What to Know If You're Buying Gadgets for Gifts

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iPodsWith just a few days left to wrap up their holiday shopping, many consumers will probably snag a few gadgets and electronic toys that they think family members and friends will treasure. But with so many options consistently hitting the market, where should you spend your cash?

When it comes to electronics, consumers generally expect to get the next version of a product with more functionality and features, but at lower or similar cost than the previous version, says Jason Oxman, senior vice president of industry affairs for the Consumer Electronics Association, which runs the behemoth gadget trade show, Consumer Electronics Show (CES).

"What this means in practice is the product introduction cycle is very quick. As soon as a product is introduced, consumers start to look for the next generation [of the product]," Oxman says.

Getting Bumped by the Next Big Thing


Holiday shoppers may want to take Oxman's observations to heart, before resorting to eBay to track down sold-out electronics and paying top dollar to snag them. Many gadgets that once looked like they'd take the industry by storm are consistently being bumped by the next big thing.

Netbooks, for instance, "are a new category that's been around for about a year and poised to make a splash. And then the iPad shows up and sells 7 million units within six months. Now, manufacturers are focusing on tablet [computers]," Oxman says. "It's a challenge to the dominance of the netbook, but It remains to be seen how much of a challenge tablets will be."

While Apple's (AAPL) iPad poises a threat to the netbook industry, the computer maker's iPod may be on the extinction list in the near future. "When people get a new iPhone, they usually hand their old iPhone down to their kids. They may disable the phone feature but allow them to use the apps," notes Reyne Rice, toy trend specialist for the Toy Industry Association, who adds that these older iPhones, in essence, act like an iPod.

Beware of Limited Usefulness

Growth in iPod sales has been rather anemic over the past several years, as noted in this Macbook chart, and last year's sales were on the decline. Over the next three years, Rice says it's possible that Apple's iPod line will evaporate altogether.

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Other electronics that could wind up on the endangered list include portable DVD players, digital picture frames and single-function ink-jet printers, says Steve Baker, an analyst with the NPD Group.With more options to watch movies, TV shows and videos on their smartphones and tablet computers, portable DVD players are losing their allure, notes Baker.

And multifunction ink-jet printers are ubiquitous as prices have fallen dramatically over the years to as low as $50 to print, copy and scan. Not long ago, such machines typically sold for between $500 to $1,000. Digital picture frames' potential demise isn't so much related to better technology at a cheaper price. Rather, "their usefulness is limited," says Baker, "so now they're relegated to holiday gifts."

On that cue, a few tips before you go shopping.

  • Seek out popular toys that were introduced or upgraded sometime this year. That will give the recipient of your gift at least an average of 18 months of fun.
  • Keep in mind when buying an electronic gadget, virtually everything is moving to a mobile device, and often that device is a smartphone. These handsets are increasingly serving as a quasi-computer, entertainment device and information center. Accessories relating to this shift may be a good bet.
  • A sure winner for parents of young children are educational toys that are interactive and promote and engage the mind. These gadgets, which can also be passed down to younger siblings, will generally outlive the typical 18-month life cycle for toys.
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