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Home > About Abt > News > "Spending On Gadgets Expected To Grow"

Spending On Gadgets Expected To Grow

Consumer electronics — tablets, TVs, smart phones — figure prominently in gift budgets

By Wailin Wong

November 29, 2010

A weak economy hasn't stopped consumers from wanting to be connected digitally at all times, whether it's checking e-mail on the go or streaming on-demand movies on a living room TV set.

The Consumer Electronics Association projects that while U.S. consumers will spend less overall on holiday gifts this year than in 2009, they will fork out more on gadgets. The industry group forecasts that the average shopper will spend $232 on consumer electronics this holiday season. This figure represents one-third of consumers' total gift budgets and a 5 percent jump over 2009.

But that doesn't mean gadget-makers and sellers have it easy. Budget-minded shoppers will face a dizzying array of choices, from laptops to video game consoles. And while the retail industry created Cyber Monday five years ago to promote online shopping, Internet deals on gadgets started circulating before Thanksgiving this year and will continue into December.

Here's a look at three popular categories of consumer electronics. Keep in mind that prices can vary because of promotions.

Tablets

These svelte, Web-connected computing devices are expected to be hot sellers into 2011. Although many manufacturers are jumping into tablets, Apple continues to dominate the market with its iPad, which was introduced in April. The iPad starts at $499. Apple is not known for offering generous holiday discounts.

One iPad alternative is the Samsung Galaxy Tab, which runs Google's Android operating system and has a 7-inch display. All four national wireless carriers, as well as Chicago-based U.S. Cellular, are selling the Galaxy Tab.

Verizon Wireless offers the Galaxy Tab for $599.99 but does not require a contract. T-Mobile sells the tablet for $399.99 with a mail-in rebate and two-year agreement. As a holiday promotion, T-Mobile customers who sign up for a family plan and buy the Galaxy Tab or one of the carrier's featured smart phones can get another phone for free. This offer runs through Jan. 18.

Dell released last week its Inspiron duo "convertible tablet," which can function as a netbook with a full keyboard or as a flat touch-screen device. Dell is selling the Inspiron duo for $549 online and at Microsoft retail stores. The only Microsoft store in the Chicago area is at Oakbrook Center in Oak Brook.

Mobile devices

Android phones have seen huge growth this year, presenting a collective threat to the iPhone's popularity in the smart phone category. This holiday season, carriers will offer lower-price Android phones, hoping to get more consumers to make the leap to devices designed for Web browsing and social networking. Microsoft is also back in the smart phone game with its new Windows Phone 7 lineup.

Sprint and Verizon Wireless' Cyber Monday deals highlight their more affordably priced phones. The LG Optimus S, an entry-level Android smart phone, is one of four devices at Sprint that shoppers can get free with a two-year contract. The phone normally costs $49.99 with a two-year contract and mail-in rebate. Verizon is running two Monday-only deals, including one for the LG Ally, an Android smart phone whose online price is $49.99. The carrier is bundling the device with a multimedia desktop charger and car mount for $29.99. The offer requires a two-year contract and data package.

U.S. Cellular also is pushing its Android devices for the holidays. Monday is the last day when shoppers can get either the LG Apex or the Samsung Acclaim, both Android phones, for free after a mail-in rebate.

The premium smart phone category includes devices such as the T-Mobile G2 ($199.99 with mail-in rebate and two-year contract), the follow-up to the G1 that was introduced in October 2008. The G2 is one of the featured smart phones in T-Mobile's buy-one-get-one-free holiday promotion.

Microsoft's Windows Phone 7 portfolio will be prominently featured at AT&T, which is running a buy-one-get-one-free promotion for these devices through Jan. 1. Shoppers can mix and match the Samsung Focus, HTC Surround or LG Quantum, which normally retail for $199.99 each with a two-year contract. AT&T's Windows Phone 7 offer is in stores only and requires a two-year agreement and minimum monthly data plan of $15.

Meanwhile, Monday is the last day that Clearwire is offering its Clear Spot 4G mobile hot spot for $20, compared with its $99 regular price. This petite gadget can connect up to eight Wi-Fi-enabled devices, such as phones and laptops, to Clearwire's 4G network.

Televisions

Prices on LCD and plasma sets are likely to drop for the holidays amid continued high demand.

"The wonderful thing about HDTVs is vendors keep finding ways to drive the prices down and make bigger TVs," said Andrew Eisner, director of community and content at Retrevo, a Web site that helps consumers with their electronics shopping decisions.

Sears is selling a 26-inch, 720p Samsung LCD HDTV for $299.99 in an online-only Cyber Monday deal, $130 off its regular price.

On the larger end of the TV spectrum, Jon Abt, co-president of Abt Electronics in Glenview, said he has seen big interest in 55-inch LCD sets ahead of the holiday season. Abt and Eisner said demand for 3-D TVs, which made a big splash at the Consumer Electronics Show early this year, is likely to remain tepid through the holidays because of premium prices and limited content. The required glasses also are a stumbling block for many consumers.

"3-D sets are going to start in the $1,000 price point," Abt said. "We've got a few close to that now, and you'll see further discounting going on."

The $1,000 level typically doesn't include extra glasses or a 3-D-compatible Blu-ray player, both crucial components for in-home 3-D viewing. Some manufacturers and retailers are running promotions in which these accessories come bundled with the purchase of a TV.

At Amazon, for example, shoppers who purchase a qualifying Samsung 3-D TV also get a compatible Blu-ray player, two pairs of glasses and the first three " Shrek" movies in 3-D. A different Amazon offer bundles a Sony 3-D TV with two pairs of glasses, a 3-D Blu-ray of "Alice in Wonderland" and a PlayStation 3 gaming console.

Still, 3-D content remains limited, especially when it comes to TV programming.

"3-D TV may have been slightly overhyped starting at last year's CES," Eisner said. "There's pretty common agreement that consumers like 3-D TV and will eventually adopt it. It may just not happen as quickly."

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