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Is It The End of the Gadget Gold Rush?

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…

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