Bargains Are Near; Just Keep Waiting
Published in the New York Times on August 26, 2006
As the economy slows, manufacturers and consumer electronics retailers are
growing more anxious - and pushy.
Continue your buying binge, they tell consumers. Now is the best time to buy
digital cameras, notebook computers and big-screen televisions, they say.
Annoy them. Wait even longer to buy any electronics. The cardinal rule of
the industry is that prices always go down. There is no reason, despite
increasing inflation pressures elsewhere in the economy, for that to change
this year. Remember that you rarely need new electronic devices.
When you do - or you think you've waited long enough - you can turn the
makers' and merchants' competitive natures to your advantage. The market for
digital cameras, flat-panel TV's and external hard drives for backing up
data, an emerging category, are especially tumultuous right now.
Manufacturers are adding myriad features and making pricing more opaque, but
there is a method to cut through the confusion to spot the bargains.
If you were shopping at the grocery store and wanted to figure out what the
better deal was, the 2-liter bottle of Coke for $1.39 or the six-pack of
Pepsi for $3.89, it is a fairly simple equation. For one thing, the unit
price is often right there on the store shelf. But even when it is not, you
just take the price and divide it by the number of liters or, for the
traditionalists, ounces. (The liter bottle is the better deal at 2 cents an
ounce.)
What you are really looking for, though, is the deal. You want to find the
two-liter bottle of Coke selling for less, per milliliter or ounce, than the
one-liter bottle.
Could you do the same thing with consumer electronics to find the sweet spot
before you buy? You could if the devices had essentially the same features;
in other words, if they were a commodity product, like a DVD player or a
wireless router. Many, though, are not.
But if you can strip a product down to its essence, to that one thing that
is most important, you might be able to find the bigger or newer product
selling for less than the smaller or older. Here are ways to look for the
better deal in the competitive markets for cameras, televisions and hard
drives:
CAMERAS The shift from film to digital is almost complete. Because of that,
demand for digital cameras is expected to slow. Prices have fallen about 9
percent this year, but in certain categories where competition is intense,
like the slim cameras, the price decline has been greater. Sales of cameras
that are less than an inch thick have increased 131 percent over the last
year, according to a survey of retailers by NPD, a consumer products
consulting service. The average price for those cameras has fallen 14.7
percent, to $290 from $340.
The prices of digital single-lens-reflex cameras, preferred by professionals
and experienced hobbyists, have dropped significantly. About 22 percent of
sales in this category were for cameras that cost less than $700. That is
remarkable because a year ago, there was not a single camera selling for
less than $700.
In the main market of compact cameras, manufacturers were saying last year
that consumers were no longer making their purchases based on the picture
resolution, measured in megapixels. They were said to be looking at other
features like styling, image stabilization or the various automated shooting
modes.
It turns out, megapixels still matter. "I don't think the resolution war is
finished yet," said Liz Cutting, an imaging analyst with NPD. The average
price for a 5-megapixel compact camera, which about a third of consumers are
buying, has fallen 34.4 percent, to $212 this year. That comes to about $42
a megapixel.
The average price of an 8-megapixel compact camera has fallen even more,
about 47 percent, to $394. That's about $49 a megapixel. With only a 17
percent increase in price for a camera with 60 percent more pixels,
manufacturers are encouraging consumers to trade up.
So watch for the anomalies when the 8-megapixel cameras drop below $336, or
$42 a megapixel. CompUSA, for instance, was recently offering the
10-megapixel Exilim Z1000 for $400, or $40 a megapixel.
Jeremy
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