Surprises in Digital TV Sales

Large DLP sets gain acceptance; prices for smaller LCD sets plummet.

Yardena Arar, PC World

SAN FRANCISCO-- The rapid acceptance of rear-projection DLP televisions and the dizzying pace of price declines for LCD sets were the biggest surprises this year in the fast-changing digital TV landscape, an expert at the annual Flat Information Displays conference said today.

Riddhi Patel, senior displays analyst at conference organizer ISuppli, said that while she had expected rear-projection sets based on Texas Instruments' DLP (Digital Light Processing) technology to gain in popularity, the ramp-up in sales this year was greater than she had anticipated.

She attributed the boost to the price differential between DLP and plasma sets at larger screen sizes. "At 42 inches, they're pretty much on a par," she said. But 50-inch DLP sets are "at least 50 percent" cheaper than plasma sets of comparable screen size. A buyer who goes to a store intending to purchase a large plasma set often winds up with a DLP model after comparing prices and image quality for the two technologies.

Major Price Drop

The year's other major trend was the precipitous decline in prices for LCD TVs, particularly for 30- and 32-inch sets.

The prices are a consequence of an overabundance of sets "throughout the supply chain," Patel said. Not only are vendors trying to move sets that didn't sell last year, but they are facing a big influx of new sets from both traditional and new competitors, including IT vendors such as HP and Dell and upstarts such as Syntax Groups and Westinghouse Digital. Also contributing to price drops: a bumper crop of LCD panels produced by new manufacturing facilities.

Not all sets will be going for bargain-basement prices, however. "Premium brands still cost more than value brands," Patel said.

LCD TVs Catching Up to CRTs

Direct-view LCD TV sales are expected to continue increasing at a breakneck pace, to the point where they will be equal to those of CRT sets in North American market penetration by 2008, Patel predicted.

However, the size of these LCD sets will probably top out in the mid-40-inch range due to the economics of the flat-panel manufacturing business. Above 46 inches, plasma and rear-projection technologies will be battling for market share.

The rise of new technologies is a consequence of several trends that will rock the TV market over the next few years. "I think it's an understatement to say the television market is in transition," Patel said.

Perhaps the most dramatic trend is the consumer perception that bulky-tube sets are passé and that flat displays are in. Other factors include the government-mandated transition from today's analog NTSC broadcast system to ATSC-compliant digital TV, and the accompanying transition from standard-definition programs to high-definition content. Finally, TV buyers are increasingly seeking out larger screens.