Olympus has suggested that it will be heavily reducing its compact digital camera range to focus on higher end Digital SLR models, lenses and accessories due to poor sales and weakening profits.

According to Reuters in Japan, Olympus said that it aimed to have digital compact cameras account for 40% of sales in its imaging division five years from now, almost half of what it did in sales last year in the sector

It then plans to boost DSLR models so they account for 30% of the division's sales in 5 years, up from a measly 3% last year. It also aims to focus more on lenses and other optical devices.

Although the company is famed for its compact digital models such as the mju range it believes DSLR is the way ahead.

Olympus has experienced a slow transition from film SLRs over to digital SLR models with the Four/Thirds system only now starting to be adopted by professional photographers.

Market research shows that demand for SLR cameras is growing faster than demand for compact models, however Olympus will have a tough fight on its hands against efforts from Canon, Nikon and Pentax as the consumer market matures.

To help focus efforts, Olympus has also announced that it will be pulling out of the MP3 player market less that 2 years after entering it. The company is citing poor sales and the inability to keep up with major players in the sector such as Sony and Apple.

A spokesman told Pocket-lint at CeBit in March 2005, that the company's music player was nothing more “than a gimmick”.

Olympus is the world's fourth best-selling digital camera brand after Canon, Sony and Kodak, but is considered one of the weaker players in an industry suffering from slowing growth and steep price falls.