Australia is now well into its third year of the digital revolution. It began quietly enough with the gradual introduction of digital mobile phones and has spread to digital cameras, MP3 players and a variety of other devices.
But, like any revolution, it has not all been smooth sailing. A lot of expectations have yet to be met and some may never be, despite the massive hype that preceded them. High price points, multiple digital storage standards, complexity of use and consumer and channel confusion have all impacted on markets.
The digital photography market is showing signs of taking off, and is expected to record up to 100 per cent growth this year. Though digital imaging remains mainly a corporate market, product prices are falling steadily, allowing manufacturers to move into the consumer range, which is expected to ensure solid growth for the next several years.
However, while digital photography is now beginning to realise its potential, MP3 has been a major disappointment. Sales of MP3 players have been uninspiring, despite the enormous amount of publicity they have received over the last couple of years. This is not to say that manufacturers have given up on the format. On the contrary, over the next 12 months consumers will be offered a larger range of MP3 players than ever, and they will also have a growing list of devices that include MP3 as an add-on.
Kodak has a camera that comes with an MP3 player; Samsung has announced several concept devices such as watches, cameras and phones with MP3; Nokia and Ericsson are both offering phones with MP3 capabilities, and Philips has launched a range of MP3 CD players.
But the confusing thing about all of these new products is that they will not use the same storage format. Unlike the CD market where there is a wide choice of products using a single storage medium, MP3 and digital photo-graphy use so many different, often incompatible formats, leaving the consumer thoroughly confused.
Ironically, the most successful sector of the overall digital market has been in storage media and the storage market is forecast to grow massively over coming years. However, the lack of a single uniform standard has been blamed for holding back the market for storage-reliant devices such as cameras and MP3 players. There are at least half a dozen different storage formats, ranging from Sony's Memory Stick, Compact Flash, Smart Media and MultiMedia Cards to rewritable CDs, DVDs, and Iomega's Clik!, Zip and Peerless drives.
Sony's technology and training manager, David Allen, admits bewilderment over storage formats is a problem for the market and that there is a need for more training in the channel. But he says Sony is looking at ways of providing training to the channel, including Web-based training.
"The confusion over various memory standards is the reason why we significantly dropped the price of our Memory Stick storage. Memory Stick has about 25 per cent of the world flash memory market, but there are still a lot of competing media out there and a lot of people are holding off making purchasing decisions (because of it)," he says.
While Memory Stick will remain a flagship product for Sony, the company has also developed other ways of using more traditional forms of digital storage, such as the rewritable CD. It has added a CD version to its successful Mavica digital camera range, which burns images direct to disk. When connected by USB to a laptop, the camera can be used as a portable CD burner.
Philips has launched a major onslaught on the digital market in recent months, and in October will launch the first recordable DVD player up against the traditional VCR market.
Jonathan Wight, marketing manager for consumer electronics at Philips, says there is a need for traditional retailers to educate themselves about the new products that are coming up.
"More knowledge is required, particularly in digital storage products, not just for retail people but everyone in the channel including general sales and marketing people, and it can be done a number of ways including using Web sites, training modules and face-to-face presentations.
"Digital products require a lot more interactivity in showing consumers how they work. It is not good enough to just say this is a portable CD player with MP3 CD playback because - from a consumer's point of view - all they are going to see is a portable CD player that looks little different to any other. But the benefit to the consumer of the MP3 CD playback is the extra storage capacity. You get 10 hours storage of ordinary MP3 and you can still play normal CDs," Wight says.
"While there is a lot of confusion out there over the number of different storage systems, we have always had a policy of backwards compatibility. The products that have failed don't have backwards compatibility. Consumers are saying future-proof me please . . . make sure I can put both current and future products inside the product I am buying'."
Kodak has had mixed success in its move into digital. Earlier this year it released a multifunction digital camera with MP3 players but by the company's own admission it has been slow to take off.
Kodak's product manager for digital and applied imaging, Greg Pearce, says part of the reason for the lack of success of the product may relate to the slowness of the MP3 market in general.
"While Napster sent the popularity of MP3 soaring on the Net, it did nothing for MP3 players. There is no major player out there just doing MP3 - everybody has a little piece of the pie and everybody has a different way of attacking the product category.
There is no one out there really championing MP3 and pushing the product hard.
"From where we sit there is not the excitement around MP3 that there once was," he says. However, Pearce believes the same cannot be said of digital photography, which is starting to take off.
"This year we will see about 100 per cent growth in digital photography products," he believes. Despite the growth, digital format still makes up only about 12 per cent of the photography market.
While Kodak remains bearish about the MP3 market, Samsung Electronics is going the other way - it has just released three new products to the market, including one that incorporates voice recording and an FM radio tuner.
Samsung's MP3 products manager, Frank Marcus, says the company is "toying" with a few ideas to help retailers sell MP3 products, such as placing download centres in high-traffic, major retailers.
"They would provide a place where consumers can go to play with MP3 before they buy a player and go back after they have bought it.
"There is a lot of uncertainty among people who have not used them. They want to know how long it takes to load a song, what the quality is like, how long does the file last on the player, can they take them off and put them back on," Marcus says.
One thing is clear, though: as long as these little questions are not being answered properly, consumer interest in digital products will depend on theability of resellers and vendors to deliver the answers.