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post strong year-end sales
2000 to be year of the digital revolution
By Alan Breznick
Consumer electronics makers sure had themselves a merry little Christmas in 1999 and this year looks like it’ll be even better.
In probably the strongest holiday shopping season in a decade, satellite dishes, DVD players, big-screen and projection TV sets, camcorders, digital cameras, video games, PCs and wireless phones all flew off retail shelves and web shopping sites over the last three months.
In fact, consumer electronics analysts and retail executives called it a banner shopping season for nearly everything digital. Even the pricey digital TVs and set-top boxes, plagued by technical compatibility problems, picked up steam in the fourth quarter, beating industry sales projections of 100,000 units for their first full year on the market. Sales are expected to rise to 480,000 units this year.
Todd Thibodaux, senior economist and vice president of market research for the Consumer Electronics Association, says holiday sales rose 10 percent in dollar terms in the fourth quarter. The trade group estimates that sales of all digital gadgets reached $30 billion in 1999 and projects digital volume of $38 billion in 2000.
Only digital audio players and such brand-new gadgets as personal video recorders (PVRs) failed to share in the Christmas spending splurge. But executives at both TiVo and Replay Networks, the two Silicon Valley startups peddling PVRs, contend that their products, limited by sparse retail distribution and promotion this past fall, will take off in 2000.
"It’s really, really early in the category," says Jim Plant, marketing director for Replay, which has sold only a few thousand units online so far but plans to hit stores with a Panasonic receiver by the spring. "There’s going to be customer demand for it."
Leading the digital surge, the DVD player comes roaring into 2000 as the hottest consumer electronics item ever after its first three years on the market.
Consumers snapped up nearly 500,000 DVD players in the first four weeks of December alone, bringing year-to-date sales to more than 3.9 million units. CEA officials project that the final sales tally for 1999 will be roughly 4 million units, way above the 1998 total of just over 1 million units and easily exceeding the group’s two earlier forecasts.
Satellite dishes finished a strong second, easily breaking holiday season and annual sales records for a second straight year in 1999. The two DBS providers, DirecTV and EchoStar Communications, sold a record 385,000 pie-sized dishes between them in December, pushing their combined total for the year over 3.1 million.
Analysts predict that the two companies will generate even greater gains this year as they break new advertising campaigns, introduce cutting-edge set-top boxes with DVD, HDTV and interactive TV features, and continue rolling out local broadcast stations in more of the nation’s top 35 markets. DirecTV now offers local service to 17 major metropolitan areas, while EchoStar offers service to 18 cities.
Stepping up its relentless drive against the cable TV industry, EchoStar has already begun its winter promotional effort, offering a free, 500-channel satellite system and free professional installation to anyone with a current cable bill. In return, new subscribers must commit to a year's worth of programming for at least $39.98 a month. The nationwide campaign, backed by print, radio and possibly TV ads, will run through March. 31.
Big-screen and projection TV sets are another big seller entering the new year. CEA figures indicate that sales of projection TVs, for example, surged in the first four weeks of December to 131,000 units, up 41.7 percent from December 1998. Year-to-date sales eclipsed the 1.2 million mark for the first time, running 15.5 percent ahead of 1998.
Combined TV/VCR sets, camcoders and analog VCRs also rang up hefty double-digit percentage gains through Christmas Eve, according to CEA. Even old-fashioned color TVs enjoyed another green Christmas.
WebTV-enabled boxes and subscriptions didn’t fare badly either.
At last week’s Consumer Electronics Show in Las Vegas, Microsoft Chairman Bill Gates said his company's webTV Networks unit and EchoStar sold 100,000 DishPlayer set-tops featuring both satellite TV and interactive TV services last summer and fall. Thanks to this boost, webTV now has more than 1 million subscribers.
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Alan Breznick covers cable and technology from Washington.