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The NPD Group Needs A New Methodology

Virtually anyone can manipulate statistics in so many different ways that it is sometimes funny what passes for news using statistics.  As the annual Consumer Electronics Show launched in Las Vegas this year, the NPD Group (formerly National Purchase Diary Group) came out with what appeared to be ominous financial statistics for the technology sector.  This was treated as potentially devastating news among many members of the technology press, most of whom were off covering the Consumer Electronics Show.

Is it possible the technology reporters and bloggers did not actually read the NPD report?  Is it possible that the mainstream media that picked up the story did not understand it?  Either way, the tech sector ought not to be reeling from the NPD Group’s assertion that holiday consumer electronics spending dropped six percent during the holiday shopping season in 2011.

This would actually be news . . . if it were true.

The NPD Group’s methodology in determining that consumer electronics sales dropped is a flawed one.  In fact, they use methodology so flawed as to make the results meaningless.  The NPD report states that total consumer technology sales “excluding cell phones, tablets, e-readers, and video games” dropped.  What?!  Why is anyone taking the report seriously when it excludes some of the biggest consumer spending items of the holiday season?!  Every major poll in every single respectable publication put the Amazon Kindle Fire at the top of both “most wanted” and “most purchased” gift lists.  The Apple iPad was also a highly sought-after and delivered gift.

Saying that consumer electronic spending is down without including tablets, e-readers and video games, is like saying that cars are being pulled over less by police . . . when red and black cars are excluded.  Given that red and black cars comprise the greatest number of cars on the road in the United States, any statistic correlating cars and car color is worthless without including them.  So, too, is a statistic about holiday spending on consumer electronics that omits the most popular consumer electronics of the holiday season!

Why did the NPD release such a worthless statistic?  To be fair, the data is virtually impossible to come by.  Amazon is notoriously tight-lipped about how many of its e-readers have sold, and, with the Kindle Fire, they have been characteristically opaque.  Apple is also less eager to release its sales figures on tablet computers, though it is widely predicted that when you consider tablets a personal computers, Apple is now the largest PC manufacturer on Earth.

Regardless of what the NPD wants consumers to think, ten days in the 2011 holiday shopping season saw billion dollar sales, which is more than any other holiday season ever before.  To think that consumer electronics like tablets, e-readers and video games did not contribute tremendously to that is naïve.

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