The 1 Megapixel Camera Phone

I have heard that this has been in the works for some time, but today the formal announcement was made that there will be 1 megapixel camera phones available in the near future. This is just the beginning for camera phone technology and I think that there are three basic questions that jump to mind after reading this article.

Question #1: If they are cheap enough, will consumers substitute camera phones for stand-alone cameras? I believe that digital camera mobile phones will be accretive to the digital camera boom. I don’t believe that most consumers will substitute a camera phone for a digital phone if they have the means and desire to purchase a stand-alone camera. However, I do believe that customers who are not passionate about photography or who do not have $150 or more to spend on both a phone and stand-alone camera (for a total spend of $300), a camera-enabled phone purchase could obviate the need to buy a stand-alone digital camera.

Question #2: How much will consumers spend on camera phone technology? – I don’t know how much revenue T-Mobile and other providers are getting from their digital photography initiatives, but my hunch is that click-and-send services will be a lot like SMS messaging — you always end up spending more on the service and using it more frequently than you initially estimate. Also, because I have yet to see a compression algorithm that would make digital photographs lightweight objects to move across the network, a click-and-send or multimedia messaging service could help carriers squeeze more value out of their next-generation network investments and more revenue from their existing customer base.

Question #3: Will there be camera-free handsets anymore? – My intuition is to say “no”, but I am not sure that this is the case. The latest data that I have seen says that more than 95% of mobile phones sold worldwide cost less than $200, which makes them essentially “free” for U.S. customers once you add in the available carrier and 3rd party rebates. So, unless 1) mobile phone components prices drop to the point where cameras can be embedded without a perceptible change in prices or 2) carriers believe that the cost required to subsidize the camera will be made up by spending on phone-related services. In the end, I believe that most (but not all) handsets will be camera-enabled in the near future, with the notable exception of the lowest-end handsets or converged devices.