updated 2/9/2006 5:36:40 PM ET 2006-02-09T22:36:40

Eastman Kodak Co. captured the No. 1 slot in the ballooning U.S. digital-camera market for a second straight year, extending its lead over Japanese rivals Canon Inc. and Sony Corp.

Domestic sales of digital cameras surged 21 percent to 28 million in 2005, and Kodak's market share leaped to 24.9 percent from 21 percent in 2004, according to data released Thursday by IDC, a research firm in Framingham, Mass.

Kodak shipped 7.05 million digital cameras to U.S. retailers last year, 43 percent more than in 2004. Tokyo-based Canon moved ahead of Sony into the No. 2 spot with 5 million shipments, a 16 percent increase, but its market slice still shrunk from 18.3 percent to 17.7 percent, IDC said.

Japan's Sony, which lost its front-runner position in the U.S. market to Kodak for the first time in 2004, was third in 2005. It shipped 4.78 million cameras, up 10 percent from 2004, but its share of the U.S. market slumped to 16.9 percent from 18.5 percent, IDC said.

Canon benefited from robust sales of digital single-lens reflex cameras, IDC said, and Kodak is now increasingly shifting its focus toward boosting sales of higher-end models. Its new pocket-sized EasyShare V570 couples two lenses — a 3x optical zoom lens and a specialized lens for ultrawide-angle pictures.

Some analysts think Kodak waited too long to launch its easy-to-use line of digital cameras in 2001 because of a reluctance to phase out film, its 20th-century gravy train. But the 125-year-old company insists its switchover was timed to take advantage of filmless imaging's emergence as a mass-market phenomenon.

Digital cameras began outselling film cameras in the United States in 2003. And in 2005, Kodak generated more annual sales from digital imaging than from film-based photography for the first time.

In the global digital-camera race, Kodak was third in 2004 with an 11.8 percent market share to Canon's 17.1 percent and Sony's 16.7 percent. While the 2005 rankings are still a few weeks away, "we don't expect any big changes" but Kodak will likely make up some ground, said IDC analyst Christopher Chute.

Behind the top trio in the U.S. ranks in 2005 were Nikon Corp. with an 8.2 percent share and Palo Alto, Calif.-based Hewlett-Packard Co. with 7.5 percent. Next in line were Olympus Corp. with 6.9 percent and Fuji Photo Film Co. with 6.3 percent, IDC said.

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