Hot for the Holiday: GPS Sales up 488%

MP3 Players See Growth Slow Down

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YORK, Pa. ( -- You better not pout, you better not cry -- or you won't get a GPS device or digital picture frame like the other good little boys and girls who know what's hot in tech this season.
'GPS took off last year, but now it's gone to a new level,' one analyst says.
'GPS took off last year, but now it's gone to a new level,' one analyst says.

Weekly data for the first three weeks of the season indicate an especially happy new year for GPS device sellers with revenue up overall by 214% and unit sales up a whopping 488% over last year, according to market research firm NPD Group. Consumers dropped $4.5 billion on electronics during the time period, lagging by about one-half percent behind last year's sales.

Other hot sellers
Digital picture frames followed GPS with dollar sales up by 204% over last year, and units sales up by 266%. Other hot sellers included LCD TVs with revenue up 64%; digital single-lens reflex cameras revenue up 29%; and computer notebook revenue up 12%.

"GPS took off last year, but now it's gone to a new level," said NPD analyst Steve Baker. "Prices are much more reasonable this year ... and it's gotten much wider distribution and marketing. It was on the Black Friday cover of J.C. Penney's [which is] not exactly known for technology."

Big-box electronics retailer Best Buy echoed much of what Mr. Baker found in the NPD numbers with its third-quarter report this week. Best Buy tallied a surprise 52% jump in revenue on the back of strong GPS, flat-panel TV, notebook computer and video game sales. NPD tracks video games separately from electronics, but a recent report from that division said video-game sales were up 52% year over year and on track to finish the year at $18 million to $19 million, up at least 44% over the $12.5 billion in games sales for 2006.

Best Buy also reported solid gains from its Geek Squad branded services and said it would focus even more on private-label brands in the coming year. Mr. Baker said he expects more private labeling overall in electronics, following what has been happening in consumer packaged goods for years.

"It's likely in 2008 we'll see private labels in much bigger numbers than we've ever seen," he said, adding that the trend is being driven by low costs and easy outsourcing in China. "Retailers are going directly to the source."

On the wane?
So if GPS is what's hot, then what's not? While not exactly burnt out, but MP3 player sales, in fact, slipped in early season sales. Revenue was down 16%, while the number of units sold was down 9%. Surprising maybe to the average iPod watcher, but not a big shock to either analysts or Apple. (Note: The NPD weekly data does not include Apple's own retail stores.)

"Apple itself has been saying that iPod sales aren't growing as fast as they once were," Mr. Baker said. "We're starting to move into a replacement market and that means slower, more stable sales."

Also slipping were any TVs other than LCDs. Both plasma and rear-projection declined, and old-fashioned tube TVs "have fallen off the edge of the world," Mr. Baker said.

Mr. Baker said one of the things he noticed in the numbers this year are that electronics brands are doing a better job overall of positioning, promoting and marketing.

"Last year, there was a real focus on flat-panel TVs and notebooks, and very expensive high-end gifts that were price competitive. Many times consumers walked out of the store with just that one thing. This year, they're buying wall mounts, arranging for installations, picking up accessories. A lot more attention has been paid to that," he said.
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