Camera phones click in Europe

Camera phones will make up most of the mobile phone market in three years' time, according to new figures from Gartner. But the category is creating opportunities for new competition from Asian vendors
Written by Matthew Broersma, Contributor

Embedded cameras are clicking in the European mobile phone market, according to a new report from research firm Gartner, which projects that camera phones will make up the majority of Western European handsets shipped by 2006.

Handsets with built-in cameras or a camera attachment are increasingly luring consumers to buy new phones or upgrade their older models, which should spell good news for handset makers and mobile phone operators. Both have been looking for ways to continue growing the mobile device market, which has begun levelling off.

The appeal of camera phones will only grow in the coming months as short-term manufacturing problems are ironed out, according to Gartner. "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," said Gartner analyst Carolina Milanesi in a statement. "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."

Upcoming improvements to image resolution, and the addition of zoom capability and flash, will continue to drive demand through this year, Gartner said. The devices will make up 21 percent of the market next year, 45 percent in 2005 and 66 percent in 2006.

Camera add-ons will grow less popular over time, however, from 5 percent of the market this year to 1.5 percent in 2006. Together, camera phones and add-ons will ship 70 million units in 2006 in Western Europe, Gartner projected.

Established European handset vendors may not necessarily benefit from this demand, however. Asian handset makers, which have superior imaging technology but little brand recognition in Europe, have successfully allied with network operators such as Vodafone to promote their wares. Established companies such as Nokia and Siemens are less keen on such alliances.

"Their lack of brand awareness among end-users in Western Europe, which might have been perceived as a weakness, has turned to their favour," Milanesi said of the Asian manufacturers.

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