Once again it's time to take a look at how sales to dealers of projection TVs (PTVs) can be both up and down at the same time.
This seeming impossibility is made possible by the fact that while the Consumer Electronics Association (CEA) releases weekly, monthly and annual sales figures on analog PTVs, it does not publicly give out the numbers for digital PTV sales. And as digital PTV sets far outsell their analog counterparts, the overall market picture gets somewhat distorted.
For making it possible for us to set the 2002 PTV sales record straight, credit goes to a familiar company with an unfamiliar name. The company, originally known as Precision Lens, became Corning Precision Lens after its acquisition by the well-known glass and fiber optic cable maker.
But Corning, after deciding to focus on its core businesses, sold the operation in December to 3M, and it is now known as 3M Precision Optics (3MPO). But regardless of its name, it is still the world's largest producer of lenses for all formats of PTVs, and as such has a firm handle on market conditions.
Using its own information and data from CEA, 3MPO, in its annual report on the state of the PTV business, said that while sales of analog PTVs sagged 27 percent in 2002 to 681,400 sets, as CEA has reported, sales of digital TVs jumped a sharp 71.3 percent. That shot them well past the million-mark to 1.78 million units, and increased their share of the overall projection TV market to 72.3 percent from the 56 percent held in 2001.
CEA previously reported that the industry sold 2.48 million digital TV receivers and monitors (excluding plasma and LCD types) in 2002, which indicates that sales of direct view digital TVs came in at 712,300 units, and nearly matched digital PTV growth with a 68.3 percent rise. As a result, the share of the digital TV market captured by digital-projection models edged up only fractionally to 71.4 percent from the year earlier 71 percent.
Sales of integrated digital TVs of all types, that is, models equipped to receive digital broadcasts, jumped 135 percent to 165,400, but still represented only 6.6 percent of the digital market. That's supposed to change next year when the FCC requires that digital tuners must be included in half of all 36-inch and larger sets made after July 1, 2004.
3MPO speculates that as digital tuners will add $200 to $400 to the retail price of digital TVs, manufacturers will start off by putting them primarily in PTVs, where the extra cost will be less noticeable to consumers. Assuming the FCC's mandate survives a current court challenge by set makers, 3MPO said, "We expect nearly all models of PTVs introduced in the spring of 2004" to come with digital tuners, which in turn "will drive the last nail in the analog PTV coffin."
In fact, 3MPO notes, analog PTV is all but dead now as a mainstream product, and is generally relegated to the rental market or as a traffic building loss leader in electronics outlets.
DVD is driving sales of digital TVs today, as consumers are impressed by the "stunning performance" they see in in-store demonstrations, "especially when done in concert with a good sound system," 3MPO says. But the lack of availability of HD broadcast programming (via over-air, cable or satellite), except for movies, continues to be disappointing and represents "a significant impediment to the transition" to digital.
Another problem is adding VCRs, audio and other enhancements to digital TVs. "These products need to interact without the aid of an electrical engineering degree if consumers are going to purchase them," 3MPO says.
For this year, 3MPO is somewhat more optimistic than CEA in its expectation of digital PTV sales and significantly more downbeat with regard to analog. For 2003, 3MPO is predicting sales of digital PTVs will jump 49 percent to 2.65 million, against a CEA forecast of a 40 percent increase to 2.48 million.
As for analog, 3MPO looks for a sharp 56 percent sales drop to just 300,000 units, while CEA is calling for a more moderate 20 percent decline to 548,000. Overall PTV sales are seen increasing 20 percent to 2.95 million by 3MPO, and by 23 percent to 3.03 million by CEA. o