Slim, sleek and sexy - that's the main appeal of the oft-touted LCD monitor.

And while appearing glamorous and unquestionably groovy, the market has seen its fair share of ups and downs. Despite the good looks and svelte frame, the market is still high maintenance. How so? Persistent problems created by falling prices, panel shortages and decreased margins have all added insult to injury.

Indeed, falling prices has led to a tough and competitive monitor market, and this situation is set to be further exacerbated as the manufacturing costs associated with LCD screens increases, Optima's retail product manager, David Choi, said.

"Seventeen-inch panel prices are on the rise and the cost of producing LCDs is also increasing, so vendors may have to raise their prices to cover manufacturing costs," Choi said. "However, resellers will find it hard to respond with a similar increase in retail prices as the market has already become accustomed to drastic LCD price drops. As a result, resellers may be facing lower margins."

And Optima isn't alone in offering a less than rosy outlook. Many LCD distributors claim plummeting margins from aggressive vendor pricing will cause tough market conditions for the rest of the year. Industry proponents also suggest the recent surge in prod­uction has fuelled a sharp fall in prices.

In a bid to fight margin erosion, some vendors and distributors are revising sales strategies. As prices plummet, vendors are being forced to come up with creative strategies.

What's the answer? Offering promotions and technology bundles - as well as a hearty focus on multimedia functions including video connectivity and TV tuners - were among the latest stunts to generate market action, IDC PC hardware analyst, Mercie Clement, said.

Despite the negative news and market twists and turns, LCDs continue to become more popular. They accounted for more than half of all monitors shipped in 2004, according to recent IDC findings.

"The 2004 monitor market saw a pronounced migration to the LCD form factor, with six out of every 10 monitors shipped being an LCD display," Clement said. "LCD uptake is primarily driven by the decreasing cost of the technology, which promises a longer life-span and fewer upgrades. It is expected to continue to cannibalise the already waning CRT market."

Clement expects this trend to peak this year as vendors focus more on the higher end of the market and larger models while OEMs increasingly bundle PCs with entry-level LCD monitors at compelling prices.

The IBM/Lenovo merger would also bear fruit in the corporate arena towards the end of the year, she said. But expect the market to wane in 2006.

"LCD sales are expected to decline from 2006 onwards, having reached mainstream volumes by this stage and subject to fluctuations in desktop sales," Clement said.

Given the host of market conditions, what's a reseller to do? There are a few options, industry pundits agreed.

Market manoeuvres

Agreeing it's a tough road for many resellers, offerings manager at IBM PCD, David Nicol, said partners could take advantage of market shifts and push product into select verticals as part of complete solutions.

"We're always featuring offers and bundles," Nicol said. "We see the monitor as part of the desktop offering."

Given the growing push during the past six months from the CRT space to LCDs, there was plenty of action out there, he said.

"There are still certain customers and applications best suited to the CRT space, but we're seeing a growing interest in LCDs across education, government, SMBs and large corporates," Nicol said.

Space-saving attributes, reduced power consumption and heat dissipation, increased user comfort and productivity were top reasons for the ongoing LCD infatuation, Nicol said.

General manager of Mitsubishi Electric's electronics division, Richard Freggi, said there was plenty of life left in the CRT space. It was an area where resellers could still make some good coin.

"We fully realise the CRT market is coming to a sunset, but there's still a good 12 months left," he said.

Looking past the CRT space, Freggi agreed aggressive pricing had hurt the overall LCD market. But Mitsubishi had managed to ride the wave thanks to a steady sales strategy and no major pricing changes, he said.

"Many resellers and distributors are under price pressure and enormous margin pressure, but we've managed to do well over the last six months," Freggi said. "Because of oversupply, many vendors have come out with guns blazing and are moving as much product as they can."

"Two-thirds of monitor vendors have hurt themselves and customers. They've been hurt because of an aggressive vendor strategy. The remainder have taken a more measured approach, and are holding prices."

Alleviating price pressure

Senior product manager of business display products for Sony Australia, James Waldron, said Sony was also looking at ways to alleviate the price pressures and help resellers deal with tight margins and a tough market.

"There's a strong downward pressure in the market," he said.

"Everybody grizzles about it, but nobody is doing anything about it. We're looking at ways to deliver the product more efficiently to maximise our logistics and delivery and to minimise costs and handling."

