While liquid crystal display (LCD) monitor pricepoints continue to drop, the technology is becoming more sophisticated and boasts an ever expanding functionality. One of the most interesting new features a number of new LCDs are offering is HDTV (high definition television) compatibility and while the niche market for high-end LCDs with built-in TV tuners is still in its infancy, it is a market on the move.
Industry pundits across the board have all reported strong increases in LCD sales over 2003. According to market research company Inform, the LCD monitor market grew 270 per cent from May 2002 to May 2003 in terms of volume, while it increased in value 210 per cent. This disparity between volume and value increases can obviously be attributed to the drop in the price of all screens over that time.
Inform reports that third party LCD market sales have also been strong, recording 21 per cent volume growth since May 2002 but a 5 per cent contraction in terms of market value. The average price of LCD monitors dropped 59 per cent since May 2003 and now averages $806 compared with $1380 for the same period last year.
The price of 15-inch LCDs dropped 63 per cent, Inform analyst, Claire Taverner, said.
Over the last three months, however, LCD prices have stabilised rather than declined at their usual rate. A shortage of 15-inch screens pushed up LCD prices, but the stronger Aussie dollar absorbed these price increases.
Nevertheless the increased functionality of LCDs is expected to further accelerate sales over the second half of 2003, particularly in the home user market. New features such as quicker 16 millisecond response times have made them an attractive alternative to CRTs for gamers and DVD enthusiasts.
High-end LCD models that offer HDTV compatibility and function as both a TV and an LCD monitor are now being touted as the versatile consumer item of this year.
The price of 15-inch and 17-inch LCD TVs is still too prohibitive to attract the majority of consumers, yet as the market becomes further educated about the introduction of HDTV, the need for set-top boxes to watch TV and the need for a wide format TV — ideally an LCD TV — to get the most out of the new digital transmission technology, consumers will inevitably start buying the screens . . . and in droves.
In the meantime, the sexy new technology will find its primary market among PC users who want the optional functionality of a TV from their monitor, rather than people who want to save space or money by purchasing a two-in-one TV and monitor.
“With 17-inch LCD TVs now available for less than $1500, sales will increase but will not explode until the picture quality improves further,” Taverner said. “The real growth from now on is expected to come from the smaller-sized conventional LCD monitors. Many 17-inch screens are now selling below the $1000 sweet spot.”
The majority of LCD TVs currently on the market in Australia are 15- and 17-inch screens, equivalent in size to a 43cm and 48cm TV, respectively, because of the slim bezel on LCDs. Gradually, as prices start to drop, larger screen LCD TVs will start to proliferate.
Harvey Norman’s national product manager, computer hardware, Paul Schnell, said LCD TV sales represented a small but growing percentage of the retailer’s total monitors business.
“We carry Samsung and LG 15-inch LCD TVs which range in price between $800 and $999,” he said. “They were around the $1499 mark three months ago. Like most products that have mass merchant appeal, their prices will tend to drop dramatically. There now on the cusp of dropping prices again — I expect to see some very aggressive pricing around Christmas time.
“You’ve got your normal thin film transistor [TFT] market — the street price for a 15-inch TFT is about $599. The LCD TVs use higher quality screens with higher resolutions that would retail for around $750 to $899, and people are prepared to pay a couple of hundred extra dollars for the extra TV functionality which is good because you raise your average selling price.”
Harvey Norman currently only stocks the 15-inch models.
“The 17-inch models are still a little cost prohibitive (around the $2000 mark),” Schnell said. “I’m waiting for the pricepoint on the 17-inch to come down. I’m hoping that the price difference between the 15-inch TFT and the 15-inch TFT tuner version will drop. At the moment you’re paying an extra $400 for the TV functionality and the higher quality screen and so on — which is a bit of a stretch.
“Resellers will get behind the technology once this price difference drops to around $100 or $200 which you can justify. Once the cost of this added functionality comes down on the 15-inch, then hopefully the cost of a 17-inch LCD TV will come down around the $1000 mark — now you’re talking.
At 17 inches it’s a decent size for a TV and that’s when people will really start to consider it.
“This market holds huge potential. Plasma is a technology that won’t last forever. TFT is a better technology. If you compare the screen quality, TFT offers a much cleaner, clearer screen than a plasma — it’s a little bit brighter and sharper. “Samsung had released a 40-inch TFT for about $13,000.
