Gadget sellers looking for a bumber Christmas

If you were hanging on the words of the consumer electronics bellwether DSG International, owners of Currys and PC World in the UK, last week you might have heard (but may not have believed) that the Christmas market for expensive gadgets, computers and flat-screen TVs may not be a complete wash-out. John Browett, the company’s chief executive, said: "This is not the end of the world. I’m a bit surprised by the Armageddon in the headlines. We are in a recessionary environment but it doesn’t feel like a global slump of epic proportions."

Sure enough, industry analysts at FutureSource Consulting are seeing reasons to be optimistic this season, after releasing their latest worldwide forecast for the consumer electronics sector. FutureSource says consumer electronics sales will tick upwards this year, a startling prediction when you consider that much of the developed world is in or on the brink of a recession, job losses are mounting and taxpayers around the world have been recruited to bail out the banks. How can this be?

To hear Graeme Packman, a FutureSource consultant specialising in digital television and broadcasting, tell it, there is still healthy demand for high-end gadgets and consumer electronics products including Blu-ray players, high-definition televisions, iPhones and, a brand new category that has come out of nowhere, netbooks, the portable computers that are sized and priced somewhere between an iPhone and a laptop. Netbooks, he says, "are just flying off the shelves. Retailers are telling us this is going to be an enormous quarter for these products."

The same can be said of flat-screen TVs, his colleague Simon Bryant, told me. The market for big-mamma, £1,000-plus "HD-ready" or "full HD" sets, weighing in with 42-inch or 50-inch screens, is still growing strong. Of course, it doesn't hurt that select retailers are sweetening the deal with a free home theatre thrown in, Mr Bryant says. The market for LCD and plasma TVs in Western Europe will grow by a healthy 9 per cent next year to 35.8 million shipments, FutureSource says. In the US, thanks to the mandated analog TV switch-off in February, growth is even stronger. The same market is expected to grow by 15 per cent in the next year to 34.4 million shipments. That’s bad news for those hoping to find a bargain flat-screen TV: you may find an older model LCD TV marked down this Christmas, but the move to "full" high-definition will mean the top-of-the-line models will cost you at least £1,000, Mr Bryant says.

There's better news for those of you still mulling a Blu-ray player. In the US, the big consumer electronics chain, Best Buy, has introduced a $199 store-branded player that comes with a coupon for $100 worth of Blu-ray titles. "It gives them the opportunity to advertise a $100 Blu-ray player," Mr. Packman says. In Europe, the prices are not quite as low, but a quick search of Amazon reveals Sony, Panasonic, LG and Samsung players priced between £120 and £229. Expect a lot of promotion in this category. "This will be the first real Christmas for Blu-ray worldwide," Mr Packman adds, and retailers are expecting a big year. According to FutureSource, the Blu-ray player market for Western Europe will more than triple next year to top 1.8 million shipments. The PS3 is still a good option too.

The biggest surprise in the consumer electronics world has been netbooks, the sub-£350 mini computers that have been popularised by the likes of Acer and Asus. The interest is in the portability of these computers. They often sit in the living room, near the TV, letting users check and send e-mails and do casual surfing. They are a bit too small to use for creating documents though they are popular with students. FutureSource predicts the market for netbooks in Western Europe will grow to between five and six million units, up from virtually zero a year ago. In the US, the market is growing at a similar clip.

Another fast-growing mini segment is pocket video recorders, such as the Flip video camera. FutureSource predicts that the US market for this segment will exceed three million units this year.

Of course, not every product category will grow. A slowing market is the digital camera and digital camcorder sector (not to be confused with the smaller USB-ready, pocket recorders). And, for big chains like Currys, big white goods products will be slow-movers as they are highly reliant upon new home sales. The sale of new mobile handsets is also expected to show flat growth in the US and Western Europe. MP3 player sales (and, yes, sales of the iPod) are expected to drop as this market has become fully saturated. "The iPod's biggest competitor now is the iPhone," Mr Bryant says.

And, speaking of the iPhone, there is, as Steve Jobs told us a week ago, still plenty of promise that this will be the must-have gadget of Christmas 2008. The new Blackberry and high-end mobile handsets such as Nokia's N96 and LG Shine are also expected to propel the smartphone market as a whole to a healthy greater-than-30-per-cent growth rate in both the US and Western Europe.

Add it all up, and there is some reason to be optimistic for the consumer electronics sector this year. "We looked at the industry again last month," Mr Packman says, "and even after the financial crisis was factored in, all signs were pointing to growth."