And while it was a problem, Waldron said market angst hadn't reached the point of worry.

"When we start to see vendors selling off monitors on the street corner for $50 or when the price gets to the price of a toaster oven, then we should worry," he said.

One way for resellers to bite the monitor blues was to sell into higher markets with higher performing gear, Waldron said.

Up-selling was the way to go in the face of stiff competition and diminishing margins, Optima's Choi agreed.

"While the 17-inch will continue to consolidate its position as the standard size LCD this year, there will also be substantial growth in the 19-inch space, and that will overtake the 15-inch as the second most popular sized LCD on the market," he said.

At ViewSonic, where LCD monitors account for 70 per cent of company sales, the company's country manager, John Yeh, said the 19-inch space was the new market darling - and a growing opportunity.

"The 17-inch market is getting harder and harder to sell, but the 19-inch space is becoming more attractive and many users are making the switch," he said.

The company is further pushing into the consumer electronics channel on the back of Ingram Micro's acquisition of Tech Pacific and going after the corporate market.

And while competition was fierce, managing director of Impact Systems, Peter Agamalis, said LCD sales and margin levels were still good enough that the company hadn't had to resort to new marketing strategies.

Stock supplies had improved and overall demand had increased, he said, particularly for 17-inch and 19-inch models.

"The company has seen a 15 per cent increase in sales of the 19-inch monitor given the reduced pricing," Agamalis said.

Current design features and added functions were keeping demand strong.

"We're not at the point where vendors need to start looking at being really creative in order to drum up sales," he said.

"We have identified pressure in squeezing margins. We have an action plan in place, but won't need to use it for a while. Margins are still acceptable."

Part of the action plan in the future would be to heavily push multimedia bundles and promos, Agamalis said.

"This would take advantage of the AV convergence and digital home trend," he said.

IDC's Clement agreed pitching design features and souped up functionality was one way to survive the cut throat market - and the top marketing strategy being touted by vendors.

A focus on pivot and tilt, brightness and ergonomic aspects were other top considerations, she said.

"Resellers and distributors need something compelling to differentiate and these types of features are doing the trick," Clement said. "Vendors have to focus on features because they can no longer focus on price."

IBM's Nicol said the multimedia aspect, in particular, addressed a consumer's thirst for screen size. This was a major factor as consumers continued to move from the 15-inch and 17-inch gear to the much-lauded 19-inch monitor.

Size isn't everything

Vendors continued to push the envelope in terms of screen size, Nicol said.

Moving up the chain, the 20- and 21-inch markets were also expected to generate heat, Nicol said.

"The 20 and 21-inch may not be for the bulk of users, but ideal for specialist applications," he said. "For example, call centres can view multiple applications and graphic design shops can be more productive."

Bundling 26- to 40-inch screens with speaker stands and set-top boxes was one example, Sony's Waldron said. Advancements in technology and declining prices were also prompting opportunities in the digital signage maket as well.

And while size matters, IBM's Nicol said other hot LCD advancements include new design features such as narrow bezels and digital connectivity funct­ionality.

Response rate is another top consideration. But Impact's Agamalis said many vendors were too obsessed with this functionality, often to the detriment of other features.

"Pushing the limits in response rates could compromise longevity of the screen," he said.

Waldron agreed there was continuing pressure on response times, which shouldn't always be the main factor, even if vendors touted it to the max.

"Why would anyone want faster than 8ms response times?" he asked.

Beyond response times, other hot features included enhanced colour rendition and backlighting, Waldron said.

"This year Sony will release models at the top end with improved backlighting, which gives a broader spectrum and wider colour gamut," he said.

Backlighting will include LED technology, dubbed Triluminos, instead of fluorescent lighting. The LEDs let displays produce more colours than the cold cathode-based fluorescent lamps used in most LCD TVs, Waldron said.

Mitsubishi's Freggi said other features worth considering included height adjustment and styling, contrast viewing angle, colour fidelity and colour shift.

While margins are low and price pressures remain a worry, a competitive market spawns improved performance and design, according to analysts.

But vendors will need to find new and improved ways to make their wares stand out from the crowd.

Follow Us

Join the newsletter!


Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.


Show Comments