The equivalent of that in the plasma is about $7000 but the price gap will close and when TFTs get to the current pricepoint of plasma TVs, we’ll start to sell a hell of a lot.”
Schnell expects the 17-inch LCD TV to hit the $1000 by the first quarter of next year.
”There’s a lot of talk about shortages because of world demand so while that hype is in the air I can’t see them crashing prices when there is demand for products they can’t supply,” he said.
Ultimately, the LCD TV technology will find its biggest audience in the home user market, where consumers are embracing the convergence of their home entertainment and PC technology into one sophisticated, space saving and seamless work and play centre. While most pundits agree that the price of the technology will have to drop quite significantly before consumers will be drawn to buy such extravagance, Samsung Australia’s market development manager for monitors, Joe Serra, said educating the market about the latest developments in TV broadcasting was a key to driving LCD TV sales.
Serra said the public needed to be educated about the introduction of the HDTV government resolution and the fact that even 15-inch LCD TVs were HDTV compatible. By 2007, all Australian free-to-air channels would have to broadcast their programs in high definition mode, in accordance with the Australian Federal Government bill which was passed in 1999.
Some cable TV stations have begun transmitting HDTV broadcasts to users on a limited number of channels.
HDTV provides a higher quality display with a vertical resolution display from 720p (progressive scanning) to 1080i (interlaced scanning). These rates translate into a frame rate of up to 60 frames per second, twice that of conventional television. One of HDTV’s most prominent features is its wider aspect ratio (the width to height ratio of the screen) of 16:9, a development based on research showing that the viewer’s experience is enhanced by screens that are wider.
New television sets will have to be either HDTV-capable or SDTV-capable, with set-top boxes or receivers that can convert the signal to their native display format. The set-top boxes will also enable TVs to become user interfaces to the Internet. To experience the full benefits of high definition technology, users will demand LCD TV screens.
“Whether you choose to view [high-definition programming] in a 4x3 format or in its true 16x9 format [a wider aspect ratio] is entirely up to the user,” Serra said.
The surge in set-top box sales in the lead up to 2007 will provide a boon for the LCD TV market and be accompanied by an upswing in LCD TV sales.
“Customers will be forced to purchase a set-top box to watch free-to-air TV,” Serra said. “This will encourage them to buy wide-format TVs — whether it be conventional wide-screen CRT type TVs, LCD TVs, Plasma TVs or rear projection TVs — so they can experience the benefits of the new technology.”
Up until now, uptake of the set-top boxes in Australia has been slow. This is largely due to the fact that broadcasters have been slow to introduce high definition signals to broadcast their TV channels. Price has also been prohibitive and is still too high to encourage buyers when there’s a scarcity of programs currently transmitted in high definition mode.
Less than nine months ago, a high definition set-top box retailed for about $1500, now they’re available for $795. In the next two or three years, Serra estimated that the boxes will probably sell for about $300 which makes it highly acceptable to the general consumer.
“I don’t see any serious movement from consumers in the LCD TV market for at least another 18 months,” he said. “Over that time, we’ll see significant uptake of the high definition signal concept and once that occurs they will be buying the technology like it’s nobody’s business.”
With the home user market for LCD TVs not yet ripe, Serra said there were myriad opportunities in the commercial market where, he claimed, the majority of LCD TV sales were currently being made.
“We haven’t seen significant growth in volume sales of LCD TVs although we are seeing more opportunities in the corporate area where a TV input or option is a desired one,” he said. “Certain organisations see it as a real benefit. For example, certain government bodies need to know and be updated on what’s going on in parliament — know if a bill has been passed or not. So they use the picture in picture functionality of these units to be kept up to date while they’re working on their PCs.
A lot of the major retailers are also looking at LCDs with built-in TV tuners as a viable way of advertising. The devices are capable of other AV inputs, so you can directly connect a DVD or VHS player to the screen, without having to run them through a PC. They can be a powerful tool for major retail chains that are looking at pumping out one message to the market within all of their stores.
“Web designers are also using them along with portable DVD players to give presentations and promote their work,” Serra said. “A lot of the uptake occurring overseas is more commercial based than consumer based. The potential in this market is quite significant.”