Flat Panel Prices Expected to Drop 15.6% in 2008, Research Finds

As if integrators aren't already hurt by the drop in flat-panel TV margins, Pacific Media Associates, a research company based in Menlo Park, Calif., is reporting that the average "street price" for plasmas and LCDs will drop another 15.6 percent this year.

That's on the heels of a 14.7 percent drop in 2007.

The company's quarterly "Worldwide Flat Panel Display Forecast" estimates that unit sales for flat panel televisions and business displays worldwide are expected to reach 113 million units in 2007 -- a 41 percent increase over the estimated 80 million units for 2007.

"At this time last year, manufacturers were hoping that 2007 would bring some stability to flat panel HDTV pricing," according to Rosemary Abowd, vice president with Pacific Media Associates.

"We estimate that the overall average street price declined 14.7 percent in 2007. The overall drop is smaller than for some individual market segments, however, as consumers have moved to larger screen sizes and 1080p resolution sets. These have higher price tags than the models favored in 2006, which has helped keep the average street price higher," she says.

"The growth in the flat panel display market is beginning to slow down," according to Abowd.

"We estimate that 2007 unit sales grew 86 percent over the 2006 numbers, and 2006 was 89% higher than 2005. The projected 41 percent unit growth for 2008 is still a healthy increase, but significantly less than the growth we saw in 2006 and 2007."

The overall street price is predicted to drop another 15.6 percent in 2008. Coupled with the slower growth in sales, manufacturers will be competing for their share of less than a 19 percent increase in total revenues worldwide.

Many integrators have already chosen to move away from a business model dependent on product markup for their video displays, recognizing that margins on accessories, including audio, cable and mounts, along with installation labor, are the long-term profit centers for their custom businesses.