USA: It wasn't very long ago that Digital Photo Frames (DPFs) were struggling to find a place in consumers' hearts. But in just a few short years, the DPF market has begun to heat up, driving strong shipment growth for displays for such products, according to iSuppli Corp.

Global shipments of displays for DPFs are expected to rise to 22.7 million units in 2008, up 58.8 percent from 14.3 million in 2007. Last year was a banner period for DPF displays, with worldwide unit shipments growing 256.7 percent from 4 million in 2006. Worldwide shipments are expected to grow by nearly a factor of four to reach 78.3 million by 2011.

"Introduced in 2005, the DPF initially was purchased by early adopters—and few others," said Vinita Jakhanwal, principal analyst for mobile displays at iSuppli.

"When looking at DPFs, consumers weren't sold on the value proposition of a product that simply cycled the same pictures over and over again with inferior image quality compared to a photo print.

"However, something happened in 2007. DPFs experienced a banner year as falling prices made them more attractive to consumers. Furthermore, DPF makers were able to offer more differentiated and appealing products."

DPF competition proliferated in 2007, with many branded and non-branded vendors entering the market. Each vendor has segmented its brand into a certain niche, including value, high-quality, rich features, regional orientation or by pairing its DPFs with Digital Still Camera (DSC) sales.

iSuppli defines a DPF as a device whose primary function is displaying photos, and that is equipped with various means of transferring images and other media to it. However, while picture viewing is the DPF's raison d'être, vendors have expanded the product's capabilities to include features such as:

* MP3 and WMA audio file playback
* Full-motion video
* AM/FM radio
* Built-in speakers
* Embedded wireless connectivity
* Web-enabled photo sharing
* Larger screen sizes of greater than 10 inches
* Customized and interchangeable frame plates to personalize DPFs
* Touch-screen technology
* Rechargeable batteries
* Built-in direct-to-printer capabilities

With shipments rising so robustly, it isn't a surprise to see display industry players—from Sony, to Philips, to Kodak, to Westinghouse, to Polaroid—entering the DPF market. The figure here presents iSuppli's worldwide unit shipment forecast for DPF displays for the period of 2007 through 2011.

A picture is worth $75
The Average Selling Price (ASP) for DPFs was originally around $150 when they were first introduced in 2005.

However, the ASP since has declined by about 50 percent. DPF ASPs may actually buck the trend and rise in 2008 due to several factors, including:

* Shortages of DPF displays in early 2008, which will cause costs to increase.
* Newer products are using larger display sizes that are more expensive.
* A shift of products from analog to higher quality (and higher priced) digital panels.

The supply base for DPF displays is set to use an expanded portion of the output of fifth-generation LCD fabs. This is yielding more capacity than can be justified by demand and will lead to declining ASPs in 2009 and thereafter.