Sony aims for digital camera boost
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Sales of digital cameras have been booming but over-supply fears are growing.
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TOKYO, Japan (Reuters) -- Electronics conglomerate Sony Corp said on Monday that it planned to boost digital camera sales by 40 to 50 percent next year in unit terms, adding to an expected glut of supply in the market.
Sony said it was aiming to sell 14 to 15 million digital cameras in the business year to March 2005, compared with the 10 million it expects to sell in 2003/04.
Sony is battling Canon Inc for the top spot in the global digital camera market, of which each of the two firms controls around 20 percent. Canon said last month that it planned to sell 15 million digital cameras in the 2004 calendar year.
"Our understanding of Sony's digital camera business is rising sales but falling profit," said Lehman Brothers senior analyst Satoru Oyama.
"It used to be able to sell its Cybershot cameras at a premium to other brands but it can no longer do that."
The digital camera market is one of the cornerstones of the recent digital electronics boom, but rising production and new models are pressuring prices.
Analysts expect the global digital camera market to grow at least 20 percent in 2004 to over 60 million units, versus estimates for around 50 million units in 2003.
"We're targeting overall volume growth in expanding markets such as Europe and Asia, especially China," said Sony spokeswoman Junko Sato, confirming a weekend report in the Nihon Keizai Shimbun newspaper.
In recent weeks, Sony, Fuji Photo Film and Nikon Corp have all complained about a profit squeeze from falling prices of digital cameras and analysts expect the trend to gather speed.
UBS Warburg analyst Ryohei Takahashi expects prices to drop around 20 percent in 2004 after a 15 percent slide last year.
To avoid getting caught in a price war, some digital camera makers, such as Nikon, plan to boost their presence in digital single lens reflex (SLR) cameras, high-priced models with interchangeable lenses marketed to the serious camera user.
Japanese manufacturers are now targeting overseas growth to compensate for a heavily saturated domestic market.
Europe and Asia are seen as potential growth markets, while Eastman Kodak Co and Hewlett-Packard Co have been gaining share in the United States.
By midday, Sony shares were up 0.23 percent to 4,340 yen versus a 0.07 percent rise in the Nikkei 225 average.
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