NPD Press Release

Decline of Tech Product Prices Accelerates Moving into Holiday Buying Season; Latest Results from NPD CE Price Watch Released

PORT WASHINGTON, N.Y.—(Business Wire)—Dec. 22, 2004—The average selling price of technology products was down during the month of October, according to the latest NPD Consumer Electronics Price Watch, a monthly pricing monitor from The NPD Group that provides a top-line look into the pricing of technology products being sold in the U.S.

While prices in October 2004 were down 18 percent when compared with October 2003, the average selling price of tech products was moderate when compared to September 2004, with the most expensive items in the basket - plasma and rear projection TVs - posting only slight declines. Overall, price declines accelerated in October as the total cost for the market basket of goods tracked by Price Watch fell. The overall basket of goods is now $11,280, nearly $5,400 less than it was in January 2003, and almost $2,500 less than it was in October 2003.

Digital cameras and memory cards saw sharp declines in prices from September 2004 to October 2004. Digital camera prices fell seven percent and dipped below the $200 level for the first time. Memory cards dropped 10 percent from September to $36.58, the first time a 128 MB card was under $40.

Besides cameras and memory cards, LCD products saw the biggest declines in prices when compared with September 2004. A standard 17-inch LCD monitor fell by seven percent from September, on top of a six percent price decline occurring in August. The market basket LCD TV, a 20-inch model, saw its price decline from $858 in September to under $800 in October.

“Prices for LCD monitors and LCD TV’s are on the decline because of expanded production capacity, increased consumer demand and an explosion of LCD’s available in larger screen sizes at affordable prices,” said Stephen Baker, director of industry analysis for The NPD Group. “This has created a domino effect throughout the category, forcing rapid price drops from the largest screen sizes down to the entry level,”

During the past 12 months, plasma TV pricing has seen the steepest dollar decline, with prices down more than $800, or 25 percent from 2003 levels. On a percentage basis, four items; 3 mega-pixel (MP) digital cameras, 128MB memory cards, DVD home deck recorders and 802.11g wireless access points, are all down approximately 33 percent from October 2003.

Camera prices fell as manufacturers released new models and new pricing levels to take advantage of expected heavy demand for digital cameras this holiday season. New high-end models in the 6-7 MP range have begun hitting the market, forcing prices down across the board and delivering exceptional values in the largest segment of the market, the 3 MP category.

In concert with movement in the camera market, prices for digital memory have fallen rapidly over the past few months. Just six months ago a 128MB memory card was more than $51. Pricing here has also been impacted by the rapid price declines of higher capacity cards, especially the rapid introduction and subsequent decline in price of 1GB products, which have dropped by half over the last few months.

“Based on the retail sales numbers we are seeing, televisions and digital cameras are clearly on many wish lists this holiday season,” Baker added. ” At the current price points, these categories are at a price level that consumers are comfortable with, and they will remain best sellers through the end of the year.”

The next NPD CE Price Watch, for the month of November 2004, will be released during the week of January 17.

About the NPD Consumer Electronics Price Watch
The NPD Consumer Electronics Price Watch is based on 27 of the best selling product categories in the consumer electronics space, which includes a cross-section of the products people buy and is made up of a “market basket” of the most frequently purchased electronic products, including televisions, PCs, cameras and media players.

About The NPD Group, Inc.
Since 1967 The NPD Group has provided reliable and comprehensive sales and marketing information for a wide range of industries. NPD provides critical knowledge on what is selling, where, to whom and why to help our clients make more successful, fact-based business decisions. Today more than 1,300 manufacturers and retailers rely on NPD to help them better understand their customers, product categories, distribution channels and competition in order to help guide their business and positively impact sales and revenues. Information from The NPD Group is available for the following major vertical sectors: apparel, appliances, automotive, beauty, cellular, consumer electronics, food and beverage, foodservice, footwear, home improvement, housewares, imaging, information technology, music, software, travel, toys and video games. For more information visit http://www.npd.com.