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EL SEGUNDO, CA – Pricing has become the paramount concern for television makers, as the growing emphasis on achieving the lowest possible cost has brought wrenching changes to the competitive landscape and manufacturing structure of the business, says iSuppli Corp.
Pricing and picture quality are the top-two criteria that consumers use to make TV buying decisions, according to iSuppli. Brand and technology come in a distant third and fourth.
“This phenomenon is already evident in the surging market shares of low-cost LCD-TV brands,” said Riddhi Patel, principal analyst, television systems, iSuppli. “It’s also evident in the fact that television brands are emphasizing efficiency and cost cutting and are making increasing use of ODM services.”
The overall television market will generate a CAGR of 4% to 245 million in 2011, from 207 million in 2007, mainly driven by the growth in the LCD-TV space, according to the firm. Because of increased consumer interest, acceptance, adoption, and continuing panel maker and OEM commitments, the LCD-TV market is undergoing an explosive growth phase, with shipments rising at a CAGR of 21% from 76 million in 2007 to 164 million in 2011, iSuppli adds.
With advanced LCD fabs commencing production, larger-sized panels reportedly will be available at much lower prices. Consumers are demanding larger sizes, and OEMs are focusing on meeting these needs. OEM and panel maker commitments, combined with the declining prices of LCD-TVs at retail stores, have led to increased consumer adoption.
Furthermore, panel makers have increased their efficiency to reduce costs. Makers of other components for LCD-TVs also have been able to reduce costs because of the increasing number of shipments. All this has driven price declines, iSuppli contends.
Another factor that has helped reduce consumer prices of LCDs is the emergence of ODMs. With the use of these third-party contract manufacturers, television brands no longer have to establish facilities for set production, resulting in lower-priced products. Moreover, ODMs have lowered the barriers to entry into the LCD TV market, which has led to the arrival of various low-priced Taiwanese and Chinese brands. With increased competition and consumer acceptance of these value brands, the premium television makers have been forced to lower their prices and to become more competitive in the market, according to the market researcher.
While LCD TVs are going from strength to strength, televisions based on other display technologies are suffering setbacks in the market, the firm explains. CRTs will still dominate the TV market this year in terms of unit shipments, but this technology in recent times has suffered the biggest erosion in sales of all the display alternatives because of a lack of consumer, retailer and OEM interest. This has led to the shutdown of many component and set production facilities. The only hope for CRT TVs is consumer acceptance of super-slim sets, specifically in the emerging markets, iSuppli says. |
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