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Technology's unrelenting pace may frustrate those who always want to own the latest and greatest, but for everyone else it can mean better deals on older models. Nowhere is this more apparent than with digital cameras, whose prices are in a state of near free fall.

For now, the best buys are in 2-megapixel models. Olympus has just introduced its 2-megapixel D-380 for $199, and other cameras, such as HP's Photosmart 318, can be had for about the same price. Not bad for a product class that ran upwards of $460 just a year ago. And these cameras all pack enough pixels to yield high-quality 8-by-10-inch prints.

Today, 2-megapixel cameras are so affordable that Richard Campbell, Olympus's senior marketing manager for digital products, predicts, "Eventually, still-imaging 1.3-megapixel cameras will go away entirely." But that won't happen this year, since lower-resolution cameras are still a good way for newcomers to get their feet wet with digital photography.

Sharper Shots

Want a high-end camera? Don't worry, prices have dropped for those as well, especially at the 3-megapixel level.

These days, a lot of new 3-megapixel cameras cost $500 or even less. Take Sony's new Cyber-shot DSC-P71, a 3.2-megapixel model, selling for just $400. Slightly older units, such as this month's Best Buy, Toshiba's 3.1-megapixel PDR-M71, and the 3.34-megapixel Konica KD-300Z sell for $399. Or you can purchase Kodak's 3.1-megapixel DX3900 for just $349 (see Top 10 Digital Cameras).

Some of these inexpensive 3-megapixel units may skimp on certain features their predecessors offered. You may locate a better bargain in an older model whose price has dropped since release. The 3.3-megapixel Nikon Coolpix 995, for example, first sold for $900 but now costs $600. And Epson's 3-megapixel PhotoPC 3100Z dropped from $799 to $599 over one year, even after Epson added new capabilities like Print Image Matching.

As 5-megapixel and higher-resolution cameras have arrived, prices of 4-megapixel units have also dropped, but remain relatively high, hovering in the $700 to $800 range.

Behind the Fall

Why are prices free-falling? "Digital cameras are driven entirely by technology," says Martin Reynolds, a Gartner research fellow who tracks this field. When tech costs drop, so do camera prices.

Flash memory and CCDs (charge-coupled devices)--components essential to digital cameras--have undergone large price drops. Jeff Lengyel, Ricoh's marketing manager for digital cameras, says 4-megapixel sensors are cheaper today than 1-megapixel CCDs were three years ago.

Gartner's Reynolds thinks prices will continue to drop as vendors master new technical solutions to traditional photo problems, such as enlarging with pixels (digital zoom) instead of having to use more-expensive optical zoom. Most cameras already include a digital zoom, but cameras may require CCDs capable of 9 megapixels and beyond to displace an optical zoom.

Photo Finish

Great deals are out there, but shop wisely. Beware of cheap cameras that discard features to hit an appealing price. "Right now, you can't buy a camera for $100 without sacrificing something," says Olympus's Campbell.

--Dave Johnson

>>TIP In the lower price ranges, vendors may use plastic lenses instead of glass, or may reduce the number of elements in the lens (try reading the specs or calling the maker to check). Both shortcuts, especially plastic lenses, mean pictures will be less sharp.

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