Digital camera firms have scaled back their sales targets for the fiscal year to March in a “collapsing” market, said Tetsuya Wadaki, an analyst at Nomura Securities.
“Order volumes at parts suppliers currently appear to be down more than 30 percent year-on-year,” Wadaki said.
Firms are scrambling to keep improving picture quality, offer features such as water-proofing and expand their Internet features, like allowing users to share pictures through social media networks.
Camera makers say growth areas include emerging economies - where many own neither a camera nor a smartphone - along with replacement demand among compact-camera owners.
And the fall-off in demand has not been as stark for the pricier detachable lens cameras favoured by avid photographers and growing ranks of camera-buff retirees, particularly in rapidly ageing Japan, they say.
Another emerging battleground is for mirror-less cameras which can be made nearly as small as compact cameras but with picture quality that rivals their bulkier counterparts.
Canon insists the market has not been abandoned to smartphones.
“Demand for quality snapshots is there, like taking pictures of your friends' weddings, an overseas vacation, or your children,” a Canon spokesman said.
“We believe there are many people who need compact cameras,” he added.
Mizuho analyst Kurahashi acknowledged that compact cameras “will not disappear”.
“But we see the current trend continuing as image quality in smartphone cameras steadily improves,” he said.