On January 23, 1926, a Scotsman by the name of John Logie Baird gave the world's first public demonstration of a mechanical television apparatus to approximately 40 members of the Royal Institution. The technology behind televisions has come a long way since that day but, until recently, these developments have been of little or no concern to the IT channel.
However, as the industries of consumer electronics and information technology continue to merge - and the boundaries between the two become increasingly blurred - hybrid versions of the box that dominates lounge rooms all over the world are offering new sales opportunities for IT dealers. Whether you think of them primarily as a television or a monitor probably depends on who you are trying to sell them to but, either way, competition in this category is starting to heat up.
Early market leaders
Hybrid television/monitor sales have so far been dominated by Samsung Electronics, LG and Philips, according to market analysts at GfK. It tracked sales of products ranging from 13-inch to 24-inch screens during 2004, with the Australian market led by 15-inch and 17-inch models. Of the 35,186 recorded sales last year, almost 20,000 were in these two sizes. A further 4733 units were sold in the 20-inch category with 22- and 23-inch models also accounting for more than 2000 sales each.
While LCD monitor prices have tumbled recently, hybrid prices have so far remained a premium product and are yet to see any serious movement. But senior account director at GfK, Derek Nash, predicted that would change this year as more vendors join the market. Recent entrants have included BenQ and Sony.
"I think it will be a much more competitive space this year and the effect this has on pricing will make people more likely to have a look at these hybrid products," he said.
"Having a small panel that can be used for two purposes will be an attractive lifestyle proposition for a lot of homes. I think there is great opportunity for these hybrid products in the home office."
The sales director of Samsung Australia's CE and IT divisions, Norm Krieke, agreed that increased competition would help to grow the overall market.
"Typically, when more vendors enter a market you see growth because there are more people promoting the concept," he said. "People will look to create desire around different concepts."
Krieke said Samsung first started manufacturing monitors with a built-in television tuner about three of four years ago. But at that time, they were being aimed at specific vertical industries rather than the general consumer market.
"They tended to be used in particular verticals like the broadcasting industry," he recalled. "Security was another area - not so much for television but for models with video inputs. In the past 12 months, people have started to buy them for domestic use."
Having historically offered 15- and 17-inch hybrid models, Samsung has now introduced a 19-inch version and will discontinue its smallest size in recognition of the overall monitor market transition towards bigger screens.
Point of difference
In order to differentiate this new breed of display products from its existing televisions and monitors, BenQ refers to them as multifunction monitors. It currently has 17-inch and 20-inch models on the market but has big plans this year to push greater functionality.
"We see a need for detachable features like tuners, speakers and Web cams," managing director of BenQ Australia, Phil Newton, said. "We are also looking at modularised DVD players and recorders that can be built into the units."
BenQ currently distributes its multifunction monitors through Westan, Synnex, Ingram Micro and Bluechip Infotech. Newton said prices for a 17-inch model ranged from $600 up to $2000 depending on functionality, and predicted the ability to customise according to different end-user needs would be vital in this market. But he said a 23-inch screen would be the biggest BenQ would manufacture for this category.
"Once you start getting any bigger than that it is difficult to see the product in a study environment," he explained. "It becomes a lounge room product. Although it would work with a Media Center Edition PC, we have dedicated TV products with PC functionality that would be more suitable for that purpose.
"There are specialist applications in the graphics space and high-end gaming that would make a 23-inch screen desirable - but beyond that it just becomes difficult to view anything from close up."
Sony recently introduced two new LCD models to its flagship Wega television range that double up as computer monitors. The company's plasma and LCD TV product manager, Di Shepherd, said the 19-inch and widescreen 17-inch Sony models allowed users to split the screen.
"The most interesting feature of these screens is that a user could be working on a spreadsheet while still able to watch television in a corner of the screen to keep up with the cricket score or watch a favourite DVD," she said.
"More people are looking for this dual screen functionality now. Another scenario might see somebody in the kitchen watching their favourite TV show while searching online for a recipe - people will find applications for it."
