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9/4/2007
06:01 PM
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Retailers' Notebook Computer Sales Slow

Economic issues, market saturation, and changes in consumers' shopping habits have impacted sales, according to analysts with the NPD Group.

Sales of notebook computers slowed during the first five weeks of the back-to-school season, as spending on promotions slowed, a market research firm said Tuesday.

From July 15 to Aug. 18, notebook sales were up 24% in terms of units and 11% in gross sales from the same period last year, The NPD Group said. In 2006, sales rose by 48% in terms of units and 15% in gross sales from 2005. Average selling prices dropped 10% this year, compared with 22% last year.

"Notebook sales have exhibited strong growth the past few years, but you can only keep that 50% plus growth going for so long," NPD analyst Stephen Baker said in a statement. "We've hit a ceiling across most categories; economic issues, market saturation, and changes in consumers' shopping habits have impacted sales."

In addition, prices aren't coming down as fast as in prior years, so consumers are less inclined to buy a new notebook to replace last year's model, NPD said.

Marketing trends among retailers have put a cramp on back-to-school notebook sales, the research firm said. Promotions increased only 12% for the first five weeks of the 2007 season, compared to 37% in 2006. Marketing for both notebooks and desktops rose by only 5% this year, a big drop from the 30% increase seen in 2006.

Besides encountering less advertising, consumers would also have seen less of an increase in selection of notebooks and desktops on store shelves this year. Notebook shelf space in the first five weeks of the season increased 7% over 2006, which was far less than the 44% jump in 2006 over 2005. Total PC shelf space rose by only 2%, compared to 32% in 2006.

"If the products aren't being marketed and aren't in consumers' line of sight on the shelves that's definitely going to have an impact on sales," Samir Bhavnani, analyst for Current Analysis West, an NPD company, said.

U.S. PC shipments overall in the second quarter rose 7.2% over the same period last year to 17.1 million units, according to IDC. The portables market remained strong, while desktop shipments continued to contract.

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