Most suppliers are expecting a further rise in overseas shipments and are preparing themselves for the demand surge. In fact, some companies anticipate their exports will increase up to threefold in the next 12 months.

Capacity expansions necessary to keep up with rising orders would entail minimal effort. Because most suppliers also produce DVD and MP3 players, the technology can be extended easily to the closely related digital photo frames.

Digital photo frames have been available in the US and the EU markets for several years, but the industry is still in its infancy in China. Most suppliers in the country ventured into the line in early 2006, with only a handful being in the business for more than two years.

At present, China churns out an estimated 100,000 units per month. More than 90 percent of output is exported, mainly to the US, the EU, Australia, Japan and Southeast Asia. The following are some of the key trends we see in China's digital photo frames industry:

This report focuses on digital photo frames with TFT LCD screen sizes of 5.6, 7, 8, 10.4 and more than 15 inches. These types constitute the bulk of China's exports.

Factors that determine the price and differentiate the quality of models are discussed in the Products & Prices section.

The Manufacturing section describes how digital photo frame are made — from incoming materials selection to assembly and packaging.

Current and upcoming trends in aesthetic and functional design, as well as how suppliers conceptualize new products are detailed in the R&D section.

The Industry Overview section analyzes key challenges digital photo frame makers are facing. It also discusses the industry composition and differentiates the capability of small, midsize and large players.

Exports statistics in the line, however, are not tracked independently and accurate figures are difficult to determine for emerging industries such as this. Nonetheless, overseas sales of the 87 companies featured in this report average at US$5 million, with some foreign-invested players already topping US$30 million per month.

This is despite the fact the most suppliers in China have only stepped into digital photo frames export trade beginning from the first half of 2006. As of February of this year, there are already more than 100 digital photo frame makers in China, and the number is expected to double by the end of the year.

The fast growth of the digital photo frames supplier base is attributed mainly to the influx of MP3 player and LCD monitor makers into the product line. Well-established suppliers of these mature electronic products can shift focus or add digital photo frames into their range with ease, since the components used and the production steps involved are related and similar.

But this booming industry is not without its own challenges. Because there are numerous companies wanting to join this flourishing line, some suppliers fear that this could lead to cutthroat competition and intense price war too early in the game. In fact, a number of makers are already planning to reduce their export prices by up to 20 percent in the next six to 12 months in an effort to stay ahead. Price cuts are more evident in the low-end segment, in which product differentiation is narrow.

Further, technologically advanced Taiwan counterparts are posing barriers for growth, especially for mainland start-ups. Most suppliers on the island entered the line as early as 2004, and are backed by Taiwan's thriving LCD, IC controllers, circuit boards and solutions manufacturing industry.

Digital photo frame suppliers are also faced with stricter overseas standards, particularly the EU's RoHS. The directive forces China suppliers to adopt costly procedures that would enable their products to enter this huge market.

Responding to challenges
China companies are prompted to quickly step up their R&D initiatives to become more competitive in the high-end segment. Shifting upmarket likewise gives suppliers wider room for aggressive product upgrades and price adjustments.

Many suppliers that started with low-end models are now rolling out high-performance designs. Such releases can support multimedia formats such as JPEG, MP3, MP4 and MPEG-1/2/4, and are compatible with CF, MD, MS, MMC, SM, SD and xD memory cards.

Some large and foreign-invested players are also cooperating with reputable providers such as Texas Instruments and mLogic for solutions, and Foxconn-affiliated Innolux for TFT LCD screens.

A specialist in USB digital products, BTL mainly offers MP3 and MP4 players, computer peripherals and communication devices.

In October 2006, the midsize company ventured into digital photo frames manufacture. While the line currently accounts for only 13 percent of total sales, the company has concrete plans of boosting its production.

Under efforts to double output, BTL will move to a new factory before the end of 2007. With two additional SMT lines, this vertically integrated plant is twice the size of the existing facility and will have 300 workers. The company will apply for ISO certification this year.

All models are RoHS-compliant, and meet CE and FCC standards.

Products
Basic digital photo frames from BTL are priced from US$44 to US$49. These are 7-inch models that support JPEG files, accept CF, MS, SD, MMC and xD memory cards, and have clock functions. Eight-inch versions will be launched in 2007.

Upscale versions range from US$51 to US$61. These can read M-JPEG, MPEG-1/2/4 and AVI file formats, and CF, MS, SD, MMC and xD cards. In addition, the slideshow function plays background music and has various transition effects.

Further, NTSC and PAL video systems are supported. Preferences are set via remote controls and OSD menu.

BTL mainly uses Zoran solutions but other types can be used on request. LCDs often come from Taiwan invested Innolux, which has a factory in Shenzhen. Acrylic and wood, which are the main materials for frames, are sourced locally.

5.6-inch models

		Billionton Model: GCRDMP4S5 Minimum order: 500 pieces Packaging type: Box Delivery time: 45 days Indicated price: • Description: TFT LCD screen; 640x480 resolution; compatible with CF, SD and MMC memory cards; supports JPEG, M-JPEG, MP3, MPEG-1/2/4 and DivX; 4:3 aspect ratio; slideshow function with background music				DPF (HK) Model: DPF-5.6M2 Minimum order: 1,000 pieces Packaging type: Carton Delivery time: 10 days Indicated price: • Description: TFT LCD screen; 960x234 resolution; compatible with SD, MS, MMC and CF memory cards; supports JPEG, M-JPEG, MPEG-1/2/4, MP3, DivX and AVI; 55-degree (left/right), 45-degree (up/down) viewing angle; 14 images per minute slideshow; 350cd/m2 brightness
		DPF Source Model: MDPF1501 Minimum order: 2,000 pieces Packaging type: Carton Delivery time: 25 days Indicated price: US$60.00 Description: LCD screen with analog input; MXIC (MP612) solution; 352x288 resolution; compatible with CF, SD, MMC and MMS memory cards; supports JPEG, M-JPEG, MPEG-4, MP3, WMA, DivX and AVI; slideshow function; AC100 to 240V, DC12V; remotecontrolled				HPC Model: DPF056CA Minimum order: 100 pieces Packaging type: Carton Delivery time: 10 days Indicated price: US$58.00 Description: LCD screen; mLogic (US) and MXIC (Taiwan) solutions; 320x234 resolution; compatible with CF, CD, MMC, MS and xD memory cards; supports JPEG, MPEG-1/2/3/4 and MP3; USB 1.1 and 2.0 port; DC12V; 330cd/m2 brightness; acrylic, leather, steel or wood frame
		Inventec Model: Julia 1 Minimum order: On inquiry Packaging type: Carton Delivery time: • Indicated price: • Description: Compatible with CF, MD, SD, MMC and MS memory cards; USB 2.0 host; videoout for slideshow viewing on TV; zoom in/out functions; removable desktop stand				Inventec Model: Julia 2 Minimum order: On inquiry Packaging type: Carton Delivery time: • Indicated price: • Description: TFT LCD screen; compatible with CF, MD, SD, MMC and MS memory cards; supports JPEG, M-JPEG, MP1, MP3 and MP4; zoom in/out function; remote-controlled