Sony also plans to introduce a 20-inch widescreen model before the end of the year, Shepherd said.
Drivers and prohibitors
While early consumer adopters would be those with high disposable income, Samsung was also seeing opportunities in home design.
"In the home renovation market - where people are building extensions or redecorating - we are seeing people starting to put panels into walls," Krieke said. "Even some of the high-end kitchen manufacturers are incorporating flat screens into their designs."
But if the category is to show some real growth this year, there is a pressing need for consumer education - a duty Newton said rested squarely on the shoulders of the vendor community.
"Resellers and retailers are there to meet a need but it is the people who design and manufacture a product that have the ability to influence consumers," he said.
PCs running Microsoft's Media Center Edition would be a big sales driver for the category, Newton predicted.
"Using a Media Center platform in the lounge or study is where you get the maximum benefit from the features of these multifunction monitor products, he said. "You don't need to be running Media Center but that is where a lot of the early adopter market is coming from."
Shepherd identified men in their 30s as the initial target market for hybrid screens because of their IT bent.
"Early adopters will be very design and lifestyle oriented," she said. "But there is also an element of the SOHO market using them."
Best path to market
Although increased competition would help to drive growth, Nash said vendors and their channel partners were still trying to figure out how to pitch hybrid monitors to consumers.
"For example, should a mass merchant sell them in the IT department as a monitor with added value or in the consumer electronic section with the televisions?" he said. "Most sales so far suggest they are being pitched primarily as a monitor because the numbers are dominated by 15-inch and 17-inch models.
"But who knows where consumers will draw the line in terms of price, size and usage. Positioning of the products is going to be important and it will be up to the resellers to educate the market, which is interesting because this isn't something many of them have sold before.
While Newton said BenQ knew where it wanted the products to end up, finding the best place to sell them was proving to be a more difficult puzzle. Its sales had so far been fairly equally split between the IT channel, CE channel and mass merchants.
"This market is still evolving in multiple directions: some retailers have maintained separate electronics and technology teams, others are merging them together; some resellers are not interested in anything but PCs while others are interested in convergence," he said. "No particular style of shop is dominating the sales so far and that is the biggest quandary of them all. Because of this, our long-term strategy is yet to be determined."
Samsung categorises its display products in terms of size - 19-inch or below is considered primarily a monitor and goes through IT resellers; 20-inch or larger becomes a television and is sold through the consumer electronics channel.
Shepherd said Sony had decided to make the products equally available to its consumer electronics and IT channel partners.
"The products have aspects suitable for both markets so we have given everybody access to them and will let everything sort itself out," Shepherd said. "It will be up to the resellers to decide which aspect is more attractive to their customers."
The channel view
Synnex distributes models from LG, ViewSonic and Hyundai. Its marketing manager, Daniel Feldman, said it had noticed an increase in demand for this style of product as more vendors entered the market. As well as monitors with built-in tuners, there was also interest among resellers for notebooks containing a tuner.
While it was selling some hybrid monitors into its traditional dealer base, Feldman said they were probably more suitable for mass merchants because of their consumer electronics style.
Ingram Micro Australia product manager, Josh Velling, said the multifunction monitors were a prime example of product convergence that would drive increased crossover between existing channels.
Ingram currently distributes Sony and Philips televisions but also has a wide range of LCD screens and projectors that can be used as televisions in conjunction with a tuner.
"The very nature of tuners themselves means you don't need one built into a TV to watch television anymore - it might be accessed through a pay TV service or the tuner could be in a set-top box," he said. "That gives you a lot of flexibility."
While some people would still want to have a traditional television set, Velling said others would integrate their computing with everything from home security and telephony to gaming and other forms of home entertainment.
In this kind of set up, Velling said most people would opt for a large display in the lounge that controls output. Improving picture quality would be the main focus this year, he added, as the market moves towards high-definition television standards.
"This is still an early adopter market but take up will continue to grow as the amount of content increases and the price point continues to move down," he said.