Sales of compact cameras at large retailers, including Harvey Norman and Noel Leeming, were up 3 per cent on the year ending in November. However, because of continued discounting total value was down by just over 10 per cent.
Camera manufacturers such as Samsung, Canon and Sony Electronics have this week shown their latest models at the Consumer Electronics Show in Las Vegas.
New features such as Wi-Fi internet connections, the ability to take photographs in 3D, and advanced face detection have been added to cameras in a bid to bring customers back.
Polaroid unveiled a new "smart connect Android camera" which attaches the smartphone's internet connection platform to a camera.
But Wellington-based technology commentator Peter Griffin said the convenience and additional features of smartphones meant the fight for relevance was largely futile.
Thousands of applications can be downloaded by smartphone users to manipulate the way they take, process and store photos.
The iPhone 4, with a five megapixel camera, has become the most popular device from which photos are uploaded to the picture sharing website Flickr.
"A lot of digital cameras have Wi-Fi built into them, but people get all that functionality in a smartphone," Mr Griffin said.
Mr Griffin said digital cameras would not become completely obsolete, but in the next 10-15 years they would become a niche product.
According to Samsung, 2.5 billion people around the globe have a digital camera of some sort, including stand-alone and smartphone cameras.
However, manufacturers such as Canon and Nikon say sales of higher-quality cameras have increased.
