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Tech Spending Could Slow In 2008

  • Reuters, Thursday, January 10, 2008 10:47 AM

As the economy slows in 2008, exhibitors at the Consumer Electronics Show in Las Vegas might find it difficult to persuade consumers to buy hi-tech cell phones and plasma screen televisions. The economy quickly center stage at CES as company executives were bombarded by questions about how the rising U.S. jobless rate, $100 oil and the worsening situation in the housing and credit markets will effect technology spending this year.

History would tell you that consumers tend to spend less on superfluous items (like gadgets) during a recession. Even so, analysts predicted a robust holiday shopping season for the tech sector, but their optimism was quashed when Circuit City reported an 11 percent holiday season sales decline. Next to report is tech retail bellwether Best Buy, which is expected to have done better.

However, the rest of the year is what really counts. "Consumers are under intense pressure," said IDC analyst David Daoud. "With the price of energy continuing to increase and a lot of people seeing the value of their houses dwindle, it will certainly lead to an amount of tension among consumers. The question now is: Are manufacturers responding to that?"

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