NetViper said:
I don't think you are going to see the price of sets change very much over the next year.
Today's
New York Times disagrees with you:
Signs of a Glut and Lower Prices on Thin TV's
By ERIC A. TAUB
Published: November 29, 2004
While hanging a television on the living- room wall may have captured the imagination of American consumers, it has yet to empty many pocketbooks.
That may soon change as a glut of liquid crystal display flat-panel televisions, called L.C.D.'s, enter the market, a result of a boom in new factories. According to several manufacturers and analysts, the prices for L.C.D. flat-panel TV's will drop in the new year, falling by as much as 30 percent by the end of 2005. The prices of plasma flat-panel TV's are also expected to fall significantly.
That is not a message that the electronics retailers want to be heard during the holiday shopping season. They are hoping that the price cuts that have already occurred will spur more people to buy flat-panel sets, and many are already offering discounts to increase traffic in their stores.
"We do not want to talk about predictions of price drops," said Lee Simonson, the director of Best Buy's television division. "We want people to buy now."
Flat-panel TV's still represent less than 10 percent of the 29 million TV sets to be sold to dealers in 2004. Of the flat-panel sales, 73 percent are L.C.D. sets and 27 percent are the larger plasma models.
Flat-panel sets have become hot items with consumers. According to a survey by the Consumer Electronics Association, an industry trade group, a plasma television is the most desired holiday gift this season.
Manufacturers, like the makers of other consumer electronics, are investing heavily to expand their production capacity, hoping to capture market share. Earnings, they reason, will come later, although until recently, these sets had proved highly profitable. In the first three quarters of 2004, the LG.Philips LCD Company made $1.4 billion in profits from L.C.D. televisions, although the company reported a drop in earnings in the third quarter from the year-earlier period. Another manufacturer, AU Optronics, made $900 million in the three quarters, according to DisplaySearch, a technology research company.
This windfall has given them the cash to build next-generation plants capable of creating even larger screens at lower per-unit costs. Each new generation L.C.D. plant costs $1 billion to $3 billion.
Next year, AU Optronics and another L.C.D. maker, C.P.T., both based in Taiwan, will complete new plants for making 32- and 37-inch displays. To cut construction costs, Sony and Samsung are in a $2 billion joint venture to build the world's first L.C.D. plant designed to produce eight 40-inch or six 46-inch displays cut from one large piece of glass.
"The plant building boom is due to a herd mentality as big sales numbers have been forecast," said Chris Chinnock, president of Insight Media and editor of the Microdisplay Report, an industry newsletter. "We've seen this cycle of shortfall, investment and oversupply for 10 years. Everyone sees the opportunity at the bottom of the trough and thinks they can do better than their competitors."
Bharath Rajagopalan, general manager for TCL-Thomson Electronics, owner of the RCA brand, said: "L.C.D. production is becoming a commodity game. There is an inordinate amount of competition and price erosion."
Ross Young, president of DisplaySearch, predicts that there will be a 53 percent increase in capacity during 2005, and he says that will put a lot of pressure on pricing. A 42-inch L.C.D. set that costs close to $4,500 today will be $3,100 next year, and $2,250 in 2006, he says.
Tasso Koken, vice president and general merchandise manager for Sears home electronics, predicts that in 18 months, a 20-inch L.C.D. TV from a well-known manufacturer will be under $299, down from $700 to $800 today. "The 2005 price drops in L.C.D. will make the 2004 reductions look like a walk in the park," he said.
As prices for all televisions fall, the industry expects that each of the competing technologies will carve out its own market niche. The ultimate victim may be the tried-and- true picture-tube TV.
So far, average consumers do not seem to care which technology they are buying. "Generally speaking, the consumer has no understanding of the differences between L.C.D. and plasma technology," Mr. Koken of Sears said.
But there are important differences. Plasma displays use a grid of hundreds of thousands of cells filled with a xenon and neon gas plasma. An electrical charge illuminates colored fluorescent phosphors, creating an image. Because of the difficulty in producing very small grids, plasma sets can be produced cost effectively only in larger screen sizes.
In an L.C.D. panel, liquid crystals are sandwiched between pieces of glass. An electrical charge twists the crystals to block light or to allow it to pass through to the screen. L.C.D. sets do not display motion as crisply as plasma TV's, and have more limited viewing angles.
Many industry executives expect that later this decade, L.C.D. units, which are typically 3 to 5 inches deep, will completely replace smaller-size picture-tube sets. Next year, Sony expects to double the number of flat-panel TV's it sells in the United States, while decreasing its picture-tube offerings by 20 percent, according to Mike Fidler, a Sony senior vice president. The picture-tube business is expected to remain profitable for the company for the next three years, but then decline as the price of L.C.D. TV's falls below $500, Mr. Fidler said.
Falling prices for larger screen sizes may force plasma sets to be sold only in sizes around 60 inches, where they maintain their price edge over L.C.D. screens. Plasma panels contain only electrodes and phosphors, so they can be made in larger sizes without a proportionate increase in price, according to Ed Wolff, a vice president at Panasonic.
But some are not so sanguine about the future of plasma. Mr. Fidler of Sony says that L.C.D. TV's will drop so much in price that plasma will go away in three to five years.
Given the uncertainty of whether customers will take to mounting their TV's on a wall, some companies like RCA are hoping that a less-expensive large-screen projection TV will remain a viable alternative to L.C.D. or plasma sets. A harbinger of that trend, the company's recently introduced Projects, a 61-inch projection set, is just 7 inches deep.
