Holiday Season Sees Shift in Consumer Electronics Buying Trends

Strategic Insights -

A significant shift in consumer electronics buying intentions has occurred this holiday season, with Apple's iPod music player and Microsoft's Xbox 360 game console ranking as the two most-coveted items. This marks a major departure from previous years, where portable MP3 music players did not even make the top 10 list of desired gifts. Digital cameras have taken the second spot on the list, while video game machines, including the Xbox 360, have moved up to third place. The iPhone's success has defined the MP3 category, making it a must-have item. Meanwhile, the Xbox 360 has created interest in game machines generally, with those looking to buy it facing stock shortages and high prices.

Key Takeaways:

  • Apple holds over 70 percent of the MP3 market share, with its iPod music player being the most-coveted item this holiday season.
  • Digital cameras are expected to sell 23 million units this year, a growth of 23.4% from last year's 18.8 million units.
  • Video game consoles, including the Xbox 360, have moved up to third place in the most-desired gift list, with Microsoft selling 450,000 Xbox 360 consoles on November 22.
  • Shortages of the Xbox 360 have helped its competitors, with Sony estimated to sell two million PlayStation 2's in the United States this Christmas season.
  • Prices of MP3 players and digital cameras continue to drop, making them more affordable for consumers.
  • Flat-panel TV prices have dropped significantly, with a 42-inch HD-ready plasma TV now available for $1,299, a 42% drop from its 2004 price of $3,800.
  • The Consumer Electronics Association has forecast a decline of 300,000 units in rear-projection TV sales in 2005.

Statistics:

  • 70-80% of MP3 players sold this year are expected to be made by Apple.
  • $2.3 billion worth of MP3 players were sold in the first nine months of this year.
  • An additional $700 million in sales is expected in the final quarter of the year.
  • Three times the number of players will be sold this year as last year.
  • 23 million digital cameras are expected to be sold this year.
  • 18.8 million digital cameras were sold in 2004.
  • PlayStation 2 sales are expected to be $2 million in the United States this Christmas season.
  • Xbox 360 console sales are estimated to be 1 million through the end of the year, accounting for $1.6 billion in revenue.
  • 42-inch H.D.-ready plasma TV prices have dropped 42% in one year, from $3,800 to $2,200.

Sources:

  • "Apple iPod Makes it to the Top 10 List of Desired Gifts" by Consumer Electronics Association
  • "Xbox 360 to Sell 1 Million Units This Year" by Wedbush Morgan Securities
  • "Digital Camera Sales Expected to Grow 23.4%" by Consumer Electronics Association
  • "Flat-Panel TV Prices Drop Dramatically" by iSuppli
  • "Video Game Sales Expected to Reach $2 Billion This Holiday Season" by Microsoft