It is a case of survival of the fittest in the fast-paced, size-obsessed, feature-loving monitor market. While things have got down and dirty in this cut-throat market, there are signs of stellar growth which means aggressive vendor strategies are working.
Locally, the picture is clear according to number cruncher, IDC, which claims the PC monitor market grew 38 per cent sequentially in Q2 and by 20 per cent over the same period in 2004.
"The second quarter was mammoth, with total shipments tipping the 750,000 market," IDC PC hardware, associate analyst, Mercie Clement, said.
The seasonal spike in desktop PC shipments, coupled by a surge in demand from the government and education sectors, fuelled the growth, Clement said.
In Q2, the OEM (PC vendor) monitor market accounted for 51 per cent of the total PC monitor shipments, growing 62 per cent sequentially from the previous quarter. The OEM gang kicked monitor activities into high gear, overtaking the branded camp in Q2, a noteworthy development, Clement said.
"This group has access to larger corporate accounts because they are already in the PC business," she said. "The OEM camp made some savvy moves by offering good pricing and select bundles."
An aggressive play
The standout story, and the main market driver, however, was the ongoing price aggression being played out by monitor vendors, Clement said.
"It is notable that vendors in the local market continued to pursue extremely aggressive pricing strategies, despite slight price increases in panels, specifically the 17-inch LCD," Clement said. "Vendors wanting to remain competitive had to absorb these price hikes, even selling below cost in some instances."
Aggressive pricing had created unusually cut-throat market conditions and resulted in the development of some unique vendor strategies, Mitsubishi Electric, general manager, Richard Freggi, said.
"It's a dog-eat-dog world," he said. "We aren't responding by lowering prices like many of our competitors."
Instead, the company was tackling tough market conditions with a range of battle plans. It aimed to pump up its monitor revenue by 25 per cent.
"There is a multiple squeeze on the market and we need to address it," he said.
The notebook market was also a market driver and a party crasher as users could now get high performing monitors on notebooks and, therefore, opt to ditch the entry-level standalone screen, he said.
"We are staying out of the notebook's way," Freggi said. "We don't duplicate what the notebook display can do, but rather complement it."
With consumers able to get a high performing monitor with a jam-packed notebook (for double the price of an entry-level monitor), the 17-inch monitor was struggling to prove its worth, Freggi said.
On the other hand, the 19- and 20-inch monitor segment was attracting attention in part because the added girth gave consumers an enhanced multimedia experience, offering higher resolution and advanced picture quality, he said.
"They can see value in this space," Freggi said.
So what else can vendors do? Get the distribution ranks in order, Freggi said. With the AV space in its crosshairs, Mitsubishi beefed up its distribution ranks - particularly at the regional level.
More regionalised distributors, system integrators and resellers were invited to the table in a bid to take advantage of what Freggi said were strong local ties with customers, and improved levels of service.
"We have brought in AV specialist distributors [including BCN and BMS] as well as integrators and resellers," Freggi said.
"We have attracted about eight already, but would like to get 20 or 30 by the end of the year. Our strategy is to add rather than substitute."
TodayTech, Also Technology and Multimedia Technology remained strong partners at the national level, he said.
Meanwhile, while many vendors were lining up their ducks at the distribution level in order to boost revenue, dishing out a host of channel incentives was another popular survival tactic that had surfaced in the monitor market, IDC's Clement said.
"PC vendors are now more tactical, providing better pricing schemes for PC monitors with desktops and are offering more compelling deals to their channel partners," she said.
While slashed prices and higher margins remain the most critical factors, recent schemes and channel incentives are increasing in popularity and could include offering fuel vouchers, shopping vouchers and movie tickets.
"Vendors are also offering bundles [buy 10 get one free] with LCD displays and TVs or other related products," Clement said. "The market is so competitive that vendors are now offering personalised incentives as well."
Service and support
There was also a concerted effort to improve monitor service and support.
ViewSonic, for its part, would continue to hit hard with its aggressive price strategy as part of its incentive plans, country manager, John Yeh, said.
"The 3 millisecond [ms] monitor is now at the same price level as the 5ms monitor," he said.
In the 19-inch category, for example, it cost $840 - a saving of about $100.
Yeh said these and other strategies were vital given the company - and the industry as a whole - had seen some sluggish sales.
"The last quarter was quite tough; the market was slow not only for us but for other vendors," he said.
And while there were pockets of strength, the company expected to see better results with its 19-inch category.
But ViewSonic wanted to create more monitor buzz by building deeper relationships with local partners, Yeh said.
As such, the company is setting up 10 demo centres - nine of which will be in conjunction with IT dealers and one in concert with a retail partner. The company wants to crank up the heat in the retail space, and further penetrate the IT channel.
"The strategy addresses the growing activity in the digital home market," Yeh said.
"A lot of people want to see the high-end models. They want to see the goods."
And while product categories at each centre will depend on the dealer, the move will address the overall trend towards convergence of IT and CE products.
Offering these types of demonstrated stock fronts to consumers was another compelling strategy, IDC's Clement said.
"It joins the ranks of positive vendor strategies including offering core branding and marketing collateral," she said.
Meanwhile, in addition to pricing, Protac International Computers said a hearty emphasis on features, along with pushing brand awareness, and enhanced services, were key competitive strategies in its arsenal - and the top monitor market drivers this year.
Its managing director, Gary Jeng, said the company was gearing up for LCD monitor growth in the consumer and SOHO segments.
