The MP3 waiting in Santa’s grotto

To update the line from Dire Straits’ Money for Nothing, I want my MP3. Retailers may generally bemoan the rotten Christmas they claim they’re about to have, but there’s no sign of Santa tightening his belt where technology and telecoms are concerned. Quite the contrary in fact: consumers are facing a gadget fest the like of which has not been seen for many years.

The MP3 is a particularly attractive prospect as a stocking-filler, with everything to play for in what is still a low-penetration market. Pricing is attractive (viewed at least from the perspective of most consumer electronics products) and the software offer (which now includes such things as talking books) increasingly versatile. While most of the big names from Sony to Microsoft have piled into this market, it was, and remains, Apple which has enshrined the MP3 with iconic status. To give the measure of the iPod’s success, it is worth recalling that the product, first launched in late 2001, now accounts for about a quarter of Apple’s global sales – a fact reflected in its soaring share price.

A merry Christmas for Apple, then, as it adds to its already attractive range features such as a colour screen and the capacity to hold 25,000 photos. The launch of iTunes, its proprietary MP3 software library, seems to have hit the right note, going some way to protect Apple from the fallout in a forthcoming ‘standards war’, where as a traditionally weaker market player it might look vulnerable.

But if iPod has become the new Walkman, Sony has little to fear in another area that it has made peculiarly its own, computer games. The PlayStation remains the dominant piece of market hardware, having seen off serious competition from Microsoft’s Xbox. Just as important as effective product, however, has been clever marketing. Sony must take most of the credit for developing the appeal of games out of the spotty teenager market into a cool twenty- (or even thirty-) something activity. And not just for men, either: women are being attracted to ‘gaming’ in increasing numbers. While it may be an exaggeration to say that the ‘interactivity’ of games is seriously challenging the more passive entertainments of film and music, the fact that Ladbrokes is now compiling odds on the number one Christmas game – a sort of hits chart – is certainly a sign of the times.

Then there’s third-generation telephony which, as this magazine predicted (MW September 23), is in the midst of a pre-Christmas marketing blitz. Longer term, there are problems with 3G – such as VOIP and WiMax, which may offer superior, and certainly cheaper, performance. But that’s then, and it’s only hypothetical. For now, the handset manufacturers can look forward to an awful lot of new phones being sold.

Nor is it just the ‘smaller’ ticket consumer electronics items that look set for an interesting Christmas. Television technology has reached a critical juncture. The cathode tube is being phased out and widescreen LCD is emerging as the principal beneficiary. Until now it has been very expensive: but prices are poised to dip well below £1,000, the point at which widescale replacement is likely to take place.

And with widescreen LCD comes DVD, or rather its latest incarnation: high-definition DVD. Strictly speaking, it’s not for this year’s Christmas list but because of the acrimonious format battle being fought between the Toshiba (HD-DVD) and the Sony consortia (Blu-ray), we can expect lots of marketing money to be spent in the not-too-distant future engaging the hearts and minds of potential customers.

Stuart Smith, Editor

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