What Will Be Hot This Holiday?
Sept. 26, 2006 — -- It may seem a bit early to start thinking about the holiday shopping season, but retailers and manufacturers already have visions of sugar plums dancing in their heads -- not to mention cash!
Analyst groups are beginning to release predictions for what they think will be hot and what they think will not at the stores this year.
Cheaper HD TVs and notebook computers, high-tech cell phones, mp3 and other portable media players, high-definition DVD players and two new video game systems from Nintendo and Sony are all poised to empty bank accounts from coast to coast.
"We're at the cusp of a time period where electronics are more important to people," says Stephen Baker, director of industry analysis for the NPD Group. "And they're willing to spend more on them because they're an important part of their lives."
Baker and NPD believe consumers will plunk down big bucks on electronics during the upcoming shopping blitz and expect to see a six to eight percent increase in holiday spending over last year's $8.2 billion.
TVs Dominate Living Rooms and Holiday Sales
It probably comes as no surprise that one of the hottest products driving consumer sales this holiday will be high-definition TVs, according to NPD.
During last year's holiday shopping season, LCD TVs alone generated over $441 million, while plasma TVs brought in over $303 million. And this year, they're expected to be even bigger sellers.
"It's hard to imagine anything happening to ruin that party," Baker says. "I think the most striking thing -- despite continued price reduction in that space -- is what people are willing to pay for their TVs."
Though prices for HDTVs have continued to drop, consumers are still spending large amounts for their sets.
Sean Wargo, director of industry analysis for the Consumer Electronics Association, says one reason is that people want to be on the cutting edge.
"Displays have seen huge growth this year and will grow throughout the holidays," says Wargo. "Consumers are buying them up -- where they would have spent $200-$300 for a new TV previously, now they're spending more to get a widescreen."
And once that big, widescreen display is in the home, Baker thinks consumers will be looking to high-definition DVD players to give them a next-generation movie viewing experience.
Despite mixed predictions from analysts about the uncertain future of HD DVD and Blu-ray, Baker says that retailers want customers to see them on their shelves as evidence they're shopping in a cutting-edge establishment.
Plus, he says, when an $800 HD or Blu-ray DVD player replaces a $50 DVD player on a store shelf, it makes retailers -- and their pockets -- pretty happy, too. NPD expects retailers to sell out of next-generation DVD players.
Pocket-Sized Entertainment
Around this time last year, Apple announced the release of the iPod Nano and continued to absorb market share in the crowded portable media space.
This year, the Silicon Valley company known for its cool, artsy image, dazzled audiophiles again with refreshed Nano and Shuffle lines featuring models in color, with more storage space and with lower price tags.
Despite a new mp3 player and music download service on the way for the holidays from Microsoft -- Zune -- and other, quality offerings on the market, most expect Apple to stay where it is -- on top.
"There remains a lot of demand in the market both for first-time buyers and for people who have two and three and four iPods," Baker explains. "You've got other products that have done well in their niches and we expect that the Zune will do OK, too, but we don't see anything that's going to change Apple's dominance."
NPD predicts portable media players will exceed the $497 million they generated in 2005.
Both Baker and Wargo say portable media players, as well as cell phones that incorporate media features, will again be one of the hottest items this holiday shopping season.
Just for Playing Around
What would the holidays be without something for the kid in all of us -- or the actual kid who lives in your house?
In mid-November, Sony will release the Playstation 3, or PS3, just two days before Nintendo releases their new video games console, Wii -- pronounced "we."
"It would be hard to imagine that the new consoles wouldn't sell out," says Wargo. "They're going to generate a lot of traffic and a lot of buzz. It's a great battle to be watching because you could argue that each of the contestants brings their own features to the table."
Aside from being a powerful video game system sure to blow the socks off of any video game enthusiast, the PS3 will feature online connectivity and a built-in Blu-ray DVD player. But at a whopping $500-$600, and with games rumored to ding $75, it likely won't be an impulse buy.
"Certainly, people are going to buy the Playstation [3]," Baker says, "but those are people who have a lot of discretionary income or were prepared to buy it regardless of the price."
In the opposing corner is Wii, which has a few exciting features like full Internet browsing, local weather and news on demand. But Wii's selling point is its motion sensitive controller, which the company hopes will open up gaming to an entirely new audience.
At $250, Wii certainly stands a chance of creating the revolution they're hoping for.
Of course, there's still the Xbox 360, which was released just before the holidays last year and is expected to be a strong player again this year.
Rounding Out the Top
Now that laptops can be had for about $500, Baker and Wargo expect to see consumers grabbing them up. Desktop computers, they say, will likely still suffer from slumping sales.
"There have been a lot of mixed discussions about notebooks," Baker says, "but we're very optimistic about notebook sales this year."
Digital cameras are also likely to be big sellers this holiday.
While not generating the kind of money made from HDTVs or portable media players, Wargo and Baker say digital cameras are consistently popular among consumers.
"We continue to see 20 percent unit growth in that category," said Wargo.