In North America, digital cameras may nearly replace film cameras by 2008, according to InfoTrends/CAP Ventures. The trend is being fueled partly by improvements in the digital sensors that capture images in lieu of film.

The latest: the X3 from Santa Clara, CA-based Foveon. It has three layers of silicon, as opposed to one in conventional sensors, which produce sharper, truer-colored photos.

Foveon partnered with Polaroid and this summer released an X3-based camera that retails for about $400.