DVDs, Yes — PCs, No

Consumer electronics retailers sold fewer products this past Christmas. While dollar sales across the board rose nearly 6 percent, unit sales dropped 0.1 percent, according to NPD Intelect Market Tracking, an independent research firm. Sales of new digital products (such as DVD players) were strong; older technology (such as replacing the old beat-up VCR) dropped. Investors flocked to buy Best Buy stock after the Minneapolis-based electronics chain reported a 3.7 percent same-store sales gain for the holidays. It had estimated a 3 percent gain. But a year ago, Best Buy's sales gained 9.8 percent from the previous year.

“Although personal computer sales have fallen,” said Peter Caruso, a retail analyst with Merrill Lynch Global Securities, “Best Buy managed to sell new DVD players and digital cameras to customers who had in the past bought desktop PCs.” Domestic PC sales were down 24 percent in December.

Further proof that the PC market is slumping is the news that Microsoft Corp. – which sold a lot of those PCs during the boom years – will be introducing an X-Box video game, the company's first foray into the consumer electronics games business. Bill Gates, who worked on developing the product, is now titled as chief software architect within Microsoft's Redmond, Wash., campus.