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Suppliers See Challenges As DTV Goes Mainstream

Despite making aggressive price moves in the fourth quarter of 2006, representatives from several top-tier flat-panel TV brands told attendees at a recent DisplaySearch conference here that innovation and differentiation will be the keys to maintaining higher average selling prices (ASPs) as the business returns to mainstream mode.

Jim Sanduski, HP’s global TV business unit VP, observed that as a result of the Federal Communications Commission’s ATSC tuner mandate encompassing all TV receivers as of March 1, 2006, the U.S. TV market for the first time will include 100 percent digital models [sell-in] in 2007.

Yet, he forecasts overall U.S. TV sales to stay relatively constant, with about 34 million unit sales by the end of the year.

“The current market we operate in today I define as HDTV 1.0,” Sanduski told the conference. “By any measurement, the last 10 years has been remarkable. When we look at how technology has changed from CRT, which has been around for some 70 years, within a short time frame we see it has rapidly transitioned into flat-panel LCD and plasma products.”

Sanduski said the market is poised to enter the next phase he calls HDTV 2.0, which will introduce “the transition to networked digital television.”

“Today many people are familiar with the practice of time-shifting, which is recording television to be able to watch favorite programs on a viewer’s own time schedule, or what I call the end of appointment-based television. This era is clearly upon us today. But with HDTV 2.0, we will have the opportunity to perform what I call place shifting. This means that it will no longer matter where digital content is stored around the home.”

HP, he said, will look to compete as a first-tier flat-panel TV brand as it ramps up its line of MediaSmart TVs that incorporate wireless network connectivity allowing users to access video, music and still images from the Internet using broadband networks and to stream digital media content from PC hard drives and home servers anywhere in the house.

Similarly, Sony recently introduced an Internet Media Link module for select new BRAVIA televisions, said Randy Waynick, Sony home products division marketing senior VP.

The device is central in Sony’s “HD value chain strategy, or what we call from the lens to the living room. More and more this is going to become important as you get producers — content providers — supplying HD content that will move through the entire ecosystem of HD,” he said.

“HD is not just about TV — it is the portal, the link, the gateway for hundreds of millions of homes to the HD environment,” said Waynick. “We want to provide as many TVs as possible for consumers, but we also don’t want to shortchange the customers from a content or broadcast level. How do you link it all together?”

Waynick said the Internet module was one of the ways Sony is differentiating itself to continue earning the highest average selling prices in the industry.

“There was a lot of discussion about Black Friday and how aggressive certain manufacturers were [in 2006]. I think certain people have proved that it is very easy to sell a dollar for a nickel, but what does it get you in the end?”

“The ASP for our industry has increased slightly. I can tell you that Sony’s ASPs led the industry as far as growth over the prior year, and that’s the way it should be,” said Waynick. “As a manufacturer and a retailer and a participant in this industry, we are selling far superior technology and larger screen sizes, and consumers are gobbling them up. If our ASPs are not going up, then I think we are shortchanging the entire industry, and more importantly, I think we are shortchanging consumers.”

Waynick said Sony expects flat-panel TV pricing to continue to fluctuate in 2007.

“Our forecasts show that it is going to continue to be a competitive marketplace in 2007. We also stand very firmly that consumers do want better products, and ASPs should go up because we are offering enhanced performance and enhanced functionality of the TV in the home.”

Jeff Cove, Panasonic technologies and alliances VP, said the market for digital television “is becoming a traditional [mainstream] television business” with consumers focused on larger screen sizes, and better value for the money.

Additionally, as the share of flat-panel TVs continues to grow into a dominant segment of the overall market, Panasonic will focus on plasma displays as the best performing, highest-value large screen TV technology.

Despite the rapid growth in share of LCD TV in the past year, Cove said technology advances will help plasma performance and value continue to improve, which will help the technology capture a predicted 30 million unit sales out of a 130 million unit overall global TV marketplace by 2010, according to Panasonic forecasts.

Panasonic has joined with several other Japanese plasma manufacturers in the Advanced Plasma Display Center (APDC) to jointly develop new technologies that will advance the capabilities of plasma displays to compete more aggressively with LCD TVs.

One technology to emerge from the APDC is high-efficiency phosphor development, Cove said.

“This is 10-lumen technology, or the creation of 10 lumens per watt light output,” he explained. “The concept of higher efficiency in phosphor technology allows considerable performance and cost benefits.”

APDC is also supporting developments in the production of super large panels, higher definition panels (higher than 1,080p) and energy savings.

Cove said the consortium has developed a new resolution measurement standard focusing on resolution in moving images, an area that has typically favored plasma technology over LCD.

Brian Berkeley, Samsung Electronics LCD Development Center VP, said that LCD TV will continue to become the dominating flat-panel technology as screens get larger and resolutions increase.

Berkeley said both plasma and LCD have made great strides in overcoming their individual weaknesses, but false consumer perceptions that plasma is still susceptible to image burn-in is hard to prove on a sales floor.

LCD, on the other hand, can demonstrate today expanded viewing angles, improved black levels, better motion resolution and an expanded color gamut, all of which were former knocks.

“From an engineering perspective, plasma is at 90 percent color gamut, and now with CCFL technology LCD can do 92 percent of higher gamut, and with LED backlights we can get up to 105 percent of the NTSC color gamut. In bright ambience, the effective contrast ratio of the LCD is much higher and LCD scales to higher resolution very effectively.”

As for contrast performance, he said new Samsung LCD technology produces one of the industry’s highest contrast ratios at 2,300:1.

Going forward, he said, “a critical factors for LCD is the ability to scale up to Gen 8, enabling the production of 50-inch glass for LCD with high efficiency. That is going to reduce the cost gap between the 40s and 50s.”

“For PDP, he continued, “the critical factor will be to develop a single-scan driving technology and overcome the cost gap between high-definition and full high-definition resolution.”