The soaring popularity of smartphones is crushing demand for point-and-shoot cameras, threatening the once-vibrant sector as firms scramble to hit back with web-friendly features and boost quality, analysts say.

A sharp drop in sales of digital compact cameras marks them as the latest casualty of smartphones as videogame consoles and portable music players also struggle against the all-in-one features offered by the likes of Apple's iPhone and the Samsung Galaxy.

Just as digital cameras all but destroyed the market for photographic film, the rapid shift to picture-taking smartphones has torn into a camera sector dominated by Japanese firms including Canon, Olympus, Sony and Nikon.

"We may be seeing the beginning of the collapse of the compact camera market," said Nobuo Kurahashi, analyst at Mizuho Investors Securities. Figures from Japan's Camera and Imaging Products Association echo the analyst's grim prediction.

Global shipments of digital cameras among Japanese firms tumbled about 42 per cent in September from a year ago to 7.58 million units, with compact offerings falling 48 per cent, according to the Association.

Higher-end cameras with detachable lenses fell a more modest 7.4 per cent in that time, it said. Part of the decline was due to weakness in debt-hit Europe and a Tokyo-Beijing territorial spat that has sparked a consumer boycott of Japan-brand products in the China market.