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Apple, Dell to Grab Bigger Slices of Smaller Holiday Pie

Apple, Dell to Grab Bigger Slices of Smaller Holiday Pie

The United States is headed toward a "massive breakdown in consumer spending" this holiday season, according to research by ChangeWave. The survey predicts that Apple and Dell will end up with a larger share of the shrinking consumer electronic spending.

By Jeff Meisner E-Commerce Times ECT News Network
11/12/08 8:51 AM PT

While other consumer electronics makers are headed for a rough holiday season, two standouts in the industry are expected to rise above the rest -- Apple and Dell.

A survey by ChangeWave concluded that the U.S. is on the brink of experiencing a "massive breakdown in consumer spending" just in time for the holiday season.

The survey, conducted between Oct. 23 and Nov. 3, polled 3,699 consumers across the country. The results were not encouraging, especially for most makers of laptop and desktop PCs.

Dwindling Prospects

Only 8 percent of those surveyed said they planned to buy a laptop over the next 90 days, down from 11 percent in 2007. Only 6 percent of respondents told ChangeWave, a market research firm, that they had plans to buy a desktop PC, down from 8 percent a year earlier.

The survey is just the latest in a slew of bad news coming from the retail sector as consumers tighten their wallets with experts predicting a long and protracted recession.

Consumer electronics retail chain Circuit City filed for bankruptcy Tuesday while several retail stalwarts announced sharp drops in revenue and profits, including coffee giant Starbucks, TJX Companies (owner of TJ Maxx and Marshalls department stores), Nordstrom and video-game maker Midway Games.

Apple May Thrive

Despite the sour news coming out ChangeWave's survey, Apple and Dell could fare better than most of their competitors.

According to the ChangeWave survey, one-third of the people who said they planned to buy a laptop over the next 90 days said they would buy an Apple laptop, with 7 percent saying they intended to buy a higher-end Apple laptop. Six percent said they planned to buy an older model Apple laptop -- the MacBook -- which start at just under US$1,000.

"If you go by product, the Mac business has been outgrowing the overall PC business for a number of years now," Tavis McCourt, an equity analyst with Morgan Keegan & Co., told the E-Commerce Times.

Apple also makes the popular iPod digital music player and the iPhone, a next-generation mobile phone with a slick touchscreen interactive feature.

The iPod probably won't sell as well as it has in the past, but McCourt said he expects sales of the item to grow "modestly." He pointed out that the iPod sells "at a relatively low price point," and, as a result, may not be as affected by a decline in consumer spending as more expensive items might be.

"The iPhone, though, I expect it to slow down during the holiday season relative to last quarter's big product launch," McCourt said. "But sales should be up versus last holiday season."

Dell Also on the Rise

Consumer spending on Dell products is also expected to rise this holiday season, according to the ChangeWave survey.

The number of respondents who expected to buy a Dell desktop PC in the next 90 days jumped to 37 percent, up 11 percentage points over 2007. However, gains in Dell's laptop business were much more modest -- 33 percent of respondents said they expect to purchase a Dell laptop, up 2 percentage points over last year.

Morgan Keegan's McCourt warned that while the news for Apple and Dell is good, consumer spending overall is expected to be way down, which means the two companies will be capturing a larger part of a smaller pie this holiday season.


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