Katsuo Mori, senior managing director of Pentax Corp, said its edge in digital camera lenses and research and development were apparent in the new Optio S4.

The Optio S4, the slimmest and smallest digital camera on the market, comes with a surprisingly powerful 3X zoom lens.

Most slim cameras such as the popular Casio Exilim series do not have zoom lenses.

Pentax has squeezed a 3X zoom lens into the compact 20mm frame with a new patented sliding lens system.

It allows the 3X zoom lens to move up and away so the retracted lens is completely flush with the camera body. This protects the lens and helps reduce camera size.

Other features include a film mode with sound playback, a voice recorder for attaching 30-second memos to select images, a 1.6-inch monitor and about 11 megabytes of built-in memory. The Optio S4 is priced at $3,700.

Mr Mori said getting the lens to line up perfectly with the sliding lens system was a tough technical challenge that took the Pentax team a year to solve.

'It is innovation like this that will give us the edge over competition as well as make it difficult for companies in Taiwan and the mainland to copy our digital cameras,' he said.

Copies of the Casio Exilim have recently surfaced in Hong Kong.

'The cost of digital camera components is mainly in the lens and the CCD [charge-coupled device]. Digital cameras are not difficult to produce. Now two-megapixel or lower CCDs are no longer costly so it is not surprising we are seeing copies. But they are not high quality and consumers will be able to tell,' Mr Mori said.

Pentax, which entered the digital camera sector last year, lagged behind more established players such as Sony, Canon, Olympus and Nikon in terms of revenue and market share. However, it sees opportunities in becoming a high-quality supplier of lenses to its competition. It now supplies lenses to Casio.

The *ist D is Pentax's first step into the digital interchangeable SLR arena.

The 6.1-megapixel D is one of the lightest cameras in this class of SLR and, like Canon and Nikon models, it will use the same lenses as Pentax's 35mm cameras. Priced at $15,500, it is one of an increasing number of digital SLRs that are becoming affordable to photo enthusiasts.

According to Mr Mori the *ist D, which is twice as expensive as Canon's new 300D, is a higher-quality SLR capable of better performance and pictures.

'Canon made some compromises to keep the price low but it attracts advanced digital camera users, not professional photographers,' said Mr Mori, adding that it was inevitable that Pentax followed Canon's footsteps to improve competitiveness.

Most professional photographers, however, have been reluctant to make the switch to digital SLRs because film cameras, while cheaper, also take better and more natural pictures.

Despite this, Mr Mori said digital SLRs were the future because of the convenience they offered.

'Film cameras still take better pictures but you can change everything taken digitally during production with the right software,' he said, adding that while the digital SLRs' prices had fallen in the past 12 months to become affordable to the mainstream consumer, the cost difference between film and digital SLRs was still too big.

'Eventually, that difference will come down to just 20 to 30 per cent and that's when you'll see more people switching to digital,' he said.

There is little indication of a slowdown in the digital camera boom.

Shipments from Canon, Fuji and Olympus rose to 4.72 million units in September compared with a year ago, the Tokyo-based Camera and Imaging Products Association (Cipa) said in a report on its website.

Sales rose 60 per cent to 128 billion yen (HK$9.09 billion). In Japan, shipments rose 19 per cent to 758,700 units, the group said.

As for overseas shipments, the number of cameras bound for Europe more than doubled to 1.74 million units, while shipments to North America jumped 65 per cent to 1.53 million.

Worldwide shipments in the January to September period climbed 81 per cent to 28.4 million units. Sales rose 59 per cent to 835.8 billion yen.

At the same time, worldwide production of Japanese-made film cameras fell 40 per cent in September to 1.36 million units, according to Cipa.