Sales of digital cameras in Asia outside of Japan surged to a record 10.6 million units in 2004, up almost 40 percent from the previous year, an industry monitor said. International Data Corporation (IDC) said strong demand from China, Australia and South Korea -- collectively the three biggest markets in the region last year -- powered the record volume.

For the next five years however, India and China are expected to be the fastest growing markets for digital cameras with compound annual growth rates of 50 percent and 26 percent, respectively, from 2005 to 2009, it said in a statement.

Competition is expected to heat up over the next two years as digital camera makers seek to enlarge their share of the market, it added.

"In the next 12 to 24 months, the market will continue to witness intense competition among digital camera vendors," said Maggie Tan, IDC's regional research manager for digital imaging program.

"Other than HP (Hewlett Packard), Kodak and Epson, the market will see the emergence of Taiwanese brands especially in price-sensitive markets.

"It is imperative that these vendors understand the varying market dynamics as well as consumer needs and lifestyles when they penetrate into each market."