The development of relatively cheap 5-megapixel compact cameras has effectively ended the long running 'megapixel war', leaving manufacturers to focus on features rather than resolution, industry sources have told vnunet.com.

"Five to eight megapixels is already sufficient for almost all users," said a spokesman for Premier Image Technology, one of the world's largest digital still camera makers.

He added that competition has forced prices for the cheapest 8-megapixel models below $300, and even manufacturers of low-cost compact models will soon begin to add features such as anti-shake and more powerful optical zooms to attract buyers.
Half of all US households own a digital camera, and markets in western Europe and Japan are similarly saturated, according to a recent report from Taiwan's Market Intelligence Center.

By adding features, manufacturers are trying to tempt existing owners into buying replacement cameras.

In Taiwan, several smaller manufacturers that lack the resources to add high-tech features, and instead try to compete on price alone, are being forced out of the market, according to a recent report by MasterLink Securities. This is helping to slow plummeting end user prices.

Between 40 and 50 per cent of the world's digital still cameras are manufactured in Taiwan by large, but low-profile, companies like Premier, Ability Enterprise, Asia Optical and Altek.

Most of this output is made for and sold by well-known foreign brands like Olympus, Nikon, Samsung and Konica, which are gradually cutting back on their own manufacturing facilities.

"In terms of quality, Taiwanese manufacturers are still catching up with Japanese companies, but we are more cost efficient," said the Premier spokesman.

The Taiwanese camera makers greatly limit sales of their own-brand products in order to avoid competing with their manufacturing customers.

For example, only five per cent of Premier's output is sold under its own brand, mostly in China. Premier's foreign customers include Sony and Hitachi, according to local press reports.

Premier, which makes a variety of cameras including an 8.1-megapixel compact camera with 3x optical zoom which has sold for as little as $180 online, plans to introduce a 6x optical zoom model by the end of this year and a 10x optical zoom version next year.