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iSupply: Low-End Brands Drive Down Prices

August 16, 2011 | Author: Ibex Marketing

Here’s another item from the Stating the Obvious Department, though it is still worth noting; iSupply has released a study showing that lower-priced HDTV brands are helping drive down the price of premium models. According to a company press release, “U.S. average pricing for a typical high-end LCD TV amounted to $1,002.58 in July, down 23.9% from $1,317.89 during the same month in 2010.”

The price of the average high-end LCD HDTV dropped nearly 24% from July 2010 to July 2011.

One of the key points made by iSupply analysts is that features that used to be found only in premium models have found their way down to some of the lowest-priced entry-level brands. 1080p resolution, 120 Hz refresh rates, and even LED backlights are now common features in lower-tier brand models, with 3D support and Internet connectivity just starting to move beyond the premuim brands. And with today’s economy, “good enough” wins out over “better” so many of the lower-tier brands are getting sales.

From my perspective, it’s true that the lower-cost models must put pressure on the premium set prices, but there are other factors at play. The larger brands are reaping the same benefits of more efficient production as the smaller brands, and that helps push costs down. The big brands are also locked in a battle with each other for the lion’s share of the sales; the lower-tier brands are just fighting over the scraps. It is the competition among the leaders that keeps their prices down, as they can’t afford to let the others have a price advantage. And the premium models still command about twice the price of some of the “off brands” for good reason; they often use components that are visibly better and include extra features that consumers want. These cost more money, which is why the sets cost more. So while having a low-cost alternative certainly helps to pull prices down, I don’t believe that it is the only factor, and perhaps not even the most significant one.