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On the Undercutting Edge of Electronics

By Thanksgiving, speculation abounded that Best Buy would trump Wal-Mart's price on Black Friday, the day after Thanksgiving, when retailers normally unveil temporary blockbuster discounts. In television commercials aired during the ever-present football games that week, Best Buy made its move: It cut the price on the Panasonic to $999. Circuit City came in second at $1,199, and Wal-Mart fell to third.

"The price on these products has come down to the point where retailers are willing to try to drive some traffic with those products," Baker said.

Of course, such prices can last only so long. Yesterday, the television sold for $1,439.99 on Best Buy's Web site -- the same price as at Circuit City -- putting Wal-Mart back in front for the lowest price.

Manufacturers have helped drive down prices of flat-screen TVs by producing sets more cheaply and in greater numbers. Suppliers, who are also battling for market share among consumers, have lowered their costs to compete with cheaper, second-tier brands .

All told, industry experts say, retailers are not making much -- if any -- money off TV sales. Instead, they are counting on customers buying accessories, warranties and service plans for their expensive new gadgets. Order the Panasonic flat-screen online from Best Buy, and a pop-up screen appears with a reminder that a four-year service plan costs $1,000. Don't forget the $302.99 TV stand or the $199.99 two-shelf wall mount.

Analysts point out that price, while important to get shoppers' attention, isn't the only factor people consider when they hunt for electronics. Many are overwhelmed by the number of choices and the jargon that go with cutting-edge technology. The Panasonic, for example, boasts an HD tuner, 2 HDMI connections, a built-in ATSC tuner and a 16:9 aspect ratio -- huh?

"If they just go for the price, they may not be satisfied with their purchase," said Bill Cimino, a director of communications for Circuit City. "That, for us, is a key thing. You're going to blame the person who sold you the TV if they didn't help you get it the way you wanted it to be."

Both Best Buy and Circuit City try to augment their appeal by advertising their customer service, and both have made that a focus of their holiday campaigns. Circuit City just launched its "firedog" service unit in September and is promoting in-home installation along with discounted flat-screens.

Still, experts say shoppers can expect even deeper discounts on electronics from retailers as the holiday season wears on. Last weekend set a new bar for price, and customers are unlikely to accept any increases.

"The cat's out of the bag at this point," Weinhart said.


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