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Connected Devices, Services, Seasonal Goods Look Hot For Holidays

While consumers busy themselves with backyard barbecues and beach outings, CE retailers are already in a Santa state of mind as they plan ahead for the all-important fourth-quarter holiday selling season.

For them, burning bright as a Fourth of July fireworks display, is the perennial question, “What will be hot for the holidays?” The answer, for at least two national CE specialty chains that recently shared their fourth-quarter outlooks, is seasonal goods, services and collections of connected products.

As Mike Vitelli, Best Buy‘s senior VP/CE and product management, forecasted at a holiday preview event last month, no single product will likely become synonymous with Christmas 2005 the way Apple’s iPod defined the last holiday season for CE. Instead, groupings of interdependent devices, including flat-panel TVs, digital cameras, notebook computers, MP3 players and related accessories — supported, he said, by such in-home installation and support services as Best Buy’s Geek Squad and Magnolia Audio Video advisors — will be the direction that the market takes beyond Black Friday.

“Consumer electronics have always been a big, big part of holiday gift giving, and this year digital living is going mass market,” he said. “But people still have trouble connecting things and using products, which is why we see a lot of potential in showing them how to pull it all together. It’s not the individual products as much as their connection and the support services that will be important.”

Vitelli said Best Buy was focusing on such categories and functions as home and portable entertainment, gaming, photo sharing, music and movies, and subscription services in anticipation of increased demand. He also described gift cards as “a tremendous gift option” because, given consumer confusion levels, they permit recipients to work with a sales associate to determine what’s right for their needs.

Supporting his point was Chris Charron, VP/research director of Forrester Research. Charron described 2005 as “an inflection point” for digital devices now that the digital home foundation is “hitting its stride” and many early adopter technologies have gone mainstream.

Fueling the digital revolution is the growth of broadband and home networking (19 percent of households now have home networks, he said); the rise of the multi-PC home (now 30-million households strong); and evolving lifestyle needs.

Among the latter is digital photography, wherein falling prices, “great” printers and better “useability” are compelling consumers to take the plunge. And they are. Eight percent of all families in North America will buy a digital camera within the next 12 months, Charron said, while the number of camera phones will double this year, helping to make sending and receiving photos online the fourth most popular Internet activity.

Meanwhile, the increased availability of high-quality, on-demand content is helping to drive home entertainment, Charron noted, pointing to TiVo as an example of the kind of combined hardware and service offering that consumers are clamoring for.

Shoppers also covet flat panel: Some 39 percent of consumers say their next TV will be a flat-panel display, while falling price points have made high-tech TVs available to all social strata. Indeed, while 7 percent of households now have at least one HDTV, 41 percent of them earn less than $50,000 a year.

RadioShack, which staged its own holiday preview last month, similarly staked its fourth-quarter tech offering on such grown-up toys as MP3 players, camera phones, digital cameras and photo printers, satellite radio products, portable navigation devices, and an exclusive DLP projector and DVD player combo unit — the $1,299 Cinego — that comes replete with powered subwoofer.

But realizing that Christmas is, after all, all about kids, RadioShack is also capitalizing on a resurgence of children’s electronics, as witnessed by the ubiquitous Disney-licensed A/V line (see TWICE, June 20, p. 4) and the return after 20 years of the animatronic Teddy Ruxpin interactive toy.

RadioShack is addressing the category with some robotic fare of its own, including the scurrying Roboraptor by WowWee Robotics (also shipping to Best Buy and Circuit City), plus such proprietary products as $300 Vex Robotics construction sets and a bilingual Batman laptop.