Cracking the gadget pricing code: Buy now or wait?
By Tom Spring
PCWorldDec 14, 2012 3:30 am PST
I get an uneasy feeling every time I belly up to the Best Buy cash register and fork over my credit card to buy a big ticket item. My worst fear? A sudden drop in retail pricing—one that occurs immediately after I make my purchase.
Ever since I paid $250 for a Barnes & Noble Nook e-reader back in 2010—and then saw it drop to $100 a few months later—I’ve become gun shy when buying anything more expensive than a thumb drive.
There’s no such thing as a sure bet when it comes to anticipating price swings. Who knew that devastating floods would hit Thailand in 2011, and jack up the prices of hard drives nearly 50 percent in the following months. And now, as we all splurge on buying tech gadgets for the holidays, I scratch my head and ask a seamingly unanswerable question: What consumer electronics gear is dropping in price the fastest right now, and which purchases should be delayed a few months to best leverage pricing trends?
As a public service, I’m here to help other reluctant buyers like myself. I’ve spent the last week asking pricing experts the big, tough questions: Is now the best time to buy a PC, tablet, TV or camera? And what about game consoles, storage, e-readers and more? Here’s what I found out.
HDTVs: Buy or wait?
If you’re itching for a mammoth HDTV, you’re in luck. While prices for sub-50-inch HDTVs are flat, prices for displays larger than 60 inces are already heading down, according to NPD research. NPD analyst Stephen Baker says TV makers are looking to stimulate sales at the high-end, where profit margins are the greatest, while keeping prices steady for sub-50-inch models that already have razor-thin margins. “On the low-end of the market, the margins are too small and pricing will stay flat,” Baker says.
All that said, don’t dismiss the value of a smaller TV, even if their prices do remain steady. Shopping site PriceGrabber says that while prices are flat for low-end HDTVs, you’ll typically get a lot more for your dollar in this segment of the TV market. For example, a typical 46-inch HDTV may not be priced significantly lower than what it cost last year, but you’ll get a lot more for your money today. “We are seeing more advanced ‘smart’ features and 3D bundled with HDTVs,” says Rojeh Avanesian, PriceGrabber’s vice president of marketing. “You’re paying the same, but getting much more,” he says.
Buying Advice: Wait until 2013 if you’re interested in a sub-50-inch TV. You’ll be able to buy “last year’s model” at an even lower prices because retailers will be trying to clear inventory for new TVs.
Get that Blu-ray player before the best deals are gone
For bargain hunters, this holiday buying season makes now the best time to buy a Blu-ray player, says Baker. He notes that discount retailers such as Walmart and other budget retailers are driving Blu-ray player sales with holiday promotions that chop the average price in half. For example, Walmart is selling the LG BP125 Blu-ray player as a promotion for $40, a 50 percent decrease from the regular price of $80.
“Pricing can’t get much lower than some of the promotions I see out there,” Baker says. “If you see a Blu-ray player priced below $50, and you want it, buy it,” he says. After the holidays, so-called door-buster pricing on Blu-ray players could disappear.
Buying Advice: Blu-ray deals will dry up after the holidays, so don’t try to game the market but delaying your Blu-ray purchase. Now is the time to buy.
Cameras are creeping up in price
Today’s high-end DSLR cameras are not seeing the same downward-trending prices that the segment experienced in past years. In fact, prices are up nearly 14 percent according to PriceGrabber data. PriceGrabber’s Avanesian blames the creeping cost of DSLRs on an increase in the number of high-end cameras on store shelves this year compared to last year.
“We are seeing a lot of people trading up their camera gear to something better. They are looking for advanced features and more megapixels, and are willing to pay more,” Avanesian says. As long as most of the people buying DSLRs are upgrading, the market will remain aspirational, and prices will stay high.
Buying Advice: New camera buyers are looking for the newest DSLR features. So, if you’re OK with buying last year’s model, and passing on the latest features, you’ll save at checkout. But if you want the latest-greatest innovations, prepare to pay up!
Point-and-shoot cameras, e-readers, and stand-alone GPS units
On the other end of the camera spectrum, point-and-shoot cameras priced below $200 aren’t budging in price. Neither are prices for stand-alone GPS devices and e-readers. What these three tech gadgets have in common is a significant lack of public affection. There’s just no demand for them, so manufacturers and retailers aren’t dropping prices to goose competition. In essence: If you actually want one of these gadgets, be prepared to pay sticker prices, because the industry isn’t motivated to offer any deals.
Let’s take a closer look at e-reader pricing as an example.
