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| Checking out technology at Best Buy. |
Headlines like the "the great consumer crash of 2009" have been hanging over the American markets for months. Sectors have been tensely watching how and on what consumers will start spending, with the country tentatively emerging from recession.
The answer seems to be that they'll spend on technology. Read mobile phones and netbooks. They're interested in a broad range of products that extends from sophisticated computers to electronic toys for children.
"80% of US consumers buy at least one technology product a year," said Shawn DuBravac, Research Director for the Consumer Electronics Association (CEA).
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| Schmitt: global demographic. |
Larry Schmitt, Product Process Supervisor for giant retailer Best Buy, puts it even more strongly. Aside from high priced items like the newest big-screen TVs, he said: "our demographic is the world."
That world is increasingly a mobile one, with people wanting to be connected from wherever they are. Hong Kong and Chinese mainland makers of mobile phones and components under OEM and ODM arrangements can look at an ever-broader range of goods in demand in the US.
The Internet is increasingly a part of the electronics product sector as more people get connected from home, work and on the move. MIDs (mobile internet devices) are accounting for a growing proportion of the action.
"The Internet is growing very rapidly despite the economic slowdown," said Pankaj Kedia, Intel Director of Ultra Mobility Group's ecosystem efforts. Internet traffic has continued to grow this year even in the face of the gloomy economic news.
Where innovation is taking place
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| Kedia: enhanced capabilities always coming. |
Netbooks, notebooks and smartphones are "where innovation is happening", Kedia said. "They are all based on the Internet. We see innovation in all of these. It's not either/or." Processors available now and on the way over the next few years will deliver enhanced capabilities and draw still more interest.
"Notebooks have been a strong revenue driver," said Ross Rubin, NPD Group Director of Industry Analysis. Further than LCD TV, the overall category is growing rapidly, with netbooks a key factor.
Next generation laptops and netbooks are well on the way, Kedia said. Intel's ULV (ultra low voltage) processors allow for still thinner, lighter and higher-performance operation in laptops designed as primary PCs for content creation as well as for Internet access.
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| Smartphones add revenue. |
The increasing capabilities available on mobile devices, along with the growing feature overlap across categories, can create confusion for consumers and inventory problems for retailers. Mobile connectivity is an evolving area.
Meanwhile, consumers can choose what works best for them. Retailers can use the choices, as Best Buy does in computers and phones, to essentially offer people "custom design" out of standard inventory.
Customer control through "individualisation"
Best Buy uses store feedback and market research to design sales programmes that use the wide choices of hardware, software and support options to target different consumers and their individual needs.
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| Individualisation is the key. |
"We're testing new concepts constantly," Schmitt said. "We don't sell a box. We have a one-on-one conversation", he added. "It's individualised, but these are standard products that cover a wide selection. They're all mass-produced - they're not one-off."
The chain's Next Class programme is aimed at college students, recognising that they're likely to be on fixed budgets and can't spend US$2,000 on a notebook.
Best Buy shares its college student market research feedback with major computer vendors - Dell, Toshiba, Sony, HP - to secure configurations essentially designed by its customers.
From US$649.9 to US$799.9, features include lighter weight, longer battery life, 320GB hard drives, 4GB of RAM and bundled software.
"Netbooks will be a major story," DuBravac said. From their start as a basically new category in 2008, CEA expects their sales to grow 132% for 2009, 72% in 2010, and 40% in 2011.
Using Intel's category-defining Atom processor, netbooks are smaller, lighter, more portable than notebooks and have a longer battery life. They tend to cost less than notebooks, but prices overlap. So do buyer demographics, which range across age groups. "It's a diverse audience, and not necessarily young," said DuBravac.
Best Buy netbook prices start at US$249.9. Vendors include Dell, Gateway, Acer, HP, Toshiba, Samsung, Asus and Sony. Current prices from a number of vendors tend to go into the US$400 range.
"Notebooks will be competing by getting slimmer, smaller and with more efficient power consumption," Rubin said.
Creeping features
"Feature creep" across categories is a major trend as Internet mobility and connectivity become more dominant.
Smart mobile phones are taking this another step as they add Internet access to their capabilities. Mobile phone penetration is already at 75% among all US adults and 93% among people CEA defines as "tech enthusiasts".
With the interest in Internet access, web browsers on the phone will be more in demand, NPD's Rubin said.
Smartphone sales are up 8% this year, while standard models are down 14%, CEA stats show. "We're seeing them integrate the software applications better, making them more useful," DuBravac said.
NPD Group reports that smartphone market share is growing, approaching 30% penetration of the available market, said Rubin. The typical buyer at this point "is a relatively affluent consumer because of the monthly plan cost," he said. "As faster networks roll out, the economics will change."
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| Best Buy mobile centre. |
For phones, Best Buy Mobile uses a wide range of hardware choices and mobile phone plans to give customers what they want out of inventory - without customising. "Bring in your needs and we'll help you fit the product to those needs - out of inventory, not customised, just as the product was manufactured," Schmitt said.
Educational toys include Hong Kong models
Increasingly sophisticated electronic toys play an important role in introducing children to the tools they will use as they grow. Online interaction is important too.
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| Rice: embedded chip the secret success. |
Some 80% of all value toys are associated with a computer chip, said Reyne Rice, Toy Trends Specialist for the Toy Industry Association (TIA). "More and more toys have some kind of embedded chip," Rice said.
Set for October release, Nanovor, a trading card game from Smith & Tinker, bridges on- and off-line play. The game is free to play, and comes with a starter pack, after which players purchase new packs.
Comics, action figures and other products (retailing at between US$6.9 and US$9.9) will extend the franchise range.
"Parents want to encourage learning with educational toys, rather than have their children watching TV," Schmitt said.
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| Vtech Kidizoom. |
Best Buy is expanding in this category. Its offerings include the 16MB Kidizoom camera from Hong Kong's Vtech (US$59.9), which can store 200 still pictures or up to five minutes of video.
The retailer carries Leap Frog's Leapster console (at US$49.9) and its individual game and learning modules (US$24.9). Also from Vtech, the Buggsby Reading System is designed to encourage early reading (US$29.9 for starter set).
The majority of items this autumn will cost under US$100. "Everyone's trying to get through 2009 to get to 2010 with new introductions that may have been held back because of the economy," said Rice.
Environmental factors to the fore
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| Appeal to student greenies? |
Green means a lot of things in electronics, DuBravac said, ranging from better energy management to incorporation of more recyclable materials.
"When you carry a lot of gadgets, green becomes a priority," Intel's Kedia said. "Our customers are becoming increasingly green-conscious."
Low power processors contribute by delivering high performance while using less electricity. Intel says it continually looks for more environmentally-friendly materials to use.
Best Buy encourages recycling by giving a credit toward a new purchase when a consumer brings in an old item.
from special correspondent Lisa Harbatkin, New York
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