Computex rings in early X'mas spirit

By Doug Young

TAIPEI: Consumer electronics makers are expecting a healthy dose of cheer for the upcoming Christmas season, fuelled by improving consumer sentiment and new gadgets that tap growing computing power and broadband data connections.

The optimistic air at Computex, the world's third largest computer trade show, being held this week in Taipei, contrasts sharply with last year, when sales ranged from flat to up marginally for many Western retailers.

"You have to believe the consumer is going to feel better (about Christmas) this year than last," commented, Texas Instruments Inc, Chief Executive, Tom Engibous.

He said his optimism is based on a stabilizing employment picture in the United States. Texas Instruments earlier this month said Q3 revenues would be at the high end of previous forecasts due to strong demand for its semiconductor products that power cellphones and other consumer electronics.

Many exhibitors at the show -- held much closer to Christmas this year after the SARS virus postponed the normal event in June -- were forecasting sales growth of 10 percent or more this holiday season on the strength of a crop of new products.

High on their list for sales growths were powerful new-generation home entertainment boxes that allow on-demand video and multi-player games via high-speed, broadband cable and wireless data connections.

RECORDABLE DVD

Another group of products that had vendors buzzing was a new crop of DVD recorders, whose rapidly dropping prices have led many to predict the medium will soon replace videocassettes.

Ritek Corp, the world's largest maker of recordable CDs, expects its revenues to grow about 15 percent in the third quarter when most Christmas orders are placed, said Eric Yu, director of sales for the OBM division of the company's North Amercian operation.

Yu said much of his company's growth will come from a recent jump in CD prices as a glut eases, along with exploding demand for recordable DVDs needed for the new generation of affordable recorder/players making its way to market.

"Normally in the third quarter we have to finalise sales for Christmas," Yu said. "Many buyers at this show are coming to finalise orders."

Another company banking on recordable DVD was Ulead Systems Inc, whose software competes with the more high profile Adobe Systems and whose hopes are resting on a new DVD editing product, said Christine Tseng, director of the company's Asia-Pacific marketing and sales centre.

Tseng said Ulead -- whose revenues are still a relatively modest $30 million a year -- has seen sales grow 10-15 percent this year, and expects to at least match those gains during the Christmas season.

"DVD burners should drop in price significantly by the end of this year, so that should help a lot," she said. "We've gotten a lot of end user enquiries. They've wanted to find out what kind of software they can use for DVD editing."

Amid the cheer, however, privately held Feton Technology Inc was less upbeat on the Christmas prospects for its MP3 players, though its reasons were unrelated to holiday demand.

Product Assist Manager Ariel Liao said the industry has been hammered by a global shortage of flash memory chips that has caused them to more than double in price in recent months.

"I'm not very optimistic about Christmas because the flash IC increased its price, so not many people are buying the product this year," she said.

(C) Reuters