In a year when demand for consumer electronics and computers has been, well, flat, flat-screen TVs are indeed one of the few products that are generating buzz during the holiday shopping season. Unlike Shukla, however, most consumers are merely drooling over, not buying, flat-screen models, for a pretty obvious reason. While a conventional 20-inch crt (cathode-ray tube) TV can be had for well under $400, a comparably sized flat-screen is about four times more expensive. Giant versions of 40 inches or more have giant price tags as well. A 61-inch model made by Japan's nec is listed at a breathtaking $20,000.
Prices have already declined markedly over the last 18 months. In November, U.S. computer maker Gateway jumped into the flat-TV market with the first 42-inch plasma model selling for less than $3,000, undercutting existing brands by at least $1,000. Paul O'Donovan, senior analyst at consulting firm Gartner Dataquest, predicts that by the end of 2004, lcd TVs at sizes under 20 inches may cost just $50 more than comparable crts. Prices in general are expected to fall by at least 20% a year for the next several years.
With each decrease comes a surge in new buyers. According to U.S. market research firm iSuppli/Stanford Resources, sales of flat-screen TVs will double in 2002 to nearly 1.7 million units and will reach 12 million by 2005. "Soon, people won't buy the old TVs anymore," predicts Gary Yuen, a salesman at a Fortress electronics store in Hong Kong.
Yuen's forecast may be overly optimistic. Conventional sets still account for 96% of TV sales. More than 150 million are sold every year. But the days of the space-hogging picture tube do seem numbered. In smaller sizes, flat screens can fit into places where crts simply won't go, such as in a bookshelf or on a kitchen countertop. At the other end of the size spectrum, jumbo wall-mounted flat-screens are ideal for cinema-like home theater systems—and displays keep getting bigger. LG.Philips lcd recently announced a prototype for a 52-inch model that will be the largest commercial lcd TV available if the company brings it to market on schedule late next year. Samsung Electronics is offering a mammoth 63-inch plasma model. With choices multiplying and prices falling, O'Donovan offers this advice to buyers interested in flat-screen models: Wait. "If you can hold out, in two years' time the prices will start falling into that sweet spot," he says.
Those willing to spend the extra cash today will have to cope with a thorny question: Which type to buy, plasma or lcd? Plasma displays employ thousands of tiny glass chambers filled with a mix of gasses that light up when electrically charged. Plasma screens dominate the larger size ranges; they produce sharper colors than lcds and can be viewed more clearly from an angle. But they have a short life span—only about five years, says O'Donovan.
Meanwhile, lcd TVs, which use the same display technology found in laptop computers, are lighter and last at least twice as long as plasma screens. But picture quality generally falls short of both plasma and crt sets. lcd displays have a slow response rate, meaning they don't handle fast on-screen action well. When Bruce Willis dives from that burning building or Ronaldo launches a perfect strike into the upper left hand corner of the net, objects moving quickly across the screen are liable to leave ghostly "tracers" in their wake.
lcd TVs have been the choice in smaller screen sizes, while more expensive plasma TVs have dominated in home theater applications. But manufacturers are getting better at making lcds in screen sizes of 30 inches or more, and competition between the two technologies is heating up. lcd makers have halved the response rate of their screens in just the past 18 months, and in the next year expect to improve it by as much as 40%. This year, Samsung and LG.Philips lcd opened new factories that can churn out displays costing roughly 25% less than those produced at older plants.
The makers of plasma sets are also investing heavily to improve the breed. A joint venture between Japan's Fujitsu and Hitachi, the largest manufacturer of plasma screens, spent $40 million in its plasma business this year, and next year plans to double that. Plasma "is much more ready for the market at this moment, especially in large sizes," says Wang Chien-erh, a vice-president at market research firm DisplaySearch. "lcd TV makers are trying to catch up." How successful they'll be "depends on how much and how quickly they improve quality."
Not all manufacturers will survive the shift to flat-screen technology. The TV business is being revolutionized, and that's "a great thing for our industry," says Bruce Berkoff, an executive vice-president at LG.Philips lcd. But profit margins are getting thinner in the push to lower prices. Ultimately, "very few players will benefit," Berkoff says. For consumers lusting after the electronics industry's hottest product, though, the picture can only get bigger and brighter.