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HDTVs: What Recession?

March 25, 2010 | Author: Ibex Marketing

According to a press release from DisplaySearch for a new research report, TV unit sales rose 32% in 2009, and are projected to rise another 24% in 2010. LCD TVs are expected to make up 180 million of the total 228 million units forecast for 2010, as it continues to expand its domination of the flat panel market. In contrast, plasma models are only expected to account for 15 million units worldwide.

LCD TVs with LED backlights are forecast to account for more than 35 million of the 180 million total, up from just 3.6 million units in 2009. Increased competition is expected to drive down the price premium charged for LED to less than 70% for 40″ and larger models, and as little as 17% at the 22″ to 24″ range. DisplaySearch also expects that 90% of the LED backlight models will use edge-lighting, trading away the ability to do localized dimming in return for a smaller part count and much thinner panels.

Based on the the increased share of the premium-priced LED backlit models, DisplaySearch is predicting just a 5% price drop for LCD TVs (and 10% for plasma), compared with the 24% price erosion in 2009.

DisplaySearch’s numbers sound plausible, but if I were a betting man, I’d take the over on the 5% price drop prediction. The economic recovery for consumers is coming much slower than some anticipated, even though we’ve been seeing positive signs in parts of the economy in this country and worldwide. Home foreclosures are going to keep a tight lid on the housing market, which will limit the demand for new TV sets, so manufacturers are going to have to resort to lower prices to entice buyers if they’re going to sell all those sets that they plan to build. And Japan has now experienced 12 months of deflationary pricing, which may give Sharp an edge with its product pricing for exports. We may see that 5% price drop get used up by this summer, which could create the need for even deeper cuts by the time next fall’s holiday buying season rolls around.