Traditional camera companies are experiencing a difficult period, as the popularity of smartphone photography continues to rise. For example, Nikon cut its full-year unit sales forecast for high-end cameras last year. And mid-tier camera companies, like Fujifilm and Olympus, have been losing money on their cameras. Aware of this trend, industry researcher IDC has forecast that compact camera sales are likely to fall more than 40% this year.

GoPro isn't a traditional camera company. Unlike most peers, the company is seeing a steady improvement of its top line. According to GoPro CEO and founder Nick Woodman, annual revenues in 2012 reached more than $500 million, and he expects to double this figure each year, as the company continues expanding its scale of operations. GoPro has recently expanded into Europe, by opening new offices in Germany, and it also plans to make an initial public offering. Let's take a look at what makes GoPro so special, and why Ambarella (AMBA -8.39%) and Foxconn Technology (NASDAQOTH: FXCNY) will benefit from its growth.

Source: GoPro website

The story of GoPro
GoPro makes wearable, high-definition personal cameras, which are often used in extreme action video photography, as they are well-known for being lightweight and rugged.

Inspired by a surfing trip in Australia in which he was hoping to capture quality action photos of his surfing, Woodman started the company in 2002 with his own capital.

Eventually, the company started growing its sales volume quite rapidly, attracting investors. GoPro sales have more than doubled every year since 2004. It sold more than 2.3 million cameras in 2012, seeing more than $500 million in gross revenue. In Jan. 2013 alone, the company racked up more than $100 million in sales. This prompted Woodman to hint in a Bloomberg TV interview last October that the company might exceed $1 billion in revenue for all of 2013.

Going Public 
The company has confidentially filed for an IPO, offering documents with the SEC to sell its common stock. Because only companies with less than $1 billion in sales can file for a confidential IPO under the JOBS Act, it appears GoPro did not double its 2012 revenue, as predicted in late 2013.

The future of the camera industry
Although GoPro may not achieve 100% revenue growth in 2013, the company still has plenty of headspace. This is because, thanks to their versatility, usability, and compactness, GoPro cameras could end up replacing the concept of compact cameras.

Note that although the compact camera industry has experienced a massive contraction in the past two years, it is still big in size for a company like GoPro. Roughly 102 million compact camera units may have been sold in 2013, way more than GoPro's 2.3 million units sold in 2012. This suggests that GoPro can continue capturing market share for a while, as compact camera users either choose to replace their devices with wearable cameras like GoPro, or with smartphones.

GoPro is a media empire
There are plenty of alternatives to GoPro cameras, including products from big players like Sony and Polaroid. However, thanks to the effective use of social media and marketing, GoPro is on its way to becoming synonymous with the concept of "action camera." Its Facebook page already has more than 7 million fans, and there are thousands of action videos made by GoPro owners available online. 

Two companies that will benefit
Both Ambarella(AMBA -8.39%) and Foxconn Technology could benefit from GoPro's public offering and continuous business expansion. Ambarella, a leading HD camera system-on-chip manufacturer, provides the technology behind GoPro's Hero line of action cameras. The company saw $149 million in revenue over the past 12 months, but this figure could change dramatically as GoPro continues growing sales.

Foxconn, the world's largest electronics manufacturers, was wise enough to buy a 9% stake in GoPro for $200 million on Dec. 2013. The investment gave GoPro a possible valuation of $2.8 billion. However, if things go north after GoPro's public offering, Foxconn could see an attractive return on investment.

Final Foolish takeaway
Action camera maker GoPro is growing its top line quite quickly, as compact camera users shift to wearables like GoPro devices, or to smartphones. As the owner of a brand synonymous with the concept of "action camera," GoPro has effectively used social media to create an active community of GoPro enthusiasts, and it may be close to achieving more than $1 billion in revenue per year. These signals suggest the company's public offering may be very successful.