Sales of sophisticated digital cameras will continue to grow rapidly, and provide healthy returns for leading manufacturers, according to a report published this week in Japan.

About 4.2 million digital SLR cameras will be sold this year, Nomura Securities estimated in the report. 

Digital SLRs will make up over five per cent of the 76 million digital cameras sold globally in 2005, according to Taiwan's Market Intelligence Center. 

The market will expand 50 per cent in 2006, Nomura predicted, and continue to grow rapidly, reaching 12.9 million units in 2009. This is considerably faster yearly growth than the 10 per cent expected in the rest of the digital camera market.

Digital SLRs have a number of advantages over cheaper digital compact cameras, including better quality optics and the ability to change lenses. They also tend to have more sophisticated features, like the ability to take several shots per second.

With compact cameras seeing cut throat price competition as the market becomes saturated, digital SLR models are one way for experienced vendors to maintain profit margins.

The more sophisticated buyers of digital SLRs tend to base purchasing decisions on the camera's features and are less likely to be tempted by lower price offerings, according to Nomura.

As a result, market leader Canon, which accounts for about 50 per cent of global sales, has been able to maintain price levels. It is a very profitable business for Canon; Nomura estimated the company's recent operating margin at around 30 per cent. 

Nikon, the second largest digital SLR vendor, with a third of the global market, is making a margin of around 10 per cent.