Report: TV Margins Lousy in 2009, Better in 2010
DisplaySearch: 2009 LCD TV selling prices fell twice as fast as they did in 2008 -- about 24% year-over-year. Plasma didn't fare much better, but margins will rebound in 2010.
We keep talking about premium features saving the display market, bringing high prices to dealers and joy to consumers.
That wasn’t the case in 2009, however. DisplaySearch reports that 2009 LCD TV average selling prices (ASP) fell twice as fast as they did in 2008—about 24% year-over-year. Plasma displays did not fare much better. ASP for last year fell 21%.
DisplaySearch attributes the price erosion to a massive glut in Q4 ’08 and Q1 2009.
Meanwhile, lower prices attracted more customers, so unit demand for flat panels in 2009 was “much better than expected at the beginning of 2009,” DisplaySearch reports.
By mid-2009, however, production levels evened out, and margins began to rebound.
DisplaySearch analyst says in the new report, Quarterly TV Cost and Price Forecast Model & Report:
Because the rate of ASP decline was slower at retail during the first half of 2009 than the pace of panel price declines, manufacturers and retailers were able to boost margins from the low levels in Q4’08. However, during the second half of the year, panel prices increased, peaking in September, and stayed fairly elevated in Q4’09 during what is normally a weak period seasonally. As a result, TV manufacturers and retailers gave back the margins gained early in the year to ensure that retail pricing didn’t stagnate, or even rise, which could have been disastrous to demand.
Outlook rosier for 2010 LCD TV Prices
Retailers will enjoy some healthier margins in 2010, especially since booming demand in China will limit supplies worldwide. Premium features such as LED backlighting and 3D capabilities also will help offset natural price erosion. DisplaySearch estimates that, by the end of 2010, the volume-weighted blended average pricing for LCDs will falling “only” about 4%, compared to the same period last year.
Alas, the decrease in price erosion won’t last. The supply chain for new-fangled displays will mature, and manufacturers will drive down LED margins to “hasten the transition away from CCFL models,” according to DisplaySearch.
Today, LED-backlit LCD TVs carry premiums ranging from 30% to 50%. HD LCD TVs could approach $300 on average by the 2010 holiday season, even from premium brands, although the margins for such a commoditized size category will be negative, according to the report.
Retailers, manufacturers and middlemen in the supply chain will continue to move consumers to more profitable display sizes, especially 40-plus inches.
Plasma Pricing Not as Rosy
DisplaySearch anticipates that average prices of PDP TVs will fall 15% to 25% in 2010—slower than in 2009, but faster compared to comparable LCD TVs.
All 50-inch and smaller PDP TVs will be below $1,000 on average by Q2 2010, and even large sizes like 58 inches are now below $2,000.
42-inch displays are a substantial volume driver for PDPs, largely due to promotional prices that are nearing the $500 mark.
The big plasma mover in 2010 likely will be 50-inch 1080p displays.
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Julie Jacobson is founding editor of CE Pro, the leading media brand for the home-technology channel. She has covered the smart-home industry since 1994, long before there was much of an Internet, let alone an Internet of things. Currently she studies, speaks, writes and rabble-rouses in the areas of home automation, security, networked A/V, wellness-related technology, biophilic design, and the business of home technology. Julie majored in Economics at the University of Michigan, spent a year abroad at Cambridge University, and earned an MBA from the University of Texas at Austin. She is a recipient of the annual CTA TechHome Leadership Award, and a CEDIA Fellows honoree. A washed-up Ultimate Frisbee player, Julie currently resides in San Antonio, Texas and sometimes St. Paul, Minn. Follow on Twitter: @juliejacobson Email Julie at firstname.lastname@example.org
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