Quick Thoughts: Naughty or Nice?

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http://www.zdnet.com/blog/btl/black-friday-cyber-monday-euphoria-clicks-cannibalize-bricks/64275

Black Friday passes the baton to Cyber Monday, as the assembled pundits parsed the tea leaves from the estimated 16% YoY rise in spending, including a 26% jump on-line.  Most analysts were unambiguously impressed by this performance, although a smattering of naysayers expressed concern that the strong growth was more reflective of aggressive promotion and early shopping, and that the spending could peter out over the course of the Holiday season.  Interestingly, IBM CoreMetrics reports that 9.8% of on-line sales were made from mobile devices, up from 3.2% in 2010, and that mobile devices generated 14.3% of overall site traffic for e-tailers, up from 5.6%.  This is a powerful indicator of the long term potential for these devices as instruments of commerce, as the brick-and-mortar store increasingly becomes a showroom for on-line merchants.  It also highlights the potential for e-wallet applications as an NFC-based infrastructure rolls out.

The big and obvious beneficiary of this is Amazon, which is teasing strong sales of its recently launched family of new Kindles, including the Kindle Fire tablet.  ComScore reports Amazon as the leading on-line retailer, with a 50% sales advantage on number two Wal-Mart.  We note that the ComScore numbers show on-line sales growth accelerating from 15% prior to Thanksgiving, to 18% on Turkey day and 26% on Black Friday.  Given just 6% average YoY growth in on-line spending for Black Fridays 2008-2010, we are inclined to see this as bullish, even if some of the growth is the result of sales pulled forward by promotion.

Apple is also an obvious beneficiary.  Apple was the fifth largest online retailer for Black Friday, its stores were clearly a top destination for foot traffic, and its products top sellers for a wide range of other retailers.  iPhones and iPads accounted for more than 10% of total e-commerce traffic, and 70% of ecommerce traffic generated by mobile platforms.  Interestingly, shoppers visiting sites via iPad were 60% more likely to buy than the average.  All of this highlights mobile devices, in general, and Apple’s iOS family in particular, as future instruments of commerce.  In a season where shopping is surprisingly strong and where iPads and iPhones are amongst the most highly sought after items, it stands to reason that Apple will enjoy the Holidays.

Google benefits too, as a strong shopping season drives search activity and advertising.  Ditto for Facebook, where the Holidays build community spirit and with it, traffic as users consult each other over gift buying strategies.  Glad tidings too, for the chain of companies tied to the successful iPad/Phone and Android franchises – e.g. Samsung, HTC, LG, Qualcomm, Texas Instrument, OmniVision, Nuance, etc..  The happy Holiday would also seem to be relatively good news for wireless carriers – Verizon, AT&T and Sprint, even if we don’t see them as long term winners.  As data center virtualization chugs along in its middle innings, the usual suspects – VMWare, EMC, IBM, etc. – should follow – and with the move to the cloud becoming ever more apparent as inevitable to IT managers, opportunities for consulting abound, to the boon of IBM, Accenture, and their ilk.

As for those that might find coal in their stockings, we remain pessimistic about the consumer PC market, and with it, the Christmas fortunes of the likes of Dell, HP, and Intel, although the rising tide of overall spending could cushion the blow of the share loss to tablets.  We are also fairly sanguine about the prospects for enterprise IT spending on desktops or major new software projects, so a bit of skittishness on SAP, Oracle and friends may be justified.

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