Meet the Zire, Palm Inc.'s decidedly different entry into the increasingly crowded digital-organizer marketplace.
In the past, new handhelds introduced at this time of year usually included some slick new feature, such as a sharper color screen, larger memory capacity or a wireless connection to the Web.
The Zire, with its white plastic case, has none of that. In fact, it has fewer buttons than previous devices and a black-and-white screen that doesn't even have a backlight, a handy feature that has been standard since the dawn of the Palm. What it does have is a low price: $99.
The Zire (rhymes with "wire") may be an unusual move for Palm, but it's been an unusual year for the consumer electronics industry.
Typically, sales in the third quarter increase and build momentum for the fourth quarter, the busiest time for the computer and electronics industries. But sales have been off all year, and tech companies from Apple Computer Inc. to chipmaker Intel Corp. are predicting that sales will be flat or near that this quarter.
To pull off a relatively happy ending, computer and electronics companies are making this a "value" holiday season. Some are slashing prices. Others are adding extras to their products. As a result, this could be the year that many cutting-edge digital gadgets, such as digital cameras, MP3 music players, flat-screen monitors and specialty PCs, begin to be snapped up by mainstream America.
Gateway Inc. is one retailer hoping that is case. The computer company announced recently that it's getting into the business of selling all manner of electronic gadgets, including MP3 players and digital cameras, at its chain of Gateway Country stores. The company even plans to start marketing its own 42-inch, high-definition plasma television this season.
Other companies are aiming to build on previous successes by trying every gadget combination they can think of. Take, for example, the new T68i cell phone from Sony Ericsson Mobile Communications, which lets you snap and e-mail digital photographs while you're on the go. The phone also doubles (triples?) as a Dictaphone.
Perhaps the most ambitious example of this trend is coming out of Redmond, Wash., where Microsoft Corp. has modified its operating system for a new sort of PC, the Media Center, that tries to merge the stereo, television and computer into one product. With the Media Center, people can record and replay television shows when they wish, as well as play MP3 files and do general computing work. It even comes with a remote control.
Microsoft also is tinkering at ways to reinvent portable computing, with operating-system software for a new type of computer called the Tablet PC coming out this year. The clipboard-like Tablet PCs will come with touch-sensitive screens and use handwriting-recognition technology to give people another way to write documents and enter information.
For the most part, though, electronics stores this year are being stocked with less "revolutionary" and more "evolutionary" technology -- better, cheaper or differently configured versions of what they offered last year.
When MP3 players first came out a few years ago, for example, $200 bought a player that could hold an hour's worth of music. These days, the same amount can purchase a player with the capacity to store 150 hours of music.
Early enthusiasts have already latched on to digital video recorders such as TiVo and ReplayTV, which record television shows on a hard drive rather than on a videotape. But while the convenience of such devices have been hailed by gadget lovers, sales have not been correspondingly strong, in part because viewers have been turned off by the required fees.
But maybe this will be the year, analysts said. Last year, if you wanted to get a ReplayTV with 40 hours of recording time, you had to shell out $400, not including the bill for the monthly TV listing service you need to use the appliance. This year, ReplayTV is hitting the market with a new model at the $250 mark.
If the price on a product has already been cut, companies are trying other strategies. Microsoft, for example, cut the price of its Xbox video-game console earlier this year. Instead of reducing the price further, the company announced recently that it will bundle two Xbox games free with the $200 console this season. Last year, an Xbox and two games would have set a customer back about $400.
Where last year's game-console wars were big news, this year the focus is on the efforts of Sony Corp., Microsoft and Nintendo Co. to take the first steps toward adding connections to let people play online. Yet it's uncertain whether playing Madden NFL 2003 against opponents located in Web-connected living rooms across the country will become the next big thing for the video game industry, analysts say.
It's a chicken-and-egg thing. Consumers don't care about getting online with their consoles unless there are good games, and no game developer wants to spend the millions of dollars it takes to build a game with online functionality unless millions of people plan to buy it. Microsoft has said it's hoping to draw just tens of thousands of customers to its Xbox Live service this year.
"Games are going to be very, very big this season, but the hype for online gaming is going to far exceed the reality," said Michael Gartenberg, research director at Jupiter Research. "It's going to be much bigger in coming years, but this season will lay the groundwork for what the future is going to be like."
While game-console makers scramble to invent an entirely new market, the digital devices hitting their prime today are replacements for last year's mainstream analog devices, like VCRs and film cameras.
The hottest consumer electronics device, according to the Consumer Electronics Association, is the DVD player, the appliance that is rapidly displacing VCRs across the country. Sales for DVD players were up 31 percent for the third quarter of this year, and the industry is on track to ship more than 20 million DVD players by the end of 2002, according to trade organization the DVD Entertainment Group.
After DVD players, digital cameras are No. 2 on the list of popular consumer items. According to NPDTechworld, sales are up 45 percent for cameras that have decent-quality resolution of between 2 and 3 megapixels.
"Last year was the first year where sales of digital cameras outpaced film cameras," said Paul Worthington, senior analyst at Future Image Inc., a San Mateo, Calif.-based consulting firm. "It won't even be close this Christmas."
What's next in line for digitalization? Digital televisions, perhaps -- but not yet. While digital televisions -- which deliver enhanced pictures and sound for people using DVD players, satellite broadcasts or digital cable signals -- have not hit the same critical mass as digital cameras, sales are building as prices drop.
Far more digital televisions have sold in August this year compared with last year -- 129,734, up from 71,809, according to NPDTechworld.
That's still just a fraction of the millions of non-digital sets sold during the same period, but this year has seen one change that may be just as important, according to analysts: For the first time, as of August this year, sales of non-digital sets are down 4 percent.