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Gadgets galore for the holidays

A tour of stores finds that the Palm III handheld and Nintendo GameBoy are elusive, while the controversial Divx player is getting a lukewarm response.

SAN FRANCISCO--If that special wireless-wearable-digital-device your loved one wants can be found on store shelves in late December, chances are it's not the high-tech version of the Furby.

A tour of San Francisco computer stores found that, like the popular Furby toy, certain high-tech gadgets can be difficult to track down.

The most obvious success story this holiday season appears to be 3Com's Palm III handheld, the latest version of the PalmPilot the company rolled out earlier this year. It was flying off the shelves at four computer retailers we visited here this week.

The device, which sells for around $350, is coasting on CompuTown employee Oscar positive word of mouth, according to Oscar (no last name given), a handheld-device salesman at CompuTown on Market Street. "If you see everyone wearing Nike's, you want to get Nike's," he said, explaining the success of the Palm III.

Customers find the PalmPilot easier to use than comparably sized devices running the Windows CE operating system, he said.

"Selling a Palm III is like selling cookies," he said.

"The [Philips] Nino is not as hot as the Palm III," agreed Tony, a sales clerk at Circuit City on Van Ness Avenue. The Nino runs a version of Microsoft's Windows CE OS. Other larger Windows CE devices are also being passed over, Oscar noted, for full-size inexpensive notebooks.

PalmPilot games are selling briskly at Computown, Oscar said, but noted that the majority of these accessories are sold to less experienced computer users. "Tourists tend to buy the games you can get on the Internet for free," he said.

Sales of computers and other high-tech devices are expected to be strong this quarter, said Kevin Hause, an analyst with research firm International Data Corporation, but revenues from those sales may suffer from the popularity of low-cost PCs and handheld devices. "For most consumer products, this season accounts for anywhere from a third to half of annual sales, instead of a quarter," he said. "It's a key time."

Sales are relatively steady this quarter, reported employees of the four stores, but signs of the growth of e-commerce are appearing.

"I can compete with the guys down the street, but I can't compete Circuit City employeeswith the Internet," Oscar said, complaining of customers who come into the CompuTown store to research and play with devices, and then actually purchase the product online.

"I do all the work and [online stores] get the sale," he said.

Another hard-to-find item this year is the Nintendo GameBoy with color display. The Good Guys store at the Stonestown Shopping Center sold its last copy of the handheld gaming device on Monday night to a relieved mother.

On the other hand, Divx, the limited use version of DVD developed and marketed by Circuit City, appears to be faltering this season. In fact, the in-store Divx display and demonstration at Circuit City features a Pioneer DVD player that cannot even play Divx discs.

"Circuit City has a hard time selling Divx, because they can't even demonstrate it in the store," said Hause. Divx requires a dedicated phone line, and many stores can't do this, he said.

More popular this year are smaller, lower-cost devices, Circuit City employees said. In fact, seven out of every 10 computers sold at the Circuit City on Van Ness are priced under $1,000. A recent study concluded that over half of all PCs sold in November were sub-$1,000 systems.

A trend of offering tons of rebates could pose a problem for stores next year. Almost every product at Circuit City is sold with a rebate discount, according to Victor: "It's rebates galore," he said.

"Retailers love rebates because it allows them to advertise a lower price than they actually charge," said Hause. "It remains to be seen what the after-affects are when people start cashing them in."