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Holiday PC sales off to slow start

Black Friday figures show consumers shifting away from computers in favor of other tech gadgets.

By Grace Wong, CNNMoney.com staff writer

NEW YORK (CNNMoney.com) -- The holiday season is bringing cheer to most electronics makers, but the outlook for computer makers looks a little less joyful.

Overall holiday PC sales are up from last year, but growth isn't as strong as it was in 2005, according to results for Black Friday week from technology research firm Current Analysis.

"What you're seeing is a shift in consumer spending towards other product categories during the holidays," said Samir Bhavnani, director of research for Current Analysis.

The day after Thanksgiving, also known as "Black Friday," generally kicks off the holiday shopping season, a critical end-of-year period for PC makers who depend on the frenzy to drive sales in the fourth quarter.

The first look at holiday sales tracked by Current Analysis shows laptop sales climbed nearly 52 percent from the year-ago period, while desktops fell 7 percent.

Overall, the number of PCs sold rose 23 percent during what is usually the highest-volume week of the year for PCs. During the same period last year, unit growth was 36 percent.

The slowdown is partly due to the fact that consumers won't be able to get Vista, the latest update to Microsoft's (Charts) Windows operating system, until January, industry experts said.

That launch usually features a marketing blitz that gets consumers into stores, Bhavnani said. "Consumers aren't seeing commercials for Vista - instead they're seeing ads for the iPod and gaming consoles," he said.

In an effort to keep computer buyers from holding off on PC purchases, Microsoft launched a coupon program that lets buyers upgrade to Vista when it's rolled out next year.

But for a lot of consumers, that's enough of a hassle factor to keep them from buying a PC, said Roger Kay, president of consulting firm Endpoint Technology Associates.

And that's troubling for major computer makers like Dell (Charts) and Hewlett-Packard (Charts), since the next big boost for PCs doesn't usually occur until back-to-school buying kicks off in the fall.

"If consumers are spending all their Christmas money, they may not come around in January," Kay said.

A weak holiday season would cap off what has been a tough year for PC makers. In addition to facing multiple delays of Vista, most of the major computer makers were involved in a massive laptop battery recall.

Still, the holiday season has only just gotten started.

"It's too early to have any read on what's actually happened yet. I don't expect any kind of weakness in sales," Steve Baker, an analyst with market research firm NPD Group, said.

He said mass consumers aren't necessarily waiting for Vista to come out. And with notebook prices having steadily fallen over the last six months, there are plenty of value-conscious customers out there ready to buy, he added.


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