Guess the Category: 1300% Growth!

Guess the Category: 1300% Growth!

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For a product category that started off with a “low-quality & unintuitive” reputation, digital picture frames (DPF’s) are putting up some of the most explosive sales numbers in CE retail history. 

NPD’s weekly tracking service recently had the image displays (5-inches or greater) up 240% in dollar growth and 250% in unit growth from this time last year, and the stats on the tiniest frames, 2-inch keychains that retail for around $30, are even more staggering as sales grew 1300 percent over the last year. That’s no typo.

“It’s just exploding,” says NPD Imaging Analyst Liz Cutting. “Digital frames were the biggest growth category of all electronics (followed by mobile navigation and LCD TVs) at the end of 2007.”  CEA projections are uber-positive as well. According to Industry Analyst Steve Koenig, 3.2 million frames are expected to ship in the U.S. in ‘08, up from 1.8 million last year.

So it stands to reason that at Dan’s Camera City in Allentown, Pa., CEO Mike Woodland has set aside a new display area for digital frames on his ample showroom floor. “We decided to make it kind of like a furniture display area, almost zen-like with Pier One candles and polished rocks all around, a more organic presentation,” he says. “We’re mixing up sizes and presenting frames much like you’d present a nice piece of furniture.”

Woodland’s strategy is quite different than you’ll see at many major department stores, which are expected to once again pitch digi-frames at rock-bottom prices for the holiday selling season.

Like so many other Americans, Woodland recently bought a frame for his mother as a gift. She figured out how to turn it on, watched the cycle of images run through a time or two, and then promptly turned it off. He says she may use the frame occasionally, but she certainly isn’t anxious to tackle the confusing set of loading instructions necessary to update her images.

“Most of the frames out there are still very difficult to use.” says Woodland. “They have buttons with three different commands, not at all intuitive. The concept is there, but the execution just isn’t what it should be yet. Simple programming needs to be an emphasis. I think a lot of people have them and don’t use them.”

An easier UI is on the way, say frame manufacturers, but at the same time, next-gen frame models will offer a wild array of features.  Most will play video. Some will boast Wi-Fi connectivity, “live” weather information, and even photo printers, as we’ve seen already from Smartparts. You can also expect “personalized” Internet content whereby a frame can be set up to go directly to a user’s social network site for updates everyday or simply refer to favorite sites on a regular basis.

Kodak, one of the companies investing significant resources into the DPF category, is now offering an EasyShare touch-screen model (they call the feature a “Quick Touch Border”) which has built-in speakers for playing MP3s. Pandigital began offering a 15-inch, kitchen-targeted frame back in June which combines image viewing with a recipe-database they call the “Digital Cookbook.”

Other companies, like Hi-Touch Imaging, are making a play for high-resolution frames in 3:2 aspect ratio. Fidelity also took a rather unique marketing route with their latest model, the Digital Photo Vault, selling it as a storage device that happens to also display images.

“Going back a bit, as digital cameras got better and better, digital frames really didn’t” says Stefan Guelpen, President, Co-Founder Smartparts, which recently introduced a 32-inch frame, the SP3200, that was so popular, it was quickly in backorder status, even with a pricetag of $899. “You were looking at inferior chip sets and limited functionality.”

Guelpen says customers are learning to avoid the rock-bottom priced frames and invest in models with more functionality. He thinks retailers should look for inventive ways to cash in on what he’s predicting will be year-over-year growth in the category for the next five (“if not 10”) years.

“They should offer to pre-load a customer’s digital images onto a frame and sell it as a package with their prints,” brainstorms Guelpen.

Digi Frames Evolving Still
As the digital frame market continues to evolve we are actually starting to see how the devices are becoming a more central part of consumers’ lives, similar to the way the cell phone evolved from a “cool convenience” to a “must-have” CE device.

From the ability to simply display images in slideshow form on various sized LCD screens to delivery of the aforementioned instantaneous up-to-date information on weather, news, stock quotes, and advertisements, the digital frame is just beginning to realize its full potential.

Skyla, a recently formed consumer products division of LiteOn, has come to market with a DPF model that includes a built-in scanner so users can scan in old photos through a small slot in the front of the frame (up to 4×6).

According to a recent report conducted by IMS Research, the category exploded in 2007 accounting for more than $648 million in retail revenue in the U.S.  IMS Research analyst Mark Meza recently stated, “The converged digital home is evolving at such a rapid pace that a niche market has been created for a product designed and fashioned specifically for accentuating the home décor and not necessarily as an extension of the traditional home entertainment center.

CE manufacturers and component suppliers are betting that the driving force behind the growth of this market will continue to be the potential for DPFs to not only provide a slideshow of images and video clips, but to also function as information display devices.”

The category was slow to develop when the first models hit the market (circa 2000), most of which were high-priced with fairly complicated UI’s. This market seemed to turn the corner in 2006 as manufactures began producing more attractive, more affordable and easier to use models with a wide array of feature sets. As 2008 comes to a close, the sky appears to be the limit for this category now.  

“The potential exists for a single home to have a DPF as the centerpiece in each room, with the dual function of being a digital display and a real-time information source. This adds huge potential for market growth as DPFs develop into much more than a one-time purchase of a ‘dumb display device’ that sits on the mantle in the background of the living room,” adds Meza. Wireless technologies are poised to play a major role in driving the transition of the DPF market from single one-time purchases to mass adoption.

Image Display at Core

While the move toward a more “full-service” device is intriguing, the digital frame market continues to dazzle for the reasons the product was originally intended, as an image display device.

The fact that many consumers have yet to address an effective way to properly store and organize their digital image files and are instead letting them pile up on their computer hard drives has certainly helped this category’s recent surge. The product is getting millions of images out of the “black hole” of a PC’s drive and back into consumer’s lives to enjoy.  While many in the industry originally claimed this product would ultimately hurt the retail print business, several are now claiming otherwise.

“Images that are stored on a PC’s hard drive will rarely if ever get printed,” began retail analysts Lauren Sosik. “While images presented on a digital frame are seem by family and friends and are often times printed as a result of someone simply asking ‘hey, I like that image, can I get that printed?’.”

Smartparts’ Guelpen agreed, adding, “Seeing your memories on a digital frame can actually remind people to get prints made – they are reliving those moments on the frame and often times then want the prints.”

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