Amazon Paces Holiday Tech Discount Drive

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Besides Amazon, Sony (SNE) also sells e-book readers. The Nook, from Barnes & Noble (BKS), is due to hit store shelves in December. This year, e-book readers entered the list of top 10 most desired consumer electronics gifts for the first time ever, according to an October survey of 1,000 U.S. households conducted by the CEA. On Nov. 24, Amazon announced it has extended the Kindle's battery life by 85% and made it easier for the device to read PDF files.

Unit Sales Up, Dollar Revenues Down?

This year marks the first time Apple's (AAPL) iPhone hit the top 10, too. The five most popular consumer electronics products include notebook computers, MP3 players, flat-panel TVs, video game consoles, and digital cameras. The iPhone trails e-book readers at No. 7. "Consumers think about that particular product as a category," says Shawn DuBravac, chief economist at the CEA. Other smartphones should be popular as well, with carriers and retailers rolling out extensive Black Friday deals. Wal-Mart is offering the new Palm (PALM) Pixi smartphone, with a touchscreen and a full Qwerty keyboard, for $25 with a two-year contract from Sprint Nextel (S).

Lower prices will boost unit volume but cut overall sales for many retailers and gadget manufacturers. Fourth-quarter unit sales are expected to rise 6%, according to the CEA. At the same time, dollar revenues from consumer electronics are expected to slump 7.5%, to $44 billion, says DuBravac. Even as the economy gathers strength, consumers are still opting for lower-priced goods such as cheaper netbooks instead of traditional laptops and 32-inch flat-panel TVs rather than bigger screen sizes. Wal-Mart currently offers a 32-inch flat-panel TV for under $300, a price unheard-of months ago.

Many consumers won't buy if they aren't offered a deal. Andrea Ihara, a 50-year-old business development manager in Portland, Ore., says she may buy a laptop and a TV this Black Friday, but only if retailers shave at least $100 off the standard price. In 2007 and 2008 the average selling price of consumer electronics items was unchanged at $324. By the fourth quarter this year, it is expected to drop to $285, according to the CEA. "Consumers are very deal-driven," DuBravac says.

Kharif is a senior writer for BusinessWeek.com in Portland, Ore.

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