Let's take a closer look at why this has happened. Let's also take a closer look at what manufacturers can do to halt the decline.
On a smartphone, there's plenty storage for videos and photos. All the photos one wishes to take can be stored on the smartphone. My smartphone - the Google Nexus 4 - uploads photos from the camera to Picasa web albums automatically. When needed in a blog article, they come straight from Picasaweb to the blog with no uploading or linking needed. It's very nice. It's also possible to write blog entries and upload photos on the go. Adding photos to all of the online services like Twitter, Facebook etc is all very easy too.
How about a camera? It takes better photos yes but to get photos from a camera to the computer I have to pull the card out of the camera or connect the camera to the computer then transfer the files. Sometimes this works automatically but not always.
The major issue with cameras is their almost total lack of usability. If I'm out taking photos and want my friends to see them, I have to rush back to my computer to upload them. There's no instant gratification.
How do the camera manufacturers fix this problem? Simple - do what a load of other wifi gadget makers do and reach an agreement with public wifi service providers. Eye-Fi, for example, allows uploads using an Eye-Fi card via the AT&T wifi networks without a login needed. Similarly Nook devices can use the same AT&T wifi networks without logons needed. What is needed is a menu setting on the camera to select the photo-sharing network of choice. Somehow account information and a password need to be entered - this can probably be achieved by simply coding it on the SD card using the computer or via button pushes on the menu. WiFi can easily be added to a camera and set to operate either automatically or when a button is pressed. Imagine sitting at a cafe while the photos upload to a selected photo sharing website without having to do a thing. Maybe even to multiple photo-sharing sites.
One of the major problems encountered by digital SLRs is that using an Eye-Fi card that uploads only JPEG images is that often if the photography is JPEG + RAW, the JPEG images are always full size. It would be better to have a choice of JPEG image sizes to be bundled with the RAW in order that only smaller JPEGs can be uploaded in order to save online storage. Very few people need an image online of greater than 1,200 x 800 pixels or 1024 x 768 pixels.
With images uploaded automatically either via WiFi to the photo sharing sites or via bluetooth automatically to the user's phone to be shared, a huge obstacle to ease of use is eliminated. This integration with web or phone needs to be seamless. Perhaps it needs to be initiated by bluetooth and the phone just copies the file sharing networks the phone uses.
Unless something like that is done soon, the future of digital SLRs and zoom compacts are numbered. The camera manufacturers need to start thinking about making something else other than cameras. How hard can it be to add something to the menu?