Dec 1, 2008 1:37 PM,

Consumers value gadgets above good health, CEA finds

By Sarah Reedy

As consumers hole up in an economic downturn, the outlook for CE vendors remains bright

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Lowering prices has been a big driver of the demand, but it also might not lead to significant profit, Sue pointed out. He said price stimulation and door-buster sales are also driving consumers to pick up flat-panel TVs and Blu-Ray players, but ABI Research’s recent survey of 1,600 surveys formed a different conclusion. Blu-Ray players were among the least desired of those ABI surveyed, with only 8% of respondents planned to purchase one even with its sinking price point. ABI believes consumers aren’t finding Blu-Ray to be a must-have technology, even though movie-watching is likely on the rise as more consumers cope with the economy by staying home.

As a result of this homebody mentality, HDTV sales have also remained strong this quarter. Sue noted that LCD flat panel TV prices are down more than 30% year-over-year and 16% to 26% in just the last two months. ABI also found that 18% of consumers plan to purchase an HDTV this holiday season, as prices have plunged and buyers gear up for the digital TV transition in February.

“Consumers seem to be gravitating towards 42-inch displays,” Sue said. “Best Buy touted a 42-inch plasma from Samsung for $699. Even high-end 1080p 52-inch LCDs were seen for $1,399. Fast movers were 37-inch LCDs.”

Mobile phones, especially smartphones, also remain at the top of most holiday wish lists. The recently launched BlackBerry Storm, Samsung Omnia and BlackJack and LG Dare have been the most popular, according to RBC. All the major US wireless operators have been promoting deals and discounts as a way to continue this momentum through the holidays.

“In terms of our research universe, the price stimulation will help clear inventories, aiding companies such as Corning, Garmin, Motorola and others,” Sue said. “Yet the next four weeks will be critical, and it's still too early to gauge whether the weekend sales are sustainable.”

“Lower price points help,” Kidera said. “As price points become more affordable, they reach a larger target audience. They are viewed more now as a necessity than a luxury. If your cell phone breaks, you won’t wait until your plan is up in nine to 11 months to get a phone. You’ll replace it in the same day.”