Olympus' flagship E-3 digital SLR was announced in Tokyo yesterday, and itlooks like quite a camera - and worth the long wait.

But of equal interest to me was the company's announcementthat it plans to have a 20 per cent share of the worldwide digital SLR marketwithin five years.

This bold target is clearly a sign of healthy confidence in its ownproducts, but against the kind of competition Olympus faces, I'd have to change 'bold' to 'impossible'. The D-SLR market is currently dominated by Canon (46.7 per cent) andNikon (33 per cent), with Olympus on a distant 5.9 percent.

So with four out of five digital SLR sales coming from thetop two manufacturers, it's clear where Olympus'improved sales are going to have to come from. Simply put, Olympus has to convince potential Nikon or Canon buyers to opt for one of its camerasinstead. And I can't see that happening.

SLR sweet spot

With a launch price of £1,099 (body only), the E-3 is aimedat what is widely regarded as the 'sweet spot' of the D-SLR market.

The problem is that its rivals also have designs on thislucrative space, and have been quite active themselves in recent months. Canon,with the EOS-40D, and Nikon, with the D300, have both launched very strongcameras in the second half of 2007.

And Sony, Olympus'closest rival for market space at 6.2 per cent, has just unveiled the A700, the first fullyrealised result of the marriage between Sony's corporate clout and Minolta's inherited camera legacy.

The E-3 certainly looks a good camera, and Olympus'optics can't be faulted, but put it alongside these high-class rivals (and there are others too) and the20 per cent aim seems hard to justify.

Four Thirds

Of course, forthcoming SLRs may change that. But all arelikely to feature the Four Thirds image sensor system, given that Olympus is its chief architect and supporter.

And herein lies the problem for Olympus.

The higher up the market you go, the more Four Thirds'limitations are apparent. The smaller sensor size means an increased risk ofnoise at higher resolutions. And while Olympus has to be praised for its work in combating this, the inherent limitations ofthe system simply can't be overlooked.

The fact that none of the other leading camera makers haveshown any sign of moving to Four Thirds tells its own story as the market movesforward.

Until this changes, or unless Olympus hassome other tricks up its sleeve, a 20 per cent market share looks likewishful thinking.

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