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Distributors, Part II: Shortages Afoot As Holidays Approach

In a recent TWICE report on distributors, CE and PC wholesale providers pointed to lower flat-panel pricing as a boon to both industries this holiday season (TWICE, Oct. 25, p. 17).

In a follow-up to our coverage, distributors cite other categories that they believe will be hot for the holidays — and in short supply — while addressing their own expanded role in a converging world (see p. 32).

Joel Blank, executive VP of Atlanta-based BDI-Laguna, for one, foresees a “healthy fourth quarter for desktops” now that the category is “finally catching up to storage demand.” But besides luring a fresh round of shoppers with monster 200GHz hard drives that can store vast archives of music, photos and video, category success is also “driven by the ability to attach affordable flat-panels” to the sale.

“Prices are dropping off the map,” Blank said, citing expected $199 to $299 retail price points on 17-inch LCD monitors.

Notebook models will also be in strong demand this holiday season, he said, particularly those within the $999 to $1,499 range.

Related categories on a hot streak are hard drive MP3 players, and digital cameras and photo printers. “Four by six printing is a very strong category this fall,” Blank said, naming models from Epson, Cannon and Hewlett-Packard. “People want to print their four by six photos at home.”

In video, DLP, particularly Samsung’s “extremely popular” 50-inch model, will continue to top many a holiday wish list, although inventory availability is spotty. “The supply chain isn’t consistent,” Blank noted. “Unlike doing business with an HP, where you can plan on a weekly basis, TVs ship once a month. So if you have to buy and hold inventory, you have to be smart about it.”

Indeed, with DLP and LCD prices “dropping rapidly” as more manufacturers enter the arena, distributors must weigh the potential of sitting on stock that loses value overnight vs. not having any microdisplay inventory at all. “You don’t want too much because the pricing is collapsing, but you don’t want to not have it either,” Blank said. “So forecasting becomes very important.”

Nevertheless, despite the vagaries of pricing and supply, the affordability of DLP and LCD has “brought in a whole new customer base” that should carry the categories for several years as consumers buy multiple HDTVs, he said.

While cellphones aren’t a big Christmas gift item (actually June, with its school graduations, is the busiest time for handset sales), Campbell, Calif.-based American Wireless says new features and product introductions will drive handset demand during the holidays. As president Michael Misuraca notes, camera phones, particularly those with Bluetooth functionality and other advanced features, “are the flavor of the year,” which is causing handset upgrades to outpace new activations — even though he questions that most consumers are actually using the units to transmit photos over the Internet.

An especially hot model is the 1.2-megapixel Motorola V710, which, despite recent price cuts, still wholesales in the $350 to $400 range and yet continues to drive business. Added senior marketing director Mitch McCoy, “A savvy dealer will train his team to demonstrate the features of higher-end handsets and smartphones,” to further spur up-market sales.

But increased handset demand, software issues and direct distribution pacts between manufacturers and carriers has tightened availability and caused “a general shortage out there,” observed Misuraca, who is working to diversify his assortment with high-end phone accessories like Bluetooth headsets, while growing his satellite TV and radio business. “We will continue to look for new distribution opportunities that wireless folks will find necessary to survive,” he said.