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This week in holiday shopping

It may be a jolly time of year for merchants, but gamers and home entertainment enthusiasts may be disappointed.

It may be the happiest time of year for merchants, but gamers and home entertainment enthusiasts may be disappointed by what is under the tree this year.

The first several days of the 2004 holiday shopping season showed positive signs for online retailers as industry watchers and major e-commerce sites charted above-average traffic and sales. Among the companies tracking early sales at Internet retailers was Web statistician ComScore Networks, which recorded a 23 percent increase in online spending between Nov. 1 and Nov. 26, compared with the same period last year.

Online spending in 2004 through the day after Thanksgiving--also known as Black Friday in the retail industry because heavy sales that day traditionally push retailers into profitability for the year--totaled $5.7 billion, compared with $4.6 billion in 2003. Spending on Black Friday itself also touched e-tailers: U.S. consumers made $250 million worth of online sales that day, a 41 percent increase over the $178 million reported for 2003.

However, top online retail sites may be inadvertently turning away customers because of higher-than-expected demand, Internet performance company Keynote Systems said. The time it took to complete a sale increased to a daily average of 21 seconds on Monday from the typical 14 seconds. Reliability was also down to 80 percent on Monday from an average of 97 percent.

Retailers expect flat-screen televisions to be highly popular this season--and recent price drops are only expected to boost sales. But for all the hype around next-generation televisions, flat panels have a way to go before they rival their cheaper CRT, or cathode ray tube, counterparts in performance--or cost.

"Consumers think they're buying the best in technology (with flat-panel televisions), but it's more of an emotional purchase," said Bob O'Donnell, an analyst at researcher IDC. "It's part status and part wanting to be on the cutting edge."

LCDs are great as desktop PC monitors because they don't have to refresh pictures rapidly, but they don't work as well when used in televisions. Plasmas tend to lose brightness over time and don't offer images as sharp as those served up by CRTs. Manufacturers are working to improve these shortcomings.

Hide and seek
A growing number of holiday shoppers and eBay bargainers have discovered that Sony's PlayStation 2 video game console is in short supply at many retailers. Sony said it's ramping up production and doing all it can to get more consoles in stores quickly.

The shortage stems from the new slimmed-down PS2 design Sony announced earlier this year. Sony has been clearing out supplies of the original PS2 configuration for the past few months, and the company has been unable to push units of the new design into the market fast enough to meet holiday demand.

Those lucky enough to get their hands on the game console are seething after discovering that a demo disc distributed by Sony could accidentally erase the memory cards attached to their consoles, wiping out many hours of progress in games such as "Grand Theft Auto."

Sony acknowledged the problem last week in a postcard sent to members of its PlayStation Underground fan club, warning members to be careful with holiday demo discs sent out last month. Don't play the trial version of the Capcom adventure game "Viewtiful Joe 2" included on the disc, Sony warned, unless you want to start over from scratch on every PS2 game you own.

If that wasn't enough, sales of video game consoles have dropped by almost half in 2004, as gamers await speedy new machines. Market research company In-Stat/MDR predicted that worldwide shipments of game consoles will reach 19.3 million this year, compared with 35 million in 2003.

Even with a slew of blockbuster game releases late this year and with manufacturer price cuts to the PlayStation and the Xbox consoles made earlier in 2004, holiday sales are unlikely to push the industry anywhere near the explosive growth of the past few years, In-Stat/MDR said.