"Government and school sectors have already changed to LCD monitors in the last two years," Jeng said. "LCD monitors can last at least five years, so there won't be too much growth in those sectors."
The LCD monitor continued to win the monitor popularity contest against the clunky CRT, Acer peripherals product manager, Caroline Villien, said.
The shift from CRT to LCD monitors continues to make headlines.
By comparing Q1 to Q3 2005, Acer numbers showed CRT accounted for 13 per cent, while LCDs hit 54 per cent, Villien said.
"The growth on LCDs is mainly explained by distribution and retail," she said. "CRT dropped more than expected."
Mitsubishi's Freggi said the demise of the 19-inch CRT was fast approaching. On the flip side, the 17-inch and 21-inch CRT space still had some life with the cost conscious consumer and professional users.
"We are seeing the 19-inch CRT market drop significantly, but the drop in the 17-inch and 21-inch space is happening gradually," he said.
Supply and demand
While IDC's Clement said supply shortages had come into alignment, there was speculation shortages were still hurting the market.
Some Taiwanese manufacturers had reportedly said they couldn't keep up with LCD screen demand, which was particularly tough in the lead up to the holiday season.
The strong demand for LCD screens (used in notebook PCs, desktop monitors and LCD-TVs) could cause prices to rise for end-users since screen markers weren't able to negotiate better prices, analysts said.
In the April to June period, the value of LCD monitor shipments dropped from $US7.8 billion from $US7.7 billion, according to industry researcher, DisplaySearch.
But many local players would tell you there's been a balance of supply, Mitsubishi's Freggi said. "The issues were more at the 15-inch level," he said.
Clement suggested there could be an oversupply at the 19-inch level.
Given the price competitive environment and constant discussion about supply and demand, Clement said vendors were now focusing on 'talking up' feature sets as a way to motivate resellers, and gain consumer attention. "Ergonomic features including pivot, tilt and height adjustment are top features," she said. "Resellers should get more adept at selling features rather than merely focusing on price."
Widescreen and response times, along with high rotatable and adjustable monitors were other top selling points, analysts said.
As such, vendors were coming to the table with a slew of imaging technology features, Clement said.
BenQ, for its part, is pitching its advanced motion acceleration (AMA) technology.
Managing director, Philip Newton, said the technology was designed to eliminate picture speed limitations and make moving images cleaner, clearer and crisper on an LCD monitor.
"AMA reduces the response time when changing each pixel of the image from a colour to any other colour," Newton said.
The functionality boosts performance for motion, video and games.
Meanwhile, ViewSonic is banking its amplified impulse technology will turn some heads.
Yeh said the technology overdrives the LCD panel's electronics to produce faster transitions between shades of grey. "This reduces ghosting and blurring of moving images," he said.
Features such as constant colour calibration and inbuilt security were other top selling points, Yeh said. This type of technology was ideal for intensive data reliant environments such as financial trading floors, graphic production studios and medical, engineering and scientific laboratories, and for large-scale enterprise installations.
"In addition to obsessing about response times consumers should look towards better software functionality on the latest monitors," Yeh said.
The company has launched its PerfectSuite software on its professional monitor series, which enables the creation of multiple custom settings for office applications and multimedia.
"This lets users switch between settings, up to four screens," he said.
Mitsubishi Electric, meanwhile, was also pitching value add and better feature sets as a way to fight price aggression and continual market meandering.
The company is offering higher performing monitors with features including narrow bezels, better height adjustment and anti-scratch glass.
"Our direction is to move into the larger sizes, and add more functionality including multiple outputs," Freggi said. The 19-inch and 20-inch product segments, for example, were the new darlings of the monitor world, and a top Mitsubishi focus, he said.
Addressing market demand, the company recently launched a line of Diamond Digital slim-line TFT LCD monitors with an 8ms response rate. Additional monitors were slated for release during the holiday season, he said. "We're still offering the 17-inch, and bringing out new product in this category to remain competitive," he said. "But our main focus is the 19- and 20-inch space."
And size does matter, according to Acer's Villien.
"The 17-inch is still the mainstream, but 19-inch now represents at least 30 per cent of our sales," she said.
Attributing market data to DisplaySearch, Villien said the 19-inch was forecast to overtake the 17-inch market by Q3/Q4 2007.
"The volume in 2006 will increase thanks to the shift from CRT to LCD, aggressive prices and a decrease of manufacturing cost. But the unit growth will be around 25 per cent in 2006 compared to 48 per cent in 2005," she said.
Villien predicted the market would see a sequential drop in 2006 in overall selling price as larger size displays continued to fall in prices. In addition to size, Villien said the recent addition of CrystalBrite technology on the latest monitors would help boost sales. First introduced on notebooks, the technology had made an appearance on monitors in the last month.
"The final coating to the screen prevents the diffusion of surrounding light and internal rays, meaning that colours are read more accurately, images are built quicker on the screen and overall, the effect gives users a 25 per cent brighter screen compared to standard displays," she said.
And while features were important, Villien said price would remain the most salient point.
"It was a war in 2005," Villien said. "There will continue to be a price war next year. Maybe it will end in 2007 and we can just focus on features." Considering the gruelling market conditions, resellers would have to work twice as hard, Protac's Jeng added.
"Resellers have to work harder with distributors to move quantity in order to keep enough profits as in the past," he said. "They need to explore niche markets such as special design for gamers or tout features such as widescreen with AV input, which can be the second TV at home or at work."