The world of consumer electronics has become one of the largest sectors of the American retail economy.  Sales typically soar during the Christmas shopping season, and this year is no different. 

"Electronics have come such a long way," says Amy Adoniz, a manager at Best Buy, one of a nationwide chain of electronics outlets. Looking out with satisfaction over the crowded aisles of her Manhattan store, she adds, "The prices have dropped so much that I think people who would have never thought to go in the direction of new technology are looking at new technology."

Ms. Adoniz says more people now are creating entertainment systems in their homes. "The LCD TVs and the plasma TVs are really popular. Also, home theaters, with their 'surround-sound' systems."

In 2006, the coolest item for many consumers continues to be Apple's "iPod," which is by far the most popular device in a range of handheld digital music players that includes Microsoft's "Zune," and others. iPods have more computer memory - and are selling at a better price - than ever. Some models can hold up to 20,000 songs, as well as movies and TV programs. Other models hold fewer songs, but are as small as postage stamps.

Steven Levy, a technology correspondent at Newsweek magazine and the author of a new book about the creation of the iPod called The Perfect Thing: How the iPod Shuffles Commerce, Culture and Coolness, continues to be impressed by how portable and compact computers have become.

"As someone who started using computers in an era where that amount of storage costs you a few thousand dollars and was the size of a shoebox, it is really amazing to see something that small!" he says. "The iPod is almost weightless. You just clip it to your t-shirt and you run and you have a lot of songs to listen to."

Today, some mobile telephones also contain digital music players, but they have far less memory than standard mp3 players. So most consumers still opt for two devices: a mobile phone for talking and text messaging, and a separate digital player for music.

On the other hand, many mobile phones feature digital cameras that are far better than last year's models, which typically produced photographs that were grainy and out of focus. Meanwhile, mid-range digital cameras now produce professional-quality images at prices amateurs can afford.

"They can use all different high-quality lenses," says Levy. "You can set the exposure times, set the shutter speed; and you can create all sorts of effects with light with them, and do all these magical things photographers do!"

Computer sales have been down this holiday season, in part because users of Windows-based PCs are waiting for Microsoft to introduce "Vista," the long-delayed upgrade to its operating system due out next month.

Still, 2006 has been one of the hottest seasons for computer game systems ever, with two new models hitting the market in the past few weeks. One is a powerful virtual reality game console made by Nintendo called "Wii."

The hand-held controller works like a baseball bat, bowling ball, or tennis racket, when you the player's movements mimic the movements used in those sports. For example, Levy says, "Swing your arm with a controller in it like you are swinging a baseball bat, and a 'virtual' swinging bat is displayed on the video screen at the same time."

Customer Eduardo Calligaris, a loyal user of a competitor's game console, Microsoft X-Box, says he loves the Wii. "You move. You don't have to sit down. You are interacting more with the game," he explains. "It's something that your girlfriend would actually come up to your house and say 'let's play some tennis.' This is the system that is bringing families together!"

The other new game machine making a splash this year is Sony's PlayStation 3 console, which features the most powerful microprocessor ever used in a video console. Indeed, two young teenagers at Best Buy seem utterly absorbed in the store's PlayStation 3 demo of a basketball game. "The graphics are incredible," one says. "It makes you feel like you are right in the game," adds the other.

But Best Buy customer Michael Montague, an older adult who retains an athletic physique, is not convinced. He says no matter how realistic the game technology is, no computer game can compare to real basketball. "It doesn't work that way. You've got to have a good pair of sneakers on. You've got to get out there and run hard. You've got to sweat!" he says, but adds with a chuckle, that when the price comes down, he just might get it for his grandson