Thursday, 14 February 2008

Beer Syndrome Part Two

Last Oct I wrote a piece entitled The Beer Syndrome which argued that if there was a mild turndown in consumer spend and confidence, people would more likely stay at home, drink beer and play with their gadgets. I also argued that gadgets like the iPod were at the feelgood/retail therapy level and might do well in such an environment.

However, I tempered this by saying that it only applied in a “mild turndown”; making the point that, if there was a steep fall into recession, these rules would not apply. As I rather cruelly quipped this only applied if you had a home to go home to – difficult if it had been repossessed.

It now looks as if some of the worst fears for that downturn might be realised. Consumer (not enterprise) spend has kept our industry going over the last few years. If that is coming to a crashing halt, it will have serious repercussions. We have already this week seen evidence of that from DSG in the UK. Perhaps the best bellweather of consumer tech – Apple – is also not doing so well judged by its share price. See Businessweek Apple shares rolling downhill After hitting $200 at the end of 2007, last night Apple closed at $129 – down 36% YTD

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