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HDTV Prices: Reading the Tea Leaves

August 6, 2009 | Author: Ibex Marketing

The two questions I get asked the most are (1) what’s the best HDTV, and (2) when’s the best time to buy one? I’m not going to give my soapbox speech about the first question (short version: nobody can answer that question), but now that we’re just a week away from the start of the NFL preseason, let me share some thoughts with you about the second one.

A good starting place is DisplaySearch’s “PriceWise” report. This is a semi-monthly report that you can download for free from the company’s Web site, and it gives you the pricing for for LCD and plasma panels, broken down by size and their intended use, such HDTV or notebook computers. PriceWise also shows the prices from the prior versions of the report, so that you can track the changes over the past few months.

The report that DisplaySearch released yesterday has some interesting information. Now keep this in mind: these are wholesale prices for the bare panels. A lot of work and materials have to go into turning these into TVs (or computer monitors or whatever) and then there are the shipping costs and the profit margins for the set manufacturers and the retailers, so these are not the prices that you’ll see on the store shelves. It is instructive, however, to see just how much of the street price goes for the panel alone.

For 42″ 1080p LCD HDTV panels, DisplaySearch shows that the typical price has risen steadily since April from $310 to $360. That’s more than $10 a month, and a 16% rise overall. If you’ve been watching the retail prices, you may have noticed that they’ve been holding pretty steady for this segment. That’s probably because the set manufacturers and retailers are trying to encourage buyers in a time of weak sales.

It also may be because prices for other segments have not increased. The cost of a typical 46″ 1080p LCD HDTV panel has held steady since April at $470, and the price for a 50″ plasma HDTV panel has actually declined from $346 to $287, which is a 17% drop. (Note that this also places the cost of a 50″ plasma at about 80% of the cost of the smaller 42″ LCD HDTV panel.) This probably is a reflection of Panasonic’s increased production capacity coupled with declining demand, which probably results in an oversupply of plasma panels. The LCD HDTV manufacturers have to keep their set prices at least within reach of the larger plasma sets to remain competitive.

So where are we headed? If consumer confidence were to pick up rapidly between now and December, I’d expect to see some increase in retail prices in response to the increased demand. But I don’t think that will happen. The panel manufacturers are coming back up to speed after last winter’s throttling back on production due to inventory backlog in the wholesale and retail channels. In spite of forecasts for increased retail demand, I expect that production capacity will continue to exceed orders, and so an oversupply of panels will give set manufacturers an edge in negotiating prices.

I expect to see prices remain stable for the most part. I don’t expect to see a big drop in prices when the holiday buying season comes, and if consumers are spending more freely by then, we may not see any discounts at all. So the bottom line is that now is probably as good a time as any to buy a new set. Most of the new models are on the market or will be shipping soon, so you should be able to get a good deal on the models that looked so wonderful when they were new a year ago. If you want to roll the dice, wait for the “Black Friday” deals to start appearing early in November, but you’ll miss half the NFL season and I don’t expect that you’ll save much by waiting.