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Display’s The Thing: Consumers Pounce On Flat Panel

TWICE:Falling prices on flat-panel displays helped make them a holiday hit, but strained the supply channel. How did you meet demand?

Jim Ristow, Home Entertainment Source: Typically, the independent channel struggles to get allocation of product. Thanks to some of the new [warehousing] initiatives we made in the past year, we were fortunate to have sufficient microchip rear projection, and plasma was not an issue at all. Our forecasts were met.

While we had very good availability for the members overall, we did have some issues with LCD panels. Those issues were price compression, and with that the underestimation by the whole CE community of just how quickly consumers were willing to adopt and pay more to get this hot new technology. We thought that delta might need to be lower, but we all were wrong.

Ross Rubin, NPD Techworld:On a lot of the flat panels, there’s a clear differentiation that consumers can readily understand. They don’t have to get caught up in the whole, “How do I get HD [high definition], refer me to my TV service provider” scenario. They’re drawn to that big screen experience on the low end. I think that’s why we’ve continued to see ED [enhanced definition] do very well even as the prices of the hi-def products are coming down a bit.

TWICE:Do you think consumers understand the difference between enhanced definition and high definition? Are many who jump at these lower priced panels in for a disappointment when they realize their sets can’t process a high-definition signal?

Tony Weiss, CompUSA:Yes. There’s a whole customer education issue as to what the differences really are between ED and HD, and an understanding of what the limitations of an ED panel are today vs. what consumers might want them to do in the future as more high-definition content is out there.

While there may be some consumer disappointment, I don’t think you see it yet. It will happen down the road as more HD content is distributed and they try to utilize the product in the way in which they want and can’t. Today they’re excited about the product they got because it’s cool, sexy, nice looking, new, and something they really wanted. Tomorrow they may not get all the benefits that they hoped to derive from it when they bought it.

Judy Quye, Tweeter:I’d second that. I think people are buying flat panels for their aesthetics. It looks and feels cool, but they don’t really have the capability of understanding what the device will do.

Weiss:The product itself is really interesting. One of the things — when you look at new products and what helps drive sales during the holidays — is that the decision makers during holiday season sometimes change, relative to who makes the decision in the household, whether it’s the man, woman or a combination of both relative to those products.

The thin panel products that are out there obviously have other benefits within the house, when people look at decorating their homes. The customer can put them up and they’re not as intrusive. They’re sexy and cool and look nice in the house.

Rubin:Big spousal approval factor.

Douglas Moore, Circuit City:I think what you sense is high excitement by all of us at the table about digital television. It’s all those things: flat and thin, 16:9, hi-def, digital. The consumer is getting an opportunity to buy more of all those things at a lower cost per inch than they did last year. I think they showed up over the holidays and voted with their pocketbooks.

How we sort our way through all those issues is going to be the fun part of the next couple years. Americans have to replace a couple hundred million televisions. Whether they come in at ED, HD, digital, flat and thin, sort of flat and sort of thin — they’re excited because it’s much better than what they’ve had. The days of the analog 52-inch big boulder with a screen in front of it are numbered. They’ll have sustaining power for the next couple of years, because there are certainly going to be value statements down there. But you can just sense the excitement of all of us about what’s going on in the market.