What do digital watches, portable navigation systems and point and shoot cameras have in common?

Their sales are shrinking. The fact is little known beyond the narrow circle of watches aficionados, but sales of Japanese digital watch movements have been going down for a few years now. Digicam sales reached their peak two years ago, and you just have to look at the price of stand alone GPS units to see that a firesale is going on.

The cause for all of this? Cell phones in general, and smartphones in particular.

I remember my first “smartphone”, a Palm Treo 600, and its dreadful VGA camera (0.3 Megapixel). Not only was the resolution of the sensor hopelessly low (640×480), but the quality of the lens itself was abysmal. Unusable. Period.

Nowadays, top of the line smartphones don’t necessarily have high resolution sensors (the iconic iPhone 4 only packs a 5 Megapixel chip), but their lens quality is significantly higher and the image processing software much better than a few years ago. Look at the picture below, taken in Rome with a very simple Nokia XpressMusic 5530. It was my first day in that beautiful city, I did not have my “serious” camera with me, and I used what was available, namely my cell phone and its tiny 3.2 Megapixel sensor.

Not bad, at least for Web postings.

Higher end Nokia phones (like the recently announced N8) are equipped with Carl Zeiss branded lenses and 12 Megapixel sensors, and promise much better results. It is true that the sensor and the flash integrated in smartphones are too small, and that their reactivity is still too low to allow them to compete with high end point and shoot cameras or with dSLRs. Particularly in low light situations or with very mobile subjects.

But low-end and medium of the range digicams are obviously under the threat of the more ubiquitous and versatile smartphones. That’s one of the reasons why camera manufacturers are launching a bucket load of waterproof cameras at the moment. Underwater photography is a niche that cell phones have not penetrated yet. Until October, if this rumor about an incoming Motorola Jordan has to be believed.