Japan's Nikon Corp. said on Monday it would launch a lower-priced digital single lens reflex camera later this month to challenge rival Canon Inc. in the lucrative market for high-end cameras.

After Canon, Nikon is the world's second-largest maker of digital single lens reflex (SLR) cameras, which use interchangeable lenses and generally offer higher performance than simple point-and-shoot models, which have a fixed lens.

The camera world has been anxious to see when Nikon would launch a new line-up of digital SLRs to follow the D70, a highly-acclaimed model that has been flying off the shelves since it was introduced worldwide early last year.

Nikon created a buzz in camera chat rooms on Friday when it issued a press release on its UK Web site saying that it would launch two new digital SLRs in the UK market toward the end of April -- one a successor to the D70 and another more basic model.

That press release was issued after the company accidentally uploaded some information about the digital cameras on its Web site, sparking speculation about an impending launch. The release has since been removed.

A Nikon spokesman in Tokyo would not comment on launch dates for other markets but acknowledged that the company was getting ready to launch a successor to the D70 and a less expensive model to match up with a digital SLR introduced by Canon last month.

"We have not made final decisions, but the price will be competitive with the EOS Kiss Digital N," the spokesman said, referring to Canon's new camera, which currently retails in Japan, body only, for under 100,000 yen ($922.70).

BULLISH PROSPECTS
The EOS Kiss Digital N -- known as the EOS Digital Rebel XT in the U.S. and the EOS 350D in Europe -- is the successor to the original EOS Kiss Digital, which was launched in September 2003 as the first digital SLR priced as low as around $1,000.

Nikon followed six months later with the D70, which now retails for about 130,000 yen with lens. Since then other rivals such as Olympus Corp and Pentax Corp have also unveiled digital SLRs in the same price range.

Industry analysts are bullish about the prospects for the digital SLR market because of the recent increase in these lower-priced models. Just a few years ago there wasn't a model on the market for less than $2,000, and some cost $5,000 or more.

Nikon is not likely to wait long after the UK launch this month to introduce the new cameras in other major markets such as the United States and Japan. It could also decide on a simultaneous launch worldwide.

Either way, a timely launch would allow Nikon to maintain its current momentum and not allow Canon a half-year to dominate this lucrative segment of the market as it did when the EOS Kiss Digital and D70 were first introduced in 2003 and 2004.

Nikon aims to ship 1.5 million digital SLR models in the business year started this month, up 50 percent year-on-year. Including compact models, the company expects to ship 7.5 million digital cameras, up from an estimated 6.6 million in 2004/05.

Boosting digital SLR sales is central to Nikon's strategy of shifting away from the low-end of the market, where pricing pressure is fiercest. Digital SLRs fetch higher profit margins and allow Nikon to leverage its strong lens technology and long history in film SLRs.

The lower-priced digital SLR is expected to be called the D50, while the successor to the D70 will probably be dubbed the D70s.

Shares of Nikon ended Monday down 1.1 percent at 1,256 yen, in line with the Nikkei average, which lost 1.09 percent.

From Reuters