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iSuppli Issues Downbeat Holiday Expectations

El Segundo, Calif. — With no hot product to anchor the consumer electronics market this holiday selling season, the research firm iSuppli is calling for only a small increase in factory equipment revenue in 2006.

The iSuppli analysts are forecasting a 2.4 percent increase this year bringing factory equipment revenue to $302.3 billion, compared to the 11.6 percent increase enjoyed in 2005.

iSuppli pointed to several factors for the expected low holiday sales turnout.

The on-going HD DVD/Blu-ray format war received the lion’s share of the blame.

“Many of this year’s wannabe hot products are designed to build on the very strong sales growth for Digital Televisions (DTVs) that support High Definition (HD) video. Chief among those products are next-generation HD-video DVD players, which should have been this year’s hit holiday product. Instead, the battle between the HD-DVD and Blu-ray standards for next-generation DVD is resulting in much slower growth,” the report said.

Instead consumers will wait until next year before they take the plunge and buy a high definition video player, the report predicted.

Adding to the Blu-ray HD DVD problems is the blue laser diode shortage. This is impacting not only the video players, but Sony and Microsoft’s latest generation game consoles, iSuppli said.

The research company also questioned the moves made by Microsoft’s with its upcoming Zune MP3 player. Instead of using the PlayForSure DRM adopted by several other vendors, the Zune will come equipped with a proprietary DRM, which iSuppli feels could scare away consumers who have content purchased from other sources.

iSuppli also said the delay of Apple’s Internet TV (ITV) application to January will throw cold water on the holiday party. ITV will allow iTunes and other content stored on a computer to be viewed on home TVs through a Wi-Fi connection.