Pushing Camera Phones To Print - Forbes.com

Pushing Camera Phones To Print
Danit Lidor, 05.03.06, 12:00 PM ET

New York -
It might seem like camera phones are everywhere these days, but by the end of 2006, there will be twice as many of them--doubling to 112 million from 69 million units last year. Yet, a study released by a research firm this week sent a tough message to the makers of camera phones and photo printers, as well as wireless carriers hoping to profit from all those camera phone pictures.
According to consumer and retail research firm NPD Group, about 73% of consumers surveyed are generally satisfied with their camera phones and more than 80% of those who use the camera feature on their phones save the picture on the phone. But that's where the cash flow stops. Only 20% of them send the images over wireless networks, 14% upload them to a computer and about 3% print the pictures.
"Consumers are mostly using the camera phone as a digital photo album," says Neil Strother, the NPD analyst who wrote the report. "Sharing, storing and printing…are not the predominant usage."
Imaging analysis firm Lyra Research, calculates that 1 billion camera phone pictures were snapped in North America in 2004, but only 150 million of those images ever moved from the phone. In 2005, though the number of raw images doubled to five billion, only 900 million went anywhere. And the trend is expected to continue into 2006: raw camera phone pictures are expected to more than double again to 11 billion by the end of the year, while the number of pictures transmitted will still lag behind at 2.5 billion.
If so many people are snapping camera phone pictures, why aren't they doing anything with them?
"One of the biggest hurdles is that image quality is pretty low," says Strother. As an example, take a look at Motorola's (nyse: MOT - news - people ) best-selling RAZR camera phone. Despite a hefty price tag and fashionable styling, it's outfitted with outdated VGA camera technology and a relatively small display screen. (Vector graphic array technology has an image resolution of up to 640-by-480 pixels).
"Quality dictates what people do with their pictures," he says. "If it doesn't look good on the phone, they aren't going to take the next step."
Better looking pictures will make a difference to consumers, but affordability and ease of use are just as essential. Costs associated with photo printers and kiosks are coming down, but while the devices are equipped to accommodate every sort of camera, direct printing from camera phones without a removable memory card, wireless or Bluetooth capability (features only high-end phones have) is impossible.
Imaging companies like Fuji Photo Film (nasdaq: FUJIY - news - people ), Eastman Kodak (nyse: EK - news - people ) and Hewlett-Packard (nyse: HPQ - news - people ) have stated that camera phone prints are part of their long-term strategy, but such innovation is hard to come by. Last fall, Fuji introduced a direct-from-handset-to retail-print-location service, but other companies have not followed its lead. (See: " Fuji Helps Develop Pics From Your Handset.")
And at CES this year, Kodak announced a 10-year research partnership with Motorola. The photo company has said the resulting phones will offer better printing and uploading options but they are nowhere near the marketplace. (See: " After Rough Year, Kodak's Perez Wows 2006 CES.")
Still it's not just manufacturers that are lagging behind. Wireless service carriers like Verizon Communications' (nyse: VZ - news - people ) Verizon Wireless, Deutsche Telekom's (nyse: DT - news - people ) T-Mobile and Sprint (nyse: S - news - people ) trumpet their text-messaging services and monthly minutes plans, but rarely mention picture sharing. "Consumers are a bit timid about sending pictures because they are uncertain about costs," Strother says. "Carriers need to do a better job of promoting those services."
In fact, though the industry predicts that digital print revenue will reach about $4.3 billion by the end of this year, only 3.5% of that revenue will be from camera phone prints. And there hasn't been any tracking of revenue from camera phone image wireless transmission at all, says Lyra analyst Steve Hoffenberg.
Getting those images off the phones and onto computer hard drives, Web photo-sharing sites and printers is the next step toward profiting from the camera phone trend, he says.
Unquestionably the "next generation of [camera phone] revenue stream has hit some bumps," Strother says, but once all the players have found their "sweet spot," the market should smooth out in the next few years.
"It’s a big ecosystem if someone can connect all the dots."