RSSRetailers Brace for Lackluster Holidays
By Scott M. Fulton, III | Published October 26, 2006, 3:43 PM
It could be the perfect storm: With Sony and Pioneer delaying their Blu-ray Disc players, Sony limiting availability of PlayStation 3 consoles next month, and Apple having delayed its "iTV" rollout until at least January, there may not be any one single "must-have" CE device driving consumers to the stores this holiday season. That's the opinion of electronics industry analyst firm iSuppli, in a report published yesterday.
The firm is trimming its already-trimmed forecast growth rate for US consumer electronics industry revenues for this year to a mere 2.4%, down from 13% the previous year.
There may be a general consumer disinterest in nearly all the new technologies that were supposed to have made 2006 a banner year, the iSuppli report states. Clearly, HD DVD supply and availability trounced Blu-ray's, for both players and media. But the fact that the first wave of HD DVD players from Toshiba and others was limited to only interlaced video (1080i) rather than progressive scan (1080p) already kept too many high-end buyers from making investments.
The firm believes this created a damper on enthusiasm for both the second wave of HD DVD players and the remainder of the first wave of Blu-ray players. iSuppli also cites reported image quality problems with Samsung's premiere BD-P1000 player as a drag on the whole high-definition category.
The inability of Sony to produce enough blue-laser diodes for its Blu-ray players and PS3 consoles, contributed to the slippage of its overall product line, and a further dampening of marketing impetus.
With enthusiasm for holiday sales already lower, retailers are apparently planning to respond with price incentives for consumers, which means lower margins and revenues for manufacturers. As if things weren't already bad enough for Sony, this morning The Wall Street Journal quoted Sony CFO Noboyuki Oneda as warning of rapidly declining prices for CE products, particularly in the US. "The competition is considerably tougher than we thought," he said.
Meanwhile, Apple's choice of January as a premiere date for its iTunes-linked television device, states iSuppli, may have been a poor one, although circumstances could have been worse if there had been another IPTV competitor waiting in the wings. Right now, there doesn't appear to be one - not in the US, at least, where many analysts still believe not enough consumers know what IPTV is to cultivate a desire for it.
iSuppli also takes Apple to task for not having significantly bolstered the capabilities of its video iPod, even though it's only been a year since it was originally introduced.
You'd think this conclusion on the part of iSuppli would mean better news for Microsoft's forthcoming Zune player. But the firm believes Zune could be causing as much damage for the MP3 player market as it generates enthusiasm, mainly as a result of Microsoft parting ways with its own PlaysForSure DRM standard, which Zune will not support.
"Microsoft could further alienate customers already concerned that a key software supplier is now also a competitor for players," reported iSuppli, to the astonishment of few.
Who could benefit from this turn of events in the end? It could be Nintendo, says iSuppli, whose forthcoming Wii game console doesn't rely so much on lofty and undeliverable new technology as it does on innovative design and respectable pricing.
These factors could enable Wii, iSuppli believes, to meet its manufacturer's goal of 4 million units shipped worldwide by 2006, which would double reported estimates from Sony of 2 million PS3s shipped worldwide, if that many. It might be a good feeling, if a bit nostalgic, when all the tumult of this year in consumer electronics has subsided, to see Mario rising above it all once again.
I think this article is mostly on target but is also understating one aspect. Last year's products were great, and consumers shelled out a lot of cash. New technology may be here, but I personally see no reason to upgrade when my fairly new technology works well. I don't plan to upgrade to Vista in the near future because no one has given me a compelling reason to do so beyond the "it's really cool" hype before any MS product launch. I'll be buying other things this year, not more of the same types of technology I bought last year. After all, how many DVD players, mp3 players, new computers, and cell phones can my family use at one time? I plan to go low-tech this year with books, clothes, makeup, and jewelry.
Also, Microsoft is famous for creating technology for others to use and then breaking the rules with their own offerings. Zune is just another example of this. If they don't address the compatibility issue with other music services, my wallet will remain firmly closed. I want flexibility to choose a music service without worrying about the capability of my player at every turn. Urge has been more than a little quirky on my machine, while Rhapsody has remained solid. I imagine that a lot of people will feel as I do... if Microsoft can't play nicely with other software and devices, I won't buy one. When I do open my wallet, the company who meets my need for flexibility will get the sale, even if it costs a bit more.
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|hrmm maybe dethklok should release a new album. that would boost the economy.
or tickle me elmo ipod edition.
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|PC sales this christmas will be decently good. Since they are all going to ship Windows Vista ready machines with OS and Office2k7 Vouchers on em. It shouldnt limit pc sales at all.
As far as consoles go, I think if Nintendo can keep Stores stocked, the Wii will be the big winner this christmas, otherwise Microsoft will own this Christmas as far as the Gaming market is concerned.
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|I'm confused. How can they say that with all the new hardware this year? We have all sorts of new stuff that people will "need":
-Wii
-PS3
-HD-DVD players
-Blu-Ray players
-Awesome new Mac hardware
-The Zune and next-generation iPods
-and all the new PCs people will need to buy to run Windows Vista.
There's tons to chose from, and I think demand will pummel supply on most fronts. Sure, delays are delays, but I don't think it will be enough to extinguish demand. I'm just a stupid ole' college kid though, and no, I don't have anything to back up my "claims." (note the "I think" qualifier)
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|The point is that none of those particularly stand out as being a single "must-have." They'll all do relatively well, but won't lord over consumer electronics sales.
The PS3 would be that device if it were shipping in any decent quantities. The iPod would be that device if it wasn't just an incremental update. The only new Mac hardware are C2D MacBooks, instead of the iTV. And so on and so forth.
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|But... won't the combination of marginal sales on all the new hardware translate into just as much - or even more - business as if there was one "must-have"?
The only new Mac hardware are C2D MacBooks
Those... and the new Mac Pros. I think those are going to sell like crazy with the competitive pricing they put on them.
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|Did you read the article? Consumers are disillusioned with many products already available due to quality issues, and many other products simply won't be around in time for Christmas.
Incremental improvements to existing devices won't be big sellers - they'll sell well, but won't be a big draw card. And as for people buying PCs for Vista: I doubt many of those will come before Christmas. Again, it's an early next year thing, IMO - particularly given past experience on MS OS launches.
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|I for one had NO idea Zune would not support playforsure. That kicks me quite swiftly and quite hard in the a** because boy was I ready to buy one. The only reason I chose Zune over a 30-40gb Creative player was because I thought the specs were identical, apart from the Wifi and ofcourse the MS player being quite handy/fun/functional. But without playforsure, my Virgin Digital subscription is pretty useless....oh well. Consider one potential purchaser disillusioned for sure. Still, it will be interesting to see if this prediction/forecast holds up because I too can't quite see how Sony or MS can makeup for a 'lackluster holiday' for retailers. Sooo many other things around!
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|Mac Pros aren't exactly home user-esque, if you will. I mean, you don't exactly need a dual xeon rig for internet and email. And I doubt people are going to go into their offices after the holiday off and see a new Mac Pro sitting on their desks with a bow on it.
The 5.5G iPods are irrelevent, but will still sell as they are iPods, but aren't a signifigant upgrade from last years models.
The 2G Nanos will sell very nicely, I'm sure.
Zune, we'll have to wait and see. I'm not holding my breath, to be honest.
Everything else? You guys can argue that. :)
The refreshed Core 2 Mac lines are probably going to help, but not signifigantly enough, as it seems a ton of people have already bought new Macs this past year.
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|Yes, I did read the article. I just happen to disagree with it slightly. Thanks.
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|Yeah, I can't wait to buy a PS3 (when will it ship in quantity now???) and an HDDVD player - after all, I have a compelling need to pay the exhorbitant price to be able to watch an Adam Sandler movie and back up a computer.
A new Mac I can see - especially as many have held out for release 2 with the updated chips that were rumored to be in the wings for the past 3/4 of the year. Be it for use with Windows, OSX, or some combination.
I am not familiar with the games on the Wii, but if they live up to the hype, with their price point I think they have the best shot at making real inroads into the average family whose kid doesn't demand (or get) a Ferrari for his 16th birthday (nor an absurdly priced XBox or PS3).
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|Fair enough.
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|"And on the firm's list of things to blame for this downturn, you'll find - perhaps not surprisingly - Sony, Sony, and Sony."
Oh come on!!! We all know that it has to be President Bush's fault somehow. Everything is President Bush's fault.
/sarcasm
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|It's not Bush's fault, it's his mothers, if she has used contraceptive, she would have spared the world from the bumbling idiot who can't even string a coherent sentence together, unless it's written down for him by his advisors....
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|And yet his GPA at Yale was higher than classmate Kerry's...
Doesn't that just chafe your @ss? ;-)
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|Perhaps the bush's had more friends in the right places.
I seem to recall Bush's I.Q. Is the lowest of any US president, and the 3rd lowest of any world leader..
Pretty scary really, though not a worrying as the people that put him there..
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|i would like to see what their gpa would be if they went to a tech school where there is no preppynomics.
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|Generous Parent Adjustment?
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