Share this
Digg
Del.icio.us
StumbleUpon
Netscape
Yahoo
Technorati
Googlize this
Facebook
Export PDF
Print
E-mail
IF YOU HAVE been out shopping for a TV set in recent weeks, you might have noticed just how far and fast prices of 46in or the larger LCD TV sets have fallen lately. I read somewhere recently that 42in LCD TVs are now so cheap that, in many markets, they are actually cheaper than 10in tablet computers such as iPads, which are actually one-tenth in total surface size.
In some ways, comparing tablet computers with wall-mounted LCD TVs is like comparing oranges with apples. Yet, both use liquid crystal display panels, which make up the largest portion of their total costs. Of course, a tablet computer’s internal electronics and software are a lot more complicated and expensive than your run-ofthe- mill TV set, which probably accounts for much of the pricing difference.
If burgeoning inventory of large LCD panels, falling prices and lower utilisation rates at the major panel makers are anything to go by, I’d bet that both TVs and tablets will take a price bath soon. US research firm DisplaySearch predicts average retail prices of 42in LCD TVs in the US will probably fall to $599 by the end of this month, or more than 10% since last October, and then slip to $578 by Christmas shopping week.
Little wonder, then, that all major global TV set makers are bleeding. Of the top players, Samsung Electronics, Sony, LG Electronics, Sharp and Philips all reportedly lost money in their TV businesses last year and are likely to lose money in their TV divisions this year as well. TV has become the ultimate commodity product, so much so that CEOs of Sony and Samsung lament that their brands have no pricing power. One Seoul-based analyst I spoke to recently said he didn’t see anyone in the TV business making money next year either. “2013 maybe,” he said. Clearly, as they cut prices further, TV manufacturers are making TV sets more affordable, thus boosting sales. But, they have cut unit prices so far down that, despite slightly better economies of scale, they are unlikely to make money even if unit sales were to rise 5% annually over the next couple of years.
To boost their margins, TV makers in recent years have rushed to add an array of new features such as Internet connectivity, 3-D as well as enhanced motion processing, yet still have not moved the needle one bit. What they can charge for the additional features is clearly not enough to compensate for additional expense of the value-added features.