Demand for e-readers has dropped dramatically compared to last year. According to an IHS iSuppli Consumer Electronics Special Report, 2012 shipments for e-readers are 36 percent lower compared to 2011. As with GPS devices and point-and-shoot cameras, demand is anemic and prices are already close to the bone. So, with no new, exciting models primed to fill store shelves and replace old inventory, pricing for these fading gadget will remain flat—and may even go up, say pricing experts.
Buying Advice: Suck it up and buy that aging tech gear. You aren’t getting any younger either, and prices aren’t budging.
Game consoles: Buy now
Holiday promotions on game consoles are currently a huge boon for bargain-hunting gamers—but take advantage of them now, because today’s holidays pricing won’t become permament until deep into 2013. “All of the price cuts for game consoles are for holiday only,” says gaming guru Michael Pachter of Wedbush Securities.
Pachter says Micrsosoft’s Xbox 360 (with Kinect) and Sony’s PS3 have each seen $50 cuts for their respected holiday hardware and game title bundles. Nintendo’s new Wii U, he says, will remain steady in price for now, but should experience a $50 price cut by the summer of 2013.
Sadly, if you’re holding out for a price cut on the PlayStation Vita, you might be waiting for a while. “I think that the Vita is going to stay expensive,” Pachter says, adding, “The deals we are seeing now are about as good as it gets untill late next year.”
Buying Advice: Buy now. Holiday sales will go away in a few weeks, and then you’ll have to wait until mid-2013 for price drops to return.
Storage prices continue to drop
PriceGrabber says its pricing data shows a whopping 55 percent drop in pricing for solid state storage. “It’s the steepest drop we have ever seen,” says PriceGrabber’s Avanesian. He says storage prices for everything from thumb drives to portable hard drives to internal SSD for PCs are following the downward pricing trend.
Price-comparison service Idealo concurs. It reports that prices of most SSD drives have fallen by 24 percent during 2012. Idealo also found that mechanical hard drive prices are not seeing steep declines, and prices are remaining flat. That said, Idealo points out, HDD storage is still nine times cheaper than SSD.
Buying Advice: If you wait, storage prices will drop even further. Can you afford to wait until they do? Only you can decide. But if you must buy storage today, you can at least do so knowing you weren’t gouged by yesterday’s prices.
A pricing tipping point for tablets? Nope!
Tablets are this holiday’s hottest sellers, from the Kindle Fire HD ($199) to the Nexus 7 ($199) to the Nook HD ($199). But experts warn that if you’re looking for bargains beyond what’s already being offered, don’t hold your breath. “There always room for cost-based reductions. However, what we’re seeing now is tablets priced at cost,” says NPD’s Baker.
Baker says the low hardware prices are all keyed into the greater revenue-generation strategies of Amazon, Barnes & Noble, and Google. Each company sells its devices at cost, and then makes all its money on the back end, selling digital content to people who need something to watch, play or listen to on their tablets. “They’re basically giving the hardware away at this point,” Baker says.
PriceGrabber says it’s seeing a 37 percent uptick in unit sales of tablets. It says the average price of what people are spending on tablets equals what it was last year: $199. “The average price is the same, but buyers are getting more for their money when it comes to storage and features,” Avanesian says.
The biggest boost has been in display resolution specs. Amazon, Barnes & Noble, and Google have all improved display resolution to provide higher pixel densities in relatively low-cost tablets.
Buying Advice: If your tablet budget is under $200, buy now. A price wars driving these already subsidized devices to cheaper levels just isn’t in the cards.
Windows 8 PC prices not headed down
Is now the best time to buy a snazzy new Windows 8 laptop or hybrid notebook? Experts say yes, because prices are actually inching up when you look at the entire product category as a whole. NPD’s Baker says PC prices in general are stable for Windows 8 hardware, but at the high-end of the market, with laptops and hybrid tablet/notebooks, the prices are creeping up, thanks to demand.
Baker says while PC sales are not as strong as computer makers would like, they are still moving in the right direction. “Overall, I’d say PC prices are pretty stable,” Baker says. “At this point [new Windows 8 hardware] sales are just getting started and it would be silly to see price cuts now.”
Buying Advice: Based on our experts advice, the time is right to buy a high-end Windows 8 notebook or hybrid. But you may want to wait until 2013 to see if pricing comes down on lower-end systems, or if PC makers tempt us with beefier specs for the same levels of pricing.
The bottom line on the bottom line
There are no official best or worst times to buy when it comes to purchasing consumer electronics. Most of the time, we make a purchase because we want something, not because we need something. That said, take your time, do your homework, shop around for the best price, and remember: A skeptical shopper is a smart shopper.
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