Matsushita, Olympus partner for digicams

TOKYO: Matsushita Electric Industrial Co. and Olympus Corp. said they had agreed to jointly develop digital camera technologies in a move that could help them lower costs amid tough competition.

The alliance comes as Olympus and other digital camera manufacturers struggle to make money in the $24 billion market. Hurdles include sliding prices, slowing growth and short product lifecycles, which have led to a sharp rise in development costs.

Olympus, the world's third-largest digital camera vendor after Sony Corp. and Canon Inc., expects its camera division to lose 18 billion yen ($175.8 million) this business year as it disposes of excess inventory and copes with steep price falls.

Matsushita is a relatively small player in digital cameras, but has been gaining traction thanks to strong sales of recently launched compact models featuring image stabilisation technology that compensates for hand shake.

It is also strong in charge-coupled devices (CCDs), image-capturing semiconductors used in digital cameras and video cameras, and in the development of thin and very small cameras -- an area where Olympus has lagged its rivals.

Matsushita wants to expand its presence, having unveiled a target of commanding 10 percent of the global digital camera market in the year ending March 31, 2007, compared with 3 percent in 2003/04.

Olympus brings to the table lens and other technologies honed during its long history in the camera business and the ability to develop digital single lens reflex (SLR) cameras, high-end models that can use interchangeable lenses.

To help nurse its camera operations back to health, Olympus has unveiled plans to boost in-house production of digital cameras to 50 percent in one or two years from about 40 percent now while strengthening its development of key parts.