t need to download their photos to a computer to edit and upload them to Flickr or Facebook (FB); the Android smartphone has editing apps onboard and it’s already connected via cellular or Wi-Fi.
The one thing camera makers can hope for is that style-conscious consumers will find the zoom smartphone form factor too awkward (after all, when it comes to smartphones, thin is in) and decide they’d rather continue carrying two devices than be seen in public holding a chunky hybrid phone to their ear.
The digital camera industry is hurting. Last month, long time manufacturer Olympus (OCPNY) announced it is exiting the point-and-shoot market altogether. Even dominant players like Canon (ADR) are feeling the heat, with that company’s stock taking a 5.7% hit at the end of April after its last quarterly earnings report showed the decline in point-and-shoot cameras was accelerating. According to Bloomberg, point-and-shoot sales overall were off 40% in the first two months of 2013 compared to 2012, and Canon was forced to revise its sales forecast down for the year.
If the Galaxy S4 Zoom catches on with consumers and other smartphone manufacturers follow suit, digital cameras could suffer the same fate as the film cameras they killed.
As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.