Picture Bright For Digital Photo Frames

Investor's Business Daily

Aug 29, 2007 12:00 EDT

The rise of digital photography has created a problem for active shutterbugs: What to do with all the snapshots sitting on their PCs.

One solution gaining in popularity is digital photo frames.

The product emerged a few years ago, but is only now taking off. That's thanks to lower prices and improved quality, analysts say.

Research firm Parks Associates forecasts vendors this year will sell 5 million digital photo frames in the U.S. and 8 million worldwide. That's up from 1.7 million U.S. and 2.9 million worldwide last year.

Parks expects digital photo frame unit sales of 43 million worldwide in 2011. Sales in dollars will jump to $5 billion in 2011 from $1 billion this year, Parks says.

"This market is experiencing explosive growth," said Parks analyst Harry Wang.

Lower prices partly account for the jump in sales, he says. A year ago, a 7-inch digital picture frame sold for about $200.

Now, many models are less than $100, and some can be found for less than $80, he says.

A digital photo frame is an electronic display with a traditional photo frame look. It can store and display digital pictures on an LCD screen.

Also An Alarm Clock

Higher-end models can play music and video, record messages, even act as alarm clocks.

The top vendor of digital photo frames in the U.S. is Pandigital, Wang says.

Pandigital, a privately held company based in Dublin, Calif., has a big presence in department, home furnishing and office supply stores, not the typical places to find electronics, he says.

Consumer electronics stores account for about a quarter of digital picture frame sales, Wang says.

The rest of the sales come from home furnishing, office and other types of stores.

Besides Pandigital, other leading sellers include Westinghouse Digital Electronics, Polaroid and Smartparts.

But seeing an opportunity ahead, some of the largest consumer electronics companies are getting in the game. Eastman Kodak EK introduced its first digital photo frame earlier this year, and Hewlett-Packard HPQ and ViewSonic are preparing to enter the business. Philips Electronics PHG also is increasing its presence.

The holiday sales quarter is going to be critical to see if the lesser-known brands can hold their lead, Wang says.

Two-Tier Market

The market is starting to split between low-cost, basic digital photo frames and advanced frames with features such as Wi-Fi, which can be used to wirelessly access photo libraries on PCs, says Steve Koenig, an analyst with the Consumer Electronics Association.

Most of the frames plug into the wall, though a few models are battery-powered. Users can add photos to the frame by slipping in their camera's memory card or by downloading photos to internal memory from a PC with a USB cable. Users then can choose to display any single photo, or can cycle through the photos slide-show style.

In addition to lower prices, other reasons behind the growth of digital photo frames include greater familiarity with digital photography and the desire to free photos stored inside PCs.

"People have literally thousands of pictures that they've taken over the past few years just sitting on their computer hard drives," said John Wolikow, vice president of sales and marketing at digital photo frame maker Aluratek.

"And what do they do with them? Maybe they'll go in every once in a while and take a look at the pictures," he said. "This product allows you to bring those pictures into your everyday life, into your home or your office."

Staples Adds More Models

Aluratek, a privately held firm based in Irvine, Calif., focuses on selling higher-end digital picture frames through online and catalog sales.

Its feature-rich frames come with screen sizes, measured diagonally like TV sets and PC monitors, ranging from 7 to 15 inches.

The time is right for digital photo frames to take off because digital cameras are in more than half of U.S. homes, says CEA's Koenig.

Consumers are using digital frames not just to display photos of their families at home and work, but also as a convenient way to check out pictures they just snapped, says Ross Rubin, an analyst with the NPD Group. It's as simple as popping out the camera's memory card and plugging it into the digital frame, he points out.

Retailers are giving digital photo frames greater prominence in their stores and that's fueling sales, analysts say.

Office supply chain Staples SPLS has been a booster of digital picture frames recently, Wang says.

Last Christmas shopping season, it had one or two brands for sale but hidden away. Now it has about five brands in prominent display areas, he says.

Source: Investor's Business Daily


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