LCDs storm global monitor market

Despite the rapid growth of LCD monitor shipments at a global level, an acute understanding of regional demand dynamics and economic factors is needed for vendors and channel players serving the Middle East monitor markets.

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By  Stuart Wilson Published  March 6, 2004

Research house IDC recently forecast that global unit shipments of LCD monitors would outstrip their bulkier cathode ray tube (CRT) counterparts by 2004. IDC also forecast that 119 million LCD monitors will be shipped in 2007 as Asian manufacturing capacity is ramped up, with CRT monitors adding another 30 million units to the global market.

The vast majority of CRT shipments are expected to be to less-developed countries, as more advanced markets almost completely switch over to LCD monitors by 2007. IDC reckons that 17” LCDs will be the dominant monitor type by 2005 and that average selling prices (ASPs) will continue to decline steadily.

The impact of US and European markets in shaping IDC’s global findings should not be underestimated. In these markets, the extra cost of a flatscreen monitor is not such a big deal to most consumers. With many of these units being shipped in from the Far East, the attractions of flatscreen monitors to vendors, distributors and assemblers are clear. It is possible to cram a great deal more flatscreen monitors in a container than CRTs, reducing logistics costs per unit and assisting margins. The same is true even if it is the underlying components of a flatscreen monitor being shipped, rather than a completed unit.

While in Western Europe and the US, the PC has become a stylised commodity almost akin to a household fashion accessory; the contrast with developing markets could not be starker. In some countries in the Middle East and Africa, the PC remains an expensive luxury item to own. With comparatively low spending power, features such as flat screen monitors — although nice to have — are not deemed a necessity, especially if they inflate the cost of the overall PC package.

For these reasons, there will be continued demand for CRT monitors in price-sensitive regions in the Middle East. Monitor vendors and assemblers are well aware of the situation. Several international names still have CRT factories in countries like Iran and local assemblers often prefer to bundle a CRT monitor with their PC systems.

Vendors of LCD monitors are also wary of ramping up production too quickly. With LCD monitors still at an early stage in their product lifecycle, there is substantial margin to be made in this sector. As supply catches up with demand and the product matures, these margins will start to erode.

Even in developed markets, the transition from CRT to LCD monitor demand continues to throw up a few anomalies. According to monitor research house Meko, HP’s European 17” LCD monitor sales more than doubled sequentially in the fourth quarter of 2003, climbing 130%. This growth was more than matched by HP’s 17” CRT monitor business, which climbed 138% in the same period.

“The end of 2003 was expected to be uncomfortable for most monitor suppliers,” said Bob Raikes at Meko. “LCD panel ‘shortages’ constrained supply and price rises conspired to dampen end user demand. However, [Meko] data shows that for many suppliers things were perhaps not as bad as they could have been.”

In the Middle East, the price difference between LCD and CRT monitors remains a stumbling block impeding the growth of the former category in some markets. This is the situation at present but judging the evolution of the supply-demand dynamic and downward pricing pressure in the LCD monitor space is tough to call.

Having a flat screen monitor is great because it takes up less room on the desk. For some consumers though, that is not enough of a reason to fork out a premium for this privilege. Flatscreen monitors may have become de rigeur in some of the most developed markets in the world, but the CRT sector knows it still has a long life ahead of it — especially in developing markets.

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