Nov 19, 2004

Kodak gains on Sony in U.S. digital camera market - AP Regional: "Kodak gains on Sony in U.S. digital camera market

AP Business Writer

November 19, 2004, 4:33 PM EST

ROCHESTER, N.Y. -- Eastman Kodak Co. is nipping at Sony Corp.'s heels in the ballooning U.S. digital camera market.

The world's biggest film manufacturer, aiming to become the No. 1 seller of point-and-shoot digital cameras on its home turf in 2004, almost drew level with Japanese front-runner Sony in third-quarter U.S. camera shipments, market research firm IDC said Friday.

Sony delivered 1 million consumer digital cameras in the third quarter, only 10,000 more than Kodak, IDC said. Canon Inc. ranked third with 800,000 shipments, followed by Olympus Corp. with 585,000. Other major camera makers include Fuji Photo Film Co., Hewlett-Packard Co. and Nikon Corp.

IDC, based in Framingham, Mass., estimates that 24 million digital cameras will be sold in the United States this year, up from nearly 17 million in 2003, and sales could jump to $8 billion from $5.7 billion.

While profits are harder to measure, "the more cameras you get out there, the more likely" a company can generate sales of printers, paper, ink and other high-margin accessories, said IDC analyst Christopher Chute.

Kodak's digital camera business "crossed the line into profitability" late last year and expects to stay on the "positive side of that line going forward," said Greg Westbrook, general manager of Kodak's digital-capture business.

"We had a really strong third quarter," Westbrook said. "We'll continue to pursue that top spot in the U.S. during this year.

About 5 million consumer digital cameras were churned out from July to September, up from 3.6 million in last year's third quarter. Yet the fourth quarter will be far busier: More than 10 million cameras will be sent to stores to take advantage of the end-of-year holiday season.

In the first nine months of the year, Sony's slice of the U.S. market slipped to 21 percent on shipments of 2.7 million consumer digital cameras while Kodak's share jumped to 19 percent on 2.5 million shipments, IDC said. Canon trailed with 15 percent and Olympus with 12 percent.

In 2003, Sony ranked first in shipments with a 21.7 percent market share, down from 24 percent in 2002, IDC said. Kodak moved into second place with a 17.9 percent share, up from 13 percent in 2002.

Worldwide, IDC expects 69 million digital cameras will be sold this year, up from 48.9 million in 2003. Global sales could reach $16.5 billion, it said.

Digital cameras began outselling traditional film cameras in the United States last year, but many Americans still haven't made the switch. The Photo Marketing Association, based in Jackson, Mich., estimates that 10.6 million film cameras will be sold domestically this year.

Kodak invented the world's first digital camera prototype in 1976 but appeared to have been caught off-guard by the speed with which shutterbugs took to digital photography, analysts say. Kodak insists it didn't want to leap in until a mass market was clearly developing.

Its EasyShare digital camera line, priced between $99 and $499, was launched in 2001.

As its makes the tough transition from analog to digital photography, Kodak is slashing its payroll. In January, when it employed nearly 64,000 people, Kodak announced plans to cut 12,000 to 15,000 jobs by 2007.

Kodak shares closed down 97 cents, to $31.67 on the New York Stock Exchange Friday, a day when the stock market was rattled by Federal Reserve Chairman Alan Greenspan's warning over the nation's spiraling trade deficit.

Sony Corp shares ended off 14 cents, at $36.14. "