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Make mine a large

Make mine a large

Resellers are not alone in casting their eyes toward the still-distant future and speaking of the day when TFT monitors will be widely available.

Vendors speak of the savings in desktop real estate, improvements in picture quality and therefore productivity, reductions in emissions, and so on. At some stage, production will be ramped up, their famed economies of scale will be reached and prices will finally begin to fall. Industry pundits have pinpointed this magical moment to be three to five years away, and in the meantime CRT monitors will continue to reign supreme.

The failure of TFT manufacturers to keep up with demand however, has not led to a stagnant market. In fact, the CRT market is an active marketplace, baring all the hallmarks of a competitive market. CRT monitor vendors are staving off their eventual assimilation in to the TFT realm by making their screens flatter and wider, by improving picture quality, and squeezing down prices.

According to IT channel research group Inform, the TFT market has been making little headway in the overall monitor market. Over the course of this year, TFT sales as a percentage of overall monitor sales has rarely risen above 1 per cent.

Meanwhile, larger CRT monitors have been gradually taking market share from their smaller counterparts. Twelve months ago, CRT monitors measuring under 17 inches accounted for 65 per cent of the market, with the larger CRT models staking a 35 per cent claim. By September this year the larger 17-inch plus monitors accounted for 44 per cent of monitor sales.

Liptsin Ng, marketing manager for monitor importer and distributor AKA Technology, believes it will not be long before the market shifts its focus entirely toward the 17-inch monitors.

"Most home users are moving up to 17-inch models, at least 60 per cent of our imports are now larger than 17-inch," Ng said.

As prices fall across different sizes and models, the larger screens have become more affordable and moved into the OUHU (office user home user) space.

Ng believes that high competition in the market at this level has forced prices down, however, he points out that it is often difficult to distinguish monitor prices from the rest of the PC bundle. "Some of the bigger hardware manufacturers and vendors simply include the monitor in part of an overall deal," Ng said. "There is only one price and that includes all the PC hardware."

Unfortunately for the reseller, the gradual price reductions are not necessarily a good thing. While end users benefit from falling prices, resellers are often caught in the middle. Competition forces down prices and this in turn cuts into margins.

Chris Koupparis, account manager at the Melbourne branch of international distributor ACS Computer, believes that the competition is not limited to vendor sales. "The IT retail sector is highly competitive," Koupparis said. "As soon as we reduce prices, they are passed on to end users - resellers almost never take up the slack."

Koupparis describes a cutthroat end-user market which benefits the end user, but not the reseller. According to Koupparis, price shifts have seen 17-inch monitors take over from smaller offerings, and quickly becoming the standard.

"The 17-inch monitors have come down significantly in price - there is now no point investing any time in the smaller monitors because the market is moving away from them," Koupparis said.

However, price is not the only variable leading to growing 17+ inch CRT monitor markets. Many industry pundits also suggest it is a phenomena brought on by an increasingly computer-savvy public. David Hein, marketing manager at Adelaide-based Hitech distribution, believes consumers are becoming more discerning when purchasing computer hardware. He argues that large CRT monitors make an ideal upgrade for end users who access the Internet extensively.

"A large CRT monitor is not necessarily a first time round purchase, it is something people see the need for the more they use a computer," Hein said. "Second-time buyers have a fairly clear idea of what kind of products they are looking for and, when they look to upgrade, they often aim for a larger, clearer monitor."

Scaling up sales

However, resellers should not limit themselves to second round sales. When it comes to maximising margins on monitor sales the trick lies in breaking out of the standard bundles. Large CRT monitors have thus far escaped the forces of commoditisation, and industry commentators argue that a little extra sales pitch is worth the extra earnings.

Inform analyst Chris Herbert believes resellers should take advantage of the higher margins while there is still a profit to be made.

"Focussing on the 17-inch plus market is a good strategy for resellers, and the sooner the better before the margins are flattened out by volume pressures," Herbert said.

Due to their commodity product status, vendors spend a limited amount of time supporting monitor sales. Nonetheless, Hitech's David Hein believes that a little marketing focus will benefit resellers. He encourages them to take advantage of display models in order to allow consumers to see larger CRTs for themselves before making a purchasing decision.

"Ideally, resellers should have display models in the store so the end user can actually see the product. The major selling point of these larger screens is that they look really good, so the best thing to do is show them to people in the shopfront," Hein said. "The thing that really makes a difference is seeing the quality of their picture."

According to ACS Computer's Koupparis, display models made a significant difference to monitor sales, however, he concedes that it is often not easy to have several display models in a shop front.

"If resellers have specific monitors on display then more people buy them," Koupparis said. "Resellers can even sell the more expensive models this way, however, many do not have the space or the money to have expensive monitors just sitting there."

Many industry commentators suggested resellers attract a sale through a PC bundled with a smaller monitor, then use display models in-store to demonstrate the benefits of the larger screens.

Hein says the consumer market is the toughest nut to crack when it comes to larger monitor sales, as the home buyer does not take questions of productivity into account.

"You find the consumer market people have a set budget and they try to get as much as they can within that budget. Corporate buyers, on the other hand, have to achieve a certain standard. They are still price selective, but they understand the gains that can be made in terms of productivity," Hein said.

Ian Bertram, regional director of IT reseach group Gartner, believes that the market is essentially awaiting the arrival of affordable TFT monitors. However, until these are more economical, large CRT monitor sales stand to gain from increased interest in the link between visibility and productivity.

"It is purely a question of economics," Bertram said. "In the enterprise space, good-quality monitors are a lot more important than in the SOHO space."

Bertram believes the consumer market is more sensitive to the price variation between a standard monitor which comes ready bundled with a PC and alternatives because of price structures. "In the consumer market, when you buy a PC you buy a total package, and you will pay a significant amount to break out of that package and upgrade the monitor."

However, corporate buyers often segment purchases, and monitors are acquired as a block purchase. The price differential between different monitors are not affected by bundling, as there is no need to break up a bundle in order to upgrade the monitor.

Keeping up appearances

When Apple launched its candy-coloured iMacs, the company proved the extent to which style plays a role in the purchasing decisions of PC consumers.

Bertram believes the success of Apple's dalliance with style has had rammifications across all consumer hardware sales. "Style is a big thing at the moment - it's really coming into the purchase decision."

Bertram added that the look of PC hardware is starting to play an increasingly significant role in "mature" markets as PCs become part of the furniture.

"In places where a PC in the corner is becoming as common as a television, people want their computer to look good. Egg-shell white has been around for a long time, but vendors that really want to make their products stand out are going to start to look at questions of style."

However, in the fastest-growing Asian markets, a zippy looking monitor is way down on the requirement list of consumers.

Monitor manufacturer Tritton general manager Arthur Orsborn agrees. "When you are marketing a product in a competitive market you are not marketing its features," Orsborn said. "You are marketing a difference - what you can offer that your competitors can't."

ACS Computer's Koupparis agrees that style is increasingly important in the consumer monitor market, however he feels vendors could do more to promote their "differences". At this stage, Koupparis believes that reviews are one of the key factors driving sales.

"The best marketing for monitors is a good write up. A lot of people will upgrade their purchase based on a review they read somewhere," Koupparis said. "There is also a big yuppie market with lots of money to spend on monitors that look good, but most people just stick with the one that comes with the PC bundle and they go for the cheapest offer they see advertised."

Bundle-breaking CRTs

By ARN staff

Sales of third-party CRT monitors last year generated $190 million, according to a recent report from channel research company Inform. Inform describes third-party monitors as those sold separately to the PC or having a different badge to the PC base unit.

Overall, third-party monitor sales generated over $200 million, with TFT sales contributing a further $15 million to the market.

Although CRT sales continue to dominate this market, as they do the overall market, the study suggests buyers of "unbound" monitors are significantly more open to the purchase of TFT monitors than their counterparts.

Inform is reporting this as good news for resellers who can earn significantly more on the sale of a TFT monitor than its CRT counterparts.

However, CRT monitors still capture 98 per cent of the overall monitor market, where recent price decreases on the TFT range have failed to lead to a significant increase in market share.

Despite a gradually increasing footprint, the 15-inch screen size continues to dominate the market with a volume share of over 50 per cent.

The over 17-inch market is on the increase, but perhaps not as quickly as resellers, distributors and manufacturers would like, particularly given this sector's rapid price decrease this year - down 12 per cent since January compared to 5 per cent for the 15-inch sector.

At the high end, large niche monitors for specialist industries constituted a paltry 6 per cent of the market. However, resellers who have tapped in to this area are doing well as this level of the market represents 17 per cent of the overall value of the monitor market.

Samsung continues to dominate the market, holding a 21 per cent share of market volume, with its Syncmaster 550S at the top of the sales list. LG Electronics took the red ribbon for the second year running capturing 11 per cent of the market, followed by Mitsubishi (9 per cent), Philips (8 per cent) and ViewSonic (6 per cent).


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