With no hot product to anchor the consumer electronics market this holiday selling season, the research firm iSupply is calling for only a small increase in factory equipment revenue in 2006.
The iSupply analysts are forecasting a 2.4 percent increase this year, bringing factory equipment revenue to $302.3 billion, compared with the 11.6 percent increase enjoyed in 2005.
iSupply pointed to several factors for the expected low holiday sales turnout.
The ongoing 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 that support high-definition 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 to 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, iSupply said.
The research company also questioned the moves made by Microsoft with its upcoming Zune MP3 player. Instead of using the PlayForSure digital rights management (DRM) adopted by several other vendors, the Zune will come equipped with a proprietary DRM, which iSupply feels could scare away consumers who have content purchased from other sources.
iSupply also said the delay of Apple's Internet TV (ITV) application to January will throw cold water on the holiday party. ITV wwill allow iTunes and other content stored on a computer to be viewed on a home TVs through a Wi-Fi connection.