Future vision crystal clear

The introduction of new digital television display technologies is inflaming the battle for the hearts and minds of consumers, with LCD TV manufacturers closing ground on their rival plasma display proponents in the large screen TV market. Aaron Greenwood reports

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By  Aaron Greenwood Published  April 6, 2006

|~|Philips200.gif|~|Philips' LCD TV range is available in sizes ranging from 26 inches to 42 inches.|~|The introduction of large screen LCD TVs is causing increased fragmentation in the flat screen television market worldwide and impacting sales of plasma TVs, which previously enjoyed a monopoly in the sector. After much consternation regarding the operational lifespan of plasma displays, consumers are increasingly turning to LCD TVs, which in turn is spurring vendors to invest greater amounts in developing larger LCD displays. Ross Young, the president of industry research firm, DisplaySearch, says new LCD monitor manufacturing techniques are forcing prices down, which is impacting demand for plasma displays worldwide. “With LCD manufacturers investing more than US$10 billion annually in R&D, it is just a matter of time before LCDs overtake CRT TVs in the market,” he explains. According to a recent DisplaySearch report, LCD TVs enjoyed the fastest sales growth of all TV display categories worldwide in 2005, rising from a 6% share of the market in 2004 to 15% by the final quarter of 2005. For the year, shipments rose 141% to 21.2 million units. By comparison, worldwide plasma TV shipments rose 44% quarter-on-quarter in Q4 2005 to 2.27 million units. Full-year shipments reached 5.9 million units to record a 109% increase year-on-year, exceeding expectations by 11%. Despite these factors, plasma TVs actually lost market share relative to Q3 2005. The increased demand for LCD TVs is prompting many of the industry’s biggest display manufacturers to revisit their growth strategies. US-based LCD manufacturer Corning Incorporated predicts that LCD production will increase at an average annual rate of 37% this year and the next, up from its original estimate of 32%. By 2007, it estimates that LCD TVs will account for around 30% of all televisions sold worldwide. With Sony’s Bravia range leading the LCD TV market, the company reclaimed its number one position in total global TV sales last year, eclipsing South Korea’s Samsung, which maintained an 11% share of the market in second position. Philips remained in third spot, while Panasonic fell from second to fourth position, due to plasma TV supply constraints. These trends were amplified in the Gulf countries in 2005, albeit with slightly different outcomes. According to figures supplied by GfK Marketing Middle East, the value of the LCD TV market in the UAE rose a massive 425% year-on-year to US$10 million, while the market in Iran recorded 208% growth to US$9.2 million. Plasma shipments in the UAE and Iran rose 338% and 276% to just over 9000 units in each country respectively. The market value of plasma sales in each country was valued at US$26 million and US$50 million respectively. Meanwhile, Saudi Arabia recorded similar improvements, with LCD and plasma shipments totaling 6000 units each, up 38% and 50% year-on-year respectively. So while LCD TVs are attracting attention in the consumer markets of the GCC, plasma displays continue to dominate demand for large-format flat panel TVs. “LCD TVs are gaining a lot of consumer attention,” says Leonard D’Souza, general manager of G-Hanz FZCO, which manufactures both LCD and plasma TVs. “Plasma is still a good bet since LCD technology is still on the upward curve in terms of development. Plasmas probably have another year to go before LCD TVs breakthrough in terms of price advantage and availability.” ||**||New breed vendors|~|Panasonic-1.gif|~|Panasonic recently unveiled its largest plasma display television - a 65 inch monster - in the Middle East.|~| G-Hanz is one of the new breed of vendors challenging the major players in both the LCD and plasma markets in the Middle East. D’Souza says the company’s strategy involves selling exclusively through recognised retailers located in high-profile shopping malls. “We work to ensure G-Hanz is perceived as a modern, lifestyle-oriented brand, providing key design distinctions to our competitors’ offerings. For example, we are the only brand that offers plasma displays in red, blue, and white-wood finishes,” he explains. “We also offer the benefit of a competitive international warranty and prices at a comfortable threshold level usually just below the market leaders in each segment.” Another new player targeting the LCD TV market is Acer, which has built a successful business specialising in IT products. The company will expand its range of LCD TVs this month with the addition of its largest model to date, the 37-inch AT-3700. Philip Ashkar, director – sales and marketing for Acer, says that LCD TVs represent a fundamental link in the company’s ‘digital home’ networking strategy. “The television is the window of the increasingly digital, modern home and it remains the place people want to sit with their family to access multimedia content, as opposed to sitting around a PC,” he claims. “While many consumers see Acer as a PC company, it is our intention to produce an increasing number of building blocks for the digital home. Our push into these product lines has proven successful in world markets and the Middle East is no exception to this growing ‘home networking’ phenomenon.” Ashkar says the AT-3700 will be priced competitively at around US$2000 and will be available from both consumer electronics and specialist IT retailers. BenQ, which rates as one of Acer’s major competitors in the IT market, is also committed to expanding its presence in the LCD TV sector. BenQ subsidiary AU Optronics is the third largest LCD panel manufacturer in the world, a fact that the company’s general manager for the Middle and Africa Manish Bakshi says provides the company with serious leverage in the marketplace. “We identify the market in terms of digital convergence opportunities – our product range consists of digital lifestyle devices,” he says. “To this end, we will roll-out a range of new LCD TVs over the next six months. We currently offer 20-, 26-