December 21, 2008 7:02 pm

Apple has winning touch in festive sales

Apple, with its iPod touch media player, appears a clear winner this holiday season as US consumers shop for smaller, cheaper and more versatile electronics.

While the Consumer Electronics Association predicts flat fourth-quarter sales compared with a year ago, analysts report Apple stores have been the busiest among electronics retailers.

iPods, historically responsible for 40 to 50 per cent of Apple’s fourth-quarter revenues, are selling in the biggest numbers.

Google has reported the iPod touch is its most searched-for product after Nintendo’s Wii games console and Wii Fit game, while the Lycos search engine has iPod as its top search.

Amazon’s electronics bestseller list has six iPods in its top 20, including all three versions of the touch. The most popular is the lowest-priced 8Gb version. It still costs $230, but Michael Gartenberg, vice-president of Mobile Strategy at Jupitermedia, says this is not putting off cash-strapped consumers.

He said: “In a down economy, people can be willing to spend more on a premium product because they don’t want to make the mistake of buying something that doesn’t meet their expectations or provide long-term value”.

Apple has been promoting the touch’s capabilities beyond music and video, with adverts showing its attributes as a games console and a mini-computer.

It has benefited from the 10,000 applications developed for the iPhone and touch, with downloads from the company’s Apple Store now exceeding 300m.

Mr Gartenberg said: “The iPod touch is being positioned as a product that can do multiple things. That gives it that strong value proposition of having lots of capabilities at one price point”.

The latest version of the touch can make phone calls using wi-fi, giving it capabilities closer to the iPhone.

Andy Hargreaves, analyst at Pacific Crest Securities, said it was expanding the market beyond the iPhone. “It takes the market to kids – all of a sudden your 12-year-old wants one, and you can do it without paying the $70- a-month fee.”

Apple may sell a cheaper iPhone at Wal-Mart stores in the New Year. There have been reports of staff being trained to sell a 4Gb version for as low as $99.

Analysts also report strong sales of the iPod nano and a new line of Macbooks, including a $999 version – the first to be priced below $1,000 by Apple.

New product announcements are usually made at the Macworld show in January but Apple lowered expectations last week by saying Steve Jobs, chief executive, would not make his usual keynote speech and this would be the last time Apple exhibited at the show.

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