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Total camera sales in 2021 were down 6% from 2020. 8,361,521 units shipped. [That seems like a small number, and I was surprised about it.] Of that group, camera's with interchangeable lenses totaled 5,348,271, representing an 0.8% increase from 2020. Compact (all in one) cameras were down 16%. Mirrorless cameras outsold SLR by a million units, an increase of 67% from previous year.
Many markets went down in 2020/2021... supply chain stuff, you just couldn't get your hands on things.... plus for something like photography, which very often is linked to events, the covid mess was probably the icing on the cake... I actually wanted to order a new camera in late 2020, but they just couldn't give a shipping date that wasn't an estimate that was 4 months out or so... so I used my existing camera some more. And there's nothing wrong with that, camera innovation really has slowed down a lot and my older camera was still eminently more than good enough. I bought a new camera in the meantime, and I'd say that if it was for picture quality alone, I probably could still live with my previous, 9-year-old camera.
As to compact digital small sensor cameras, which were everywhere many moons ago, indeed they don't have a purpose given that smartphones are extremely capable (for what I'd call snapshots rather than photograhy).
Contrast: 1.43 billion smartphones were sold in 2021. Each with at least one camera feature.
Then one could argue smartphones kill the sales of audio gear, since they have integrated speakers. :-D (I actually know people that listen to music that way...)
No one said everybody should own a large sensor, mirrorless camera. In fact, the problem was that too many people went and bought cameras without actually having a real need for them, and for those people of course smartphones are much better in order to take pictures.The stand alone camera is not a dead market. But as it survives it'll no doubt be more for the pros, and hardcore hobbyists. As a camera non-enthusiast, I own two very out of date digital cameras. But I don't know where they are. In a box somewhere. However, waifu and I have three sometimes smart phones (I hate to admit that), plus two tablets, all with cameras. I think that describes most folk's situation when it comes to the need for cameras.
I wouldn't call myself a hardcore enthusiast, and I do use my smartphone camera all the time - it's stunningly good for many things. But there are also many things in more ambitioned photography that I know I cannot even remotely try to do with my smartphone.