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Have We Come to the End of the Gadget Gold Rush?

Gordon Kelly



It is less than one month to Christmas. On the back of a mild autumn this may come as a shock to our UK readers, but it will come as a greater shock to technology retailers. Christmas is the most lucrative period in their financial calendar and yet the signs are customer behaviour is evolving in the way they most fear: we're getting smarter.

The news this week emphasised a pattern which bucks tradition: as Christmas approaches sales are down. Yesterday British retail giant Arcadia, owner of electronics stalwarts Dixons and Currys, announced it will close up to 260 stores nationwide over the next few years. "Winter goods are tough," explained Arcadia boss Sir Philip Green. "Trading conditions remain extremely challenging, with style, quality and value at the top of our agenda and more important than ever." Arcadia has already closed 66 stores in the past year.

This is part of a wider global picture. Hours after the Arcadia announcement tech golden boy HTC revealed revenues for the final three months of 2011 would be little changed from last year. It had previously forecast growth of 20-30 per cent. Seven per cent was wiped off its share value, the maximum allowed in a single day. It came on the back of reports last week that PC sales fell 11.4 per cent in Western Europe over the last quarter and netbook sales crashed 40 per cent. Meanwhile on Wednesday US tablet sales painted a damning picture with HP revealed as the second largest tablet seller thanks to a firesale of the failed TouchPad. Excluding Apple HP took 17 per cent of the market ahead of Samsung (16 per cent), Asus (10 per cent), Motorola and Acer (both nine per cent). Between them they had sold just 1.2m tablets between January and October. As for Ultrabooks, deemed tablets' biggest rival, the new category is said to be doomed without a 25 per cent price cut.


Even tech untouchable Apple is not immune. In October it announced Q4 results analysts deemed disappointing and for the first time missed iPhone sales targets. Apple has countered this by bringing its long time US-only Thanksgiving 'Black Friday' sales to a global audience with its 24 hour reductions yesterday hoping to stoke demand. That said with Apple CEO Tim Cook claiming "strong momentum going into the holiday season" come January it is likely to be the exception that proves the rule.

So what is going on? The most obvious answer is the black hole also known as the current global economy, but to use it as a blanket excuse would be to miss the point. After all Apple, famously the most premium of tech companies, has proved most resilient to our challenging times and has enjoyed unprecedented growth. Meanwhile smartphones are increasingly ubiquitous, despite their more expensive contracts, and the hot new categories this year are tablets (a want, rather than a need) and Ultrabooks while the budget friendly netbook slumps.

No the economy is not the sole factor, just as big is technology itself…


November 26, 2011, 11:41 pm

Ummm Arcadia group have nothing to do with Currys and Dixons, they are owned by DSG International along with PC World, Pixmania and various other European retailers. Arcadia is exclusively a clothing retailer :/

Roy Bean

November 27, 2011, 2:31 pm

"most of the products you already own do everything you need…"
But nothing very well. We are living in a world of mediocrity; compressed music, low quality video on TV so even more dross can be broadcast - and I'm still looking for a mobile phone that's as good as my old Nokia 6310i.


November 28, 2011, 4:09 pm

Good article. You are basically saying that the latest upgrades to devices already working well enough are not very tempting - coming from a tech review site is 'brave' of you.

I'm currently 'making do' with a HD-ready tv which works well enough for me - I have thought about upgrading but even in the current recession places like Currys and John Lewis dont seem to be reducing prices (on the good tvs and not the end-of-line stuff they can't shift)

Tablets are basically convenient internet browsers - all well and good but at £400 they are over-priced (hopefully the Amazon Fire will change all that)

Overall, I think the manufacturer and retailers will have to the same as everyone else and stimulate sales with prices rather than nice-to-haves.


November 29, 2011, 7:22 am

We aim to be "trusted" rather than "brave" ;)


November 29, 2011, 7:28 am

I think that's untrue. You can choose to live in a world of mediocrity, but lossless audio, HD video, and on-demand content have long been readily available. There are plenty of dumbphones that are excellent phones, smartphones suffer because they pack so many antennas into their cases. If you purely want voice quality go with Orange HD Voice or Skype over mobile data, both are vastly superior to the old Nokia and affordable.


