Tech Check

Will Apple, RIM and Others Enjoy Happy Holidays?


I'm looking at a spate of market research over the past few days, and when it comes to consumer electronics, it seems like some key companies might be on the verge of a break-out holiday shopping season.

Which might seem counter-intuitive in an economy like this one.  The back-to-school shopping season was supposedly going to be a bust; PC sales have been under severe pressure.  But then, we got sales data from Gartner earlier this week that shows while cell phone sales globally fell 6 percent last quarter, smart phone sales jumped 27 percent.  That's tremendous news for Nokia , Research in Motion , Apple and others.  Sales figures were robust, with Nokia once again leading the charge, selling almost 18 million smart phones.  Research in Motion came next with almost 8 million, and Apple's gaining ground with over 5 million iPhones sold.  Not surprisingly, to at least some of us closely watching this market, Palm came in a distant tenth, selling about 250,000 Pre's.

But the smart phone market is quickly becoming the rising tide floating so many boats:  chipmakers, screen makers, software developers, gamers, network service providers, retailers.  The trends are stunning, and I have to imagine they'll even accelerate toward the holiday shopping season as the economy begins to recover.  And heck, even if it doesn't begin to recover all that much, the trends suggest that if it's cool, and neat, and slick, and needs power, consumers will crack open their checkbooks.  Even in this economy, when it comes to technology, it's still very much a "want" over "need" environment.

The same goes with netbooks.  Sure, they're more inexpensive than traditional laptops, but $300 or $400 is still a pricey purchase.  Yet netbook unit sales are expected to double this year over last.  That trend seems to be only gaining momentum and that's good news for everyone from Intel and Microsoft to Dell , Hewlett-Packard , Google and Yahoo , even Best Buy .  And likely Apple too.

That's because, if you believe the rumors, Apple will release its own version of a netbook next month, and speculators believe the device will run $600 to $700.  The Mac tablet could generate over $1 billion for Apple's topline as soon as next year, according to Piper Jaffray.  Again, the price would be significantly below a MacBook, but it's still a $600 or $700 transaction.  That ain't cheap in an economy like this one, but think about it:  even before this thing even comes to market, it's already a $1 billion proposition.  Not bad in the midst of a deep recession.

And a word on Apple:  The company continues to post phenomenal sales, even at a price premium to competitors in the marketplace.  iPhone and iPod Touch are quickly gaining steam as the gaming platform of choice, providing serious competition for the Sony PSP and Nintendo DS.  Apple is absolutely the exception that proves the rule:  Consumers will spend if they're given a compelling reason to do so.  Apple is very compelling indeed.

Oh, and let's not forget that Microsoft just announced release plans for its new ZuneHD today.  Maybe less expensive than an iPod, but at $200 or $300 depending on the model, it's still pretty expensive.  And earlier this summer, Cisco made the ultimate consumer purchase, buying Pure Digital, the maker of the Flip digital video cameras ($199, $299) for $600 million.  Clearly, Cisco sees big time opportunity in high priced consumer gadgets and is placing a big bet that at worst, it'll continue, and at best, it'll improve.

These are strange times, but I'm not sure the consumer's appetite for gadgets and goodies is truly waning.  Hewlett-Packard reports earnings next Tuesday and we'll get a pretty good idea whether there's any strength in the marketplace and whether HP is able to exceed expectations not merely because of ongoing cost-cutting.

There's a perceived value with some of these new technologies.  And consumers have been stepping up to snap them up.  That's something to consider as we head toward the back half of 2009.  Analysts sorely underestimated expectations this past quarter, something they'll likely not repeat.  Holiday shopping this year might be as bad as last year, but for key players -- like the ones I've mentioned above -- this could be a happier season than you might suspect.  Don't throw money willy-nilly at broad tech; pick the stars, and soon, and you might be handsomely rewarded.

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