The large-screen television wave had obviously passed its peak at the beginning of November, when I predicted falling prices, especially after Christmas. The television business, though, was waiting to see how the Christmas shopping season would work out. Now that it is winding down, they are on the verge of panicking. According to a new New York Times story, Sony is exasperated at its continuing losses on televisions. After two years of tinkering, it is planning more drastic steps. For its part, Google doesn’t seem to know how to rescue its foray into the television business, which was largely forgotten by the time the Christmas season rolled around.
Best Buy drew large crowds on Black Friday with low prices on televisions, but with the low prices, probably lost money on many of the units. It was a process that was repeated on Boxing Day, and further price cuts are inevitable next month as manufacturers are forced to cut their prices just to get products into already overstocked stores. With near-zero margins on televisions, Best Buy is reporting earnings one third lower than the year before.
Sears and Kmart were counting on strong Christmas-season television sales, along with other electronics. That did not materialize, and the company will be closing about 120 stores, it announced yesterday.
Televisions were expected to be a large after-Christmas item, but aside from Boxing Day itself, foot traffic at after-Christmas sales has been poor, as shoppers seem eager to put the Christmas shopping season behind them. With shoppers not paying attention, price reductions may not be enough to move the overhang of television inventory.
And there is a separate concern hanging over the television business. A few observers are predicting a move by Apple into self-contained television units in 2012. If, as rumored, Apple can take a 37-inch Sharp display and make it more cool than a large-screen television by making it easier to use, that could add further pressure to an already overextended category.
It could end up being good news, though. If Apple can convince consumers that the old-fashioned, 100-button, channel-surfing remote control is just too complicated, it could drive a new wave of shoppers into stores looking for something simpler.
