Halloween might be in the air, but while consumers are busy getting their costume and party plans in order for the next two weeks, retailers and investors already are thinking long past pumpkins and candy corn and toward wreaths and reindeer. The holiday sales gauntlet is starting, and businesses of every stripe need consumers to open their wallets and spend at the end of 2011 more than ever.
The Commerce Department announced in August that consumer spending slipped 0.2% over the second quarter of the year — the first decline since the third quarter of 2009. The dip spurred economists to lower predictions for the back half of the year, expecting growth of just 2.5% over 2010 where they were expecting 3% before. So what is going to get people spending this holiday season?
The same thing that gets them spending every year: technology. In 2010, the hit gadgets of the fourth quarter were Apple‘s (NASDAQ:AAPL) iPad (7.3 million sold) and Microsoft‘s (NASDAQ:MSFT) Kinect (8 million sold) — two toys that found success among every stripe of consumer. But who is going to replicate those successes this year? Here are what should be the five best-selling gadgets and games of the 2011 holiday season:
Amazon Kindle Fire
The world expected Amazon‘s (NASDAQ:AMZN) Kindle to roll over and die after the iPad released in 2010. The little e-reader did just the opposite, thriving in a market filled with smartphones and tablets, and the Kindle became Amazon’s best-selling product of all time last Christmas. Amazon appears to be unsatisfied holding on to its own niche market, though, and now it’s ready to take Apple’s popular tablet on with a tablet of its own.
The Kindle Fire is a bit smaller than the iPad, both in physical size and price. The device will retail for just $199 when it releases in November, half the price of the cheapest iPad. Analysts predict a hit — Barclays expects Amazon to sell 4.5 million Kindle Fires in the fourth quarter. IHS believes the company will lose $10 on each Fire sold, though, so Amazon will have to make up the difference through electronic book, movie and music sales on the new device.
The iPad will be a popular gift. So will the iPod Touch. The MacBook Air laptop will generate steady money as well. But there’s no doubt though that Apple’s new iPhone 4S will be the star of the company’s fourth quarter.
The iPhone has emerged as a holiday sales force to be reckoned with in recent years. During the 2010 holiday season alone, Apple sold 16.2 million iPhones thanks to the popularity of the iPhone 4 model. Apple announced on Monday that it sold more than 4 million iPhone 4S units in just three days after releasing the device. Considering that it took just one weekend for Apple to match one quarter of 2010′s total holiday iPhone sales, it’s a safe bet the company will break that record in 2011.
Nintendo‘s (PINK:NTDOY) newest portable handheld has had a rough year so far. Sales of the new stereoscopic 3D video game player were so bad after it released in March that the company’s value was crippled. Christmas 2011 might turn things around for both the company and the device, though, thanks to a couple of marquee game releases.
Super Mario 3D Land, out in November, is the latest in the company’s long-running Mario series, and its sales potential is huge. The last handheld entry in the series, New Super Mario Bros. for the Nintendo DS, sold 26.21 million copies between 2006 and February 2011. Mario Kart 7, out in December, also has a strong pedigree. The previous portable version has sold more than 21 million copies since releasing in 2005. These two releases on their own could make the Nintendo 3DS one of the holiday’s swiftest sellers.
Star Wars: The Old Republic
In December, Electronic Arts (NASDAQ:ERTS) will release Star Wars: The Old Republic, an online game in the same mold as Activision Blizzard‘s (NASDAQ:ATVI) multibillion-dollar earning World of Warcraft, set in George Lucas’ lucrative film universe. Development of the game has been painstaking, costing EA a rumored $135 million over the past four years, making it the most expensive game ever created.
As with most things Star Wars, though, the investment will have been worth it for the company. Wedbush Morgan’s Michael Pachter believes EA needs just 500,000 to 800,000 consumers to buy the game to break even, and Cowen & Company analyst Doug Creutz thinks EA will net 2 million players for the game before the year is out. Development studio BioWare, the group making the game for Electronic Arts, also was behind 2003′s Star Wars: Knights of the Old Republic, a classic that has sold millions. As the saying goes: Put a lightsaber in it, and people will play it.
Motorola Droid HD
It isn’t a guarantee that Motorola‘s (NYSE:MMI) new flagship phone will make it out in time for Christmas, but rumors from sources like Engadget and a countdown clock on the company’s website to a Tuesday announcement suggest that the Motorola Droid HD will come out sooner rather than later. Alternately referred to as the Motorola Spyder, prototype images of the new phone popped up in August, showing a device with a 4.5-inch HD display that is markedly thinner than previous Droid models.
While the Droid name remains synonymous with Google‘s (NASDAQ:GOOG) Android operating system, Motorola’s line has ceded no small amount of market share to competitor HTC. A sexy new high-end phone for the holidays should help the company earn back its audience before becoming a part of the Google empire in 2012.
As of this writing, Anthony John Agnello did not own a position in any of the stocks named here. Follow him on Twitter at @ajohnagnello and become a fan of InvestorPlace on Facebook.