Handheld game consoles & cameras losing market share to smartphones

Smartphones are continuing to capture lucrative market share from portable consumer electronic (CE) devices such as handheld game consoles and cameras.

According to analysts at ABI Research, annual shipments of handheld game players are slated to decline at least 4% YoY with the North American market experiencing a major fall of nearly 13%.

Meanwhile, digital camera are projected to plummet over 11% YoY worldwide and nearly 20% in North America.

“New devices like Sony’s 3G Vita and Samsung’s Galaxy Camera are trying to bridge the divide between portable CE devices and cellular-enabled mobile devices, but these tweener devices will have many challenges,” explained ABI Research analyst Michael Inouye.

“Early sales of Sony’s 3G Vita were quite strong, likely attributable to pre-launch bundles which favored the cellular version – more recent holiday bundles have since favored the Wi-Fi-only model. Incremental monthly fees consumers must pay when adding these devices to their cellular data plans combined with metered data often overweigh the benefits of mobile devices – excluding smartphones and tablets.”

However, Inouye was quick to emphasize that a definite opportunity still remains for portable game consoles, as they boast “adequate differentiators” versus smartphones, notably exclusive game franchises and superior user interfaces (UIs).

Indeed, Nintendo’s 3DS has sold well and Sony’s Vita is looking like a late bloomer, although a price cut would undoubtedly help spur demand. For digital cameras, picture quality and lens attributes might still be the best way to differentiate dedicated point-and-shoot cameras.

“While the auditory and visual quality of content in many ways is less important today than in the past, some consumers still look for these features,” added ABI analyst Sam Rosen.

“A subset of customers still look to higher end single-purpose cameras for higher image quality and portable game players for better game-play quality over smartphone feature sets. When CE manufacturers and operators work together to develop win-win data plans, and reduce the cost burden of the additional hardware, these classes will again find favor with consumers.”