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High-End PCs, Handhelds Seen Leading Holiday Sales

Following a tough sales environment in October, retailers are expecting a strong Christmas, with sales up slightly for PC desktops and significantly higher in handhelds.

Digital cameras, PCs costing $1,000 and more, handhelds (particularly in the Palm family), photo printers and FireWire-related products are among the expected strong sellers for the holiday season. Handhelds will be a key seller for most retailers, given the wider range of Palm products available, the lower prices (now in the $149 range) and a slew of new accessories.

Jackie Trilling, marketing director for DataVision, New York, said, “The handhelds will be berserk between the Blackberry, the Palm, Visor and Sony. We’re expecting a huge business in those areas. Overall, we’re on track to be up approximately 10 percent over last year in volume, but in handhelds we’re looking at 40 to 50 percent.” He noted however, that the forecast was based on quantities remaining steady.

Tim Hess, computer buyer for R.C. Willey, Salt Lake City, said, “For us the upswing this year will be in portables and personal computing. We carry Palm, and the Sony piece is an exciting new entry and it will be very competitive with the Palm. PCs are going to continue to be hot. We’re not looking for explosive growth, but they will be constant. Our most popular price range is from $1,000 to $1,500 for Pentiums with CD-RWs and DVDs.”

Although shortages continue to plague certain handheld brands, particularly the Compaq iPAQ, retailers said the influx of new brands into the market will help offset shortages. In addition, many retailers said supplies of the Palm-branded products such as the Palm Vx had improved since earlier this year.

Carl Gish, general manager of electronics, said that last year the site was selling one or two handheld brands but now offers six or seven.

“If you include accessories, I’m guessing our selection has gone up by a factor of five to 10 times,” Gish said. “In accessories alone, there are so many people who have come into the market. Because of our huge selection, combined with our relationship with vendors, we don’t anticipate any significant shortage issues.”

In desktops, most buyers said sales of higher-end products were improving, but many said Internet appliances are considered dead in the water.

Tom Peel, merchandise manager for Nebraska Furniture Mart, Omaha, Neb., is one of the more optimistic proponents of Internet appliances.

“I think they’ll do OK this Christmas, but they are a little ahead of their time,” Peel said. “People have to get comfortable with paying an extra $22 a month for the service fees. If I were looking at a crystal ball, I would find a way to have a single account where they could buy multiple machines but with one service fee. If this happens, I think the market will explode.”

Other suppliers said prices on the Internet appliances were still too high, in the $500 to $600 range, for example, in the case of Compaq.

At least two regional buyers reported sluggish sales in October, and both credited uncertainty about the presidential election as the reason.

Said Peel, “I’m looking for a slight turn-up in sales, but there’s a lot of uncertainty about the economy and the presidency, although the economy is the biggest issue.”

Another regional buyer said, “Honestly, it’s been a tough month. I think we’ll have to wait until after the election to see what will happen at retail. I think there may be some pent-up demand. We’re flat right now but we should be seeing increases.”

In general, Peel said, he expects digital cameras and photo printers to top the Christmas buying list: “I’m thinking Christmas will be real strong in CD-R drives and digital cameras in the $300 to $700 range. The cameras have so many more features, better zoom, higher resolution, and they’re easier to understand. Photo printers such as the Epson 750, and Hewlett-Packard 1000 and 970 will be hot, along with any low-end printer at $100 or less.” said strong sellers this year will be anything digital, including computers, PDAs, digital cameras, digital video cameras, DVD players and DVD discs. Hot PC prices will be all over the map, at $799 to $999, $1,500 and also $1,999, said Mike Walkey, senior VP of product management.