Retailers Brace for Lackluster Holidays

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.