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HDTV Brands: New and Improved?

October 3, 2006 | Author: Ibex Marketing

News item: Ausustek is the company that makes Asus motherboards, which are a familiar staple among the DIY personal computer set. The company has just launched a 42″ LCD TV in Taiwan, hoping to expand sales into China and Europe in 2007.

We’re still in an expansion stage for HDTV brands. Companies are buying up existing names — Polaroid, Westinghouse, Maganavox, Sylvania — or creating new ones on an almost daily basis. Some brands are the result of new entrants into the marketplace, while others are made by companies on behalf of others. For example, Best Buy’s Insignia brand is made by another company for them.

In some markets, lots of brands can be a good thing, especially when the products are all very similar. Next time you’re in the grocery store, check out the laundry soap aisle. You’ll find dozen of brands, but if you look closely, almost all are made by about three companies. Why? Because in a market where all the products are about the same, any product should get a few points of market share just by being on the shelf. The more brands you have, the more share you get.

The problem with HDTVs is that shelf space for 42″ flat panels is much harder to come by than it is for a box of soap. Stores can’t afford to stock and display an infinite number of brands and models, so they have to narrow it down to a few. The typical strategy is to offer “good”, “better”, and “best” choices. Sony, Panasonic, Sharp, and Pioneer seem to be some of the companies that are doing very well in the “best” category, and are developing products that can compete in the lower ranges as well. This puts the squeeze on the other brands, especially at the bottom of the price range, because they have to provide better value than the competition in order to win distribution and shelf space.

The past year has seen a number of consolidations among the Taiwanese flat panel manufacturers. While we probably have not seen the last new brand of HDTV to come to market, I expect that the number of brands will start to contract in the next year or two as companies give up the fight.