The proliferation of digital content-e-mail messages, audio, video, digital photographs, office documents-gave a major boost to the market for storage peripherals as people looked for more ways to store this content. The need for additional storage to keep up with the data being generated turned out to be the key driving factor for this segment's growth.

While, external portable storage-including pen drives/Memory Sticks and external hard disk drives (HDDs)-drove the corporate segment, the non-traditional storage medium like digital camera and MP3 players got the push from the consumer side. The storage capacities in these storage peripheral devices also kept pace with the demand as the gigabit war continued during the year, breaking the capacity barriers. The growing usage of non-traditional devices also generated an additional demand for external portable storage such as external HDDs and memory sticks.

Digital Camera
The digital camera market was one of the leading drivers for generating demand for storage capacities. According to IDC, the size of the legal market for digital cameras in 2005 was 232,265 units. This translated into a market size of around Rs 299 crore. According to Dataquest estimates, the grey market accounted for around 30% of the total digital camera market during the year.

Despite the whopping growth, the penetration level of digital camera was still low as compared to its market potential. The Indian market for the digital still camera is expected to grow for the next couple of years. Kodak, Canon, Sony, Mercury, Olympus, Nikon were the key players striving to garner a larger share of the pie. The key highlight of the year was HP's exit from the digicam market. Though this reduced the competition to some extent, the market was already crowded with enough players to guarantee fierce competition.

The factors driving growth in this segment were growing awareness among consumers who are now rapidly shedding their tech inhibitions, and the drop in prices of digicams. The prices are estimated to have dropped by almost 25% in the last two years with digital cameras becoming available at prices lower than Rs 10,000.

With digicams becoming more and more affordable and duties and taxes being restructured, the grey market is expected to lose its share over the next few years. The year 2005 also saw consumers increasingly buying from genuine dealers with companies offering additional warranty on products.

There was a huge demand for digicams across various segments, including the professional photographers. The rise in the spending power among the youth is emerging as a driving force for the upgrade market, which in turn is driving growth in the mid- and high-end segments. The lifestyle migration, the need to see pictures instantly, affordability, accessibility and the retail boom will be some of the factors that will give a further fillip to the digicam market. One will also see a growing demand from medium and large business houses, government and defense sectors for official usage.

The storage capacities in digicams have been on an upswing during 2006. In step with the trend in 2004, SD/MMC cards continue to be the popular storage medium with around 50% of the market share among the various memory formats. Memory Sticks account for around 23%, and XD cards for about 5% of the market share of the memory formats. The demand is expected to remain stable in the near future.

Customers now demand cards with at least 256 MB storage capacity. In a couple of years 1 GB capacity cards will become standard. This is purely due to the decline in the prices and the customers' demand for higher capacity cards to store more number of pictures of higher resolutions.

The megapixel war continued during the year. In 2005 beginning the entry-level digicam was a 3-megapixel camera and towards the end it moved to 4 megapixels. 5 megapixel is expected to become the entry-level in 2007.

While 'megapixel' is the most understood and aspirational specification of digicams that tops the purchase considerations, there is an increasing trend towards better optical zoom, faster processing, image stabilization, movie recording with sound, Bluetooth and Wi-Fi support, and attractive form factors. New features like shooting movies, special scene settings, image control, image stabilizer and faster processor have worked well with the consumers.

During the year 2005, digicams also became fast upgrade products like the mobile phone with a growing percentage of users opting for upgrades in technology, looks and features. This has started eating into the entry-level camera sales. However, the impact on the entry-level sales will become prominent only over the next two years.

MP3 Players
The Indian MP3 player market (Flash-based and HDD-based) witnessed a whopping growth in term of volumes in 2005 according to Dataquest estimates. This is in line with the stupendous growth seen in the global market for MP3 players. This was largely spurred on by falling price points, availability of legitimate subscriptions and pay-per-download online music sites. The other factors that contributed to the growth were the increasing Flash memory capacities and enhanced features. According to IDC, during the year 2005, the legal market for Flash-based and HDD-based MP3 players in India stood at around 85,500 units, translating into around Rs 95 crore revenues.

However, one should not overlook the fact that this segment is largely dominated by the grey market, which Dataquest estimates accounts for almost 80% of the total market. This includes the Chinese and Taiwanese-make players available at dirt-cheap prices. While, the first half of the year saw the market being a little dull, it picked up rapidly towards the second half of the year.   

In the legal market, Apple dominated the scene, according to IDC. Beyond Apple, the Indian market was fragmented between various small players. This can be deduced from the huge gap between Apple and the second largest player, Creative's unit shipments.

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