Display's The Thing As New Year Unfolds
By Alan Wolf -- TWICE, 1/8/2007
LAS VEGAS — Following the contentious holiday selling season for flat-panel TV, pricing and consumer preference for video display technology will likely remain at the forefront of retailer concerns through the balance of 2007.
While dealers, distributors and other industry players believe that the worst of the price drops are over, they still anticipate further price compression as LCD attempts to displace plasma as the large-screen technology of choice in flat panel and suppliers continue to jockey for market share amid an expected vendor shakeout.
The outcome, they argue, is critical for retailers, as TV remains the lynchpin upon which all A/V attachment sales depend. The importance of the category has been repeatedly underscored by Circuit City CEO Phil Schoonover, who has declared advanced TV a "stake-in-the-ground" business for the chain. Circuit City also redesigned its stores' video departments before the holidays to better display its enhanced assortment, and issued an aggressive 125 percent price protection plan in the wake of Black Friday to secure its position in flat-panel TV.
Bill Trawick, president and executive director of NATM Buying Corp., believes that the flat-panel battles from last month's holiday selling season have spilled into the New Year as Super Bowl approaches, and that price points remain a "big concern" for dealers.
"The price erosion will continue this year," he said, "although not at the same pace as last year, when there were price drops of 40 percent to 50 percent in some categories."
Trawick also sees the competition between LCD and plasma display technologies heating up as pricing for the former begins to parallel the latter.
The long-term writing may already be on the wall, he suggested, as suppliers, most notably Toshiba, move out of the plasma display panel business. But Trawick isn't ready to write off plasma just yet. "The transition won't happen this year," he projected. "If the low price points are sustainable, I see another strong year for plasma. At this point, the consumer still likes the technology."
Regardless, Trawick anticipates a major shakeout of display suppliers of all stripes as the year progresses. "You've got four or five guys doing 85 percent of the business," he argued, "but there are 15 players out there. Something's got to give. It's a tough industry, and the vendors aren't making a lot of money. They're under a lot of pressure right now."
Other elements that must be factored into the HDTV equation this year is demand for 1,080p displays, and the outlook for rear projection TVs. "1,080p is starting to get some play, and rear-projection is still out there too," Trawick noted, "so there are a lot of unanswered questions. The only thing we know for sure is that we will sell a lot of TVs."
Joe McGuire, president and CEO of the Tweeter Home Entertainment Group, agrees that the industry will apply the brakes on flat-panel price compression. "The price declines will be a little less dramatic this year," he told analysts during a recent conference call. "Prices will stabilize because people were hurt last season. The price moves will be more muted and the pace of decline will shorten."
That's not to say, however, that deflation is over in flat-panel displays, as "the search for market share by dealers and manufacturers" continues to play out in the marketplace, he said. Gross margins, he added, will likely be impacted by the new pricing environment.
Nevertheless, McGuire believes that 2007 will be another robust year for flat-panel volume, as adoption continues to radiate across the country. "It will be another year of deep household penetration," he said, with plenty of replacement mileage left given the vast number of households that have yet to replace their 27-inch tube sets with flat-panel TVs.
Warren Chaiken, president and COO of Almo, the independent brown- and white-goods distributor, concurred. "You don't have a flat-panel TV in every living room yet," he said — and probably won't until after the analog cutoff and even sharper declines in flat-panel pricing.
"Pricing will have to get more realistic," Chaiken argued, especially in smaller LCD sizes where direct-view sets are still significantly more affordable.
No related content found.
Featured Company
-
Webcollage
WebCollage, the world's leading provider of rich product information to retailer web sites (and their mobile visitors) perfected a new form of channel-marketing by helping manufacturers instantly publish content that increases sales, reduces return rates and improve conversions b..more
VIEW ALL GALLERIES