RIP Point-And-Shoot: Nokia N8, Smartphones Make Simple Cameras Redundant

The new Nokia N8 smartphone highlights a serious problem confronting companies that manufacture point-and-shoot cameras -- namely, in the era of multiuse devices, how do you market a one-trick pony? The issue isn't new, but the situation is now dire for companies like Kodak (EK), Canon (CAJ), Sony (SNE), Panasonic, Nikon, and Olympus.

For instance, the Nokia N8 has a 12 megapixel camera that includes one of the highest resolution sensors ever produced for a smartphone. Furthermore, as my photog colleague Erik Sherman mentions, the Nokia N8 uses Zeiss optics. The Cadillac of lenses (pardon the cliche), Zeiss optics are used in planetariums, electron microscopes, and, sniper rifles.

By being more powerful than the average low-end shoot, the Nokia N8 is a symbolic curtain call for the point-and-shoot camera. Smartphones like the iPhone are already taking part of this marketshare. Hardcore photogs aside, there's less reason than ever to carry an additional device.

There are a few things point-and-shoot cameras have traditionally held over previously substandard camera phones:

• Optical zoom
• Real flash units
• High resolution lenses

A real flash unit was also selling point for even cheap point-and-shoot cameras. Camera phone pictures were notoriously dark, emphasizing the low resolution, or complimented by a cheap flashing bulb as helpful as a light pen. This year has already brought new, real flash to affordable smartphones, like the Sony Ericsson Xperia X10.

On high-resolution lenses, a low-end point-and-shoot camera offers 8 to 10 megapixels -- actually lower than the newer smartphones.

So the question is becoming, "Why would a consumer pay to have an additional device that does less of a job?" Assuming a company doesn't want to pull a Polaroid -- trying the video game market after its casual consumer market dried up -- Kodak, Canon and other point-and-shoot manufacturers have two options:

• Create extremely cheap cameras, risking brand devaluation
• Create extremely expensive cameras, risking less market share

Lowering the point-and-shoot price was a wise supply-and-demand move on the manufacturers' part, but it hasn't stopped the consumer lure of slightly more expensive camera-ready smartphones with more functionality:

• The popular Samsung Memoir, with an 8 megapixel camera, Xenon flash and online picture sharing
• The upcoming Apple (AAPL) iPhone 4, with its front-facing, higher resolution camera
• The aforementioned Nokia N8

Nielsen today estimates that by the end of 2011, smartphones will overtake feature phones in the U.S. One in two Americans will have a smartphone by Christmas of that year, Nielsen forecasts, compared to just one in 10 in the summer of 2008. I blame the iPhone, but there are plenty of culprits to point out - superphones packed with with more features than you can fit in a stocking over the fireplace.

The only real choice, then, is for camera manufacturers to go upscale. I discussed a similar dilemma with GPS devices being overtaken by smartphones, but, unfortunately, no one is really a GPS fanatic. Photography, however, is still a billion-dollar industry, and hardcore hobbyists will foot the bill for the high-end cameras. The camera manufactures will do fine off that, but they shouldn't expect the point-and-shoot revenue to be around much longer.

• Nokia's N8: Dawn of the "Swiss Army Knife" of Cellphone Handsets
• Picture This: Polaroid as a Generic Video Game Accessory Maker
• Strategic Dilemma: Garmin and TomTom Will Fail If GPS Devices Pretend To Be Smartphones