The market for digital photo frames has taken-off, particularly since prices dropped to affordable levels in the first half of 2009. Unfortunatelly, due to difficult economic conditions and the trend to purchase digital photo frames as gifts pre-loaded with pictures, most units shipped still lack advanced features like wireless connectivity to the Internet. Still, wireless-enabled photo frames are a key growth driver as they will grow at twice the rate of overall digital photo frames in 2010, believe analysts from In-Stat market research company.

“Prices for connected frames will continue to decline, and as manufacturers educate consumers about these devices; the mass market will become more comfortable using the Internet services connected frames support,” said Stephanie Ethier, In-Stat analyst.

Nearly 60% of U.S. respondents to In-Stat’s consumer survey identified integrated wireless connectivity as a desired feature on their next digital photo frame purchase. End-users want to stream Internet-based radio and other types of media using photo frames as well as share photos, which is why Internet connectivity is a valuable addition to photo frames.

“Applications such as sharing and downloading pictures over the Internet, as well as streaming Internet radio and video from online sites like YouTube, are expected to be primary drivers,” said Ms. Ethier.

According to In-Stat, worldwide unit shipments of all digital photo frames are expected to reach 50 million by 2013. The bill of materials for a wireless 8” digital photo frame will fall below $36 by 2013 with the LCD, the wireless module and the enclosure are the dominant cost items, claims the research firm.

The total silicon opportunity for digital photo frame suppliers will exceed $550 million by 2013.  Microcontrollers comprise the largest opportunity in non-wireless enabled devices, according to In-Stat.