At the CES New York Press Preview, held yesterday at the Metropolitan Pavilion in New York, CES Director of Industry Analysis Sean Wargo worked hard to convince 400 analysts and members of the press that the coming holiday selling season would be the best on record for consumer electronics (CE). 

Ken Werner
Senior Analyst and Editor
Mobile Display Report

Although unit sales are down 0.7% year-to-date, revenues are up 20.5%.  How can that be?  The average wholesale price of CE products sold is up 23%.  So consumers are buying up.  The stretch comes in assuming this revenue growth will continue through the holiday season. In making that case Wargo argued that the drop in home equity is an inconsequential portion of the average family’s net worth and is not likely to affect buying decisions negatively.

As comforting as this argument is meant to be, it does not seem to have convinced retail brontosaurus Wal-Mart, which cut the prices of 100 CE items by 15 to 30%, according to a November 4 article in the New York Times.  Since our focus is displays, we were particularly taken with Wal-Mart’s reduction of a Panasonic 42-inch PDP-TV from $1,794 to a stunning $1,294, a reduction that was also reported by Taiwan’s Chinese-language Economic Daily News. 

Wal-Mart, said the Times’ Michael Barbaro, was “expecting a grim November” and slashed its prices to increase traffic.  ” For Wal-Mart,” he added, the strategy represents a bold bet that it can save Christmas and Hanukkah by single-mindedly stressing low prices, a message that has become clouded by efforts to carry higher-end merchandise.”

Bold bet, indeed.  Even with Wal-Mart’s purchasing clout, selling a Panasonic 42-inch PDP for $1,294 can’t provide a margin much thicker than a gnat’s eyelash.  The tough and savvy executives at Wal-Mart wouldn’t be doing something so desperate unless they were&well&desperate.  Maybe they’ll feel better if they talk to Sean Wargo.

By the way,  Panasonic’s 42-inch PDP is a very nice television set even at Wal-Mart’s old price of $1,794 or the $1,599 Costco was charging last week-end.  At $1,294 it won’t make Wal-Mart much money, but it should drive a lot of traffic into the stories.  And that, of course, is the whole point.