November 29, 2011, 1:10 pm

But they ARE stimulating sales with prices - as you say there is plenty of "end-of-line" stuff (i.e. lower end items with fewer features, lower specs and poorer build quality) that is cheaply available. You seem to be suggesting they should cut prices on higher end stuff, presumably reducing costs by omitting the "nice-to-haves", but it seems you would then turn your nose up at it as "end of line". You can't have it both ways - state of the art technology is not cheap to produce, and manufacturers have a right to charge a premium for it, while offering low and mid-range alternatives for people who can't / don't want to pay the top end price.


November 29, 2011, 4:24 pm

Nice one, Gordon. Well observed article.

You are right about some things, for sure. I have a high end smartphone. For the first time, when I renewed my contract, I wasn't so bothered about signing a 24 month contract. (The truth is, the contract was so cheap that if in 18 months, something great comes along and I simply must have it, I could pay up the rest of my contract and it would still cost a lot less than if I had bought the 18 month version of the same contract!). I use my phone for satnav, photos (not high end - just snapshottery), music, emails, internet, etc.

I use my PS3 for gaming, but it gets more use as an iplayer client.

And we have one high end laptop in our house, which does everything else, and we have no particular desire for a tablet.

My TV, which is a 4 or 5 year old LCD 32" (pre local backlighting) is a getting on a bit. The picture's a bit dull compared to modern ones, but the fact is, it works, and the wife couldn't care less anyway.

So, the question is, what's going to be the next driver for purchases in the future? Is this it? Are we finally seeing technology mature into a state of stasis?

I don't believe that for one moment!


November 29, 2011, 5:25 pm

All good points. And of course technology nowadays *tends* to be exceptionally long lived - in my experience if an item is going to fail, it will most likely do so in the first few weeks or months, and certainly well within the first year when it will be replaced under warranty. Tech that lasts through its first year is likely to last a few more years before it gives up the ghost. And since pretty much all recent tech is "good enough" for most people's needs, where's the incentive to upgrade in a time of economic uncertainty and increasing concern about the environmental impact of discarded electronics?

simon jackson

November 30, 2011, 4:47 pm

Salient point about cannibalism (I think they call it convergence?). I use my smartphone as a sat nav, and i find that a lot more convenient than carrying around a separate hunk of plastic. I do have a separate MP3 player, but because i work from home most of the time i don't have much opportunity to listen to music on the go, and it's an old model. I think there is a downside with the smartphone replacing things like PMPs and dedicated handheld gaming devices and that's battery life. I never play intensive 3D games on my SGSII because usually i can't afford for the battery to die if im out and about. In years gone by, you have a battery in every device, and so a much greater number of mAH to support all your application needs.

The tablet vs computer debate is a very interesting one. I'm on the fence myself. I have an asus transformer through work, and whilst i love it, i can't see myself dropping 300 of my own hard earned notes on one. It just doesn't do enough to differentiate itself from my computer and my phone. It can't replace either, and both can do what it can do. All it really offers is a slightly more convenient browsing/gaming experience due to the larger screen. I still need a computer with a keyboard and mouse for anything more intensive than browsing the net - email, spreadsheet, desktop publishing, photoshop etc. In this respect, windows 8 could be a game changer. Windows 7 has been held back by a UI poorly suited to touch and the power requirements of x86. If an arm windows 8 tablet can maintain enough compatibility with full blown windows applications, and can be docked with a keyboard like the transformer, we could well see more convergence in this sector. There are two problems though: 1) it's going to be confusing for the average consumer to have two lots of windows 8 tablets with support for different instruction sets and which therefore support different software libraries - i think anything written from launch will have to run on both, but there is a huge question mark over backwards compatibility with old windows software on arm. Presumably it could all be software emulated, but the performance would suffer tremendously, which brings me on to...2) the actual raw arithmetic performance of arm cores is dwarfed by even an atom. There is a reason x86 requires so much silicon.


November 30, 2011, 6:55 pm

Hi John, fair comment but I'm really questioning the price of the high-end stuff anyway. I also meant end-of-line stuff that wasn't good in the first place. Like I said my TV is getting on and I was happy getting that as it was well received on release.

I bought a Humax HD PVR earlier this year - I went into Currys to see they would give me a good deal but wouldn't even take £10 off so I went elsewhere. If nobody is willing to budge on their prices then they shouldn't be surprised if the consumers are putting off upgrading during the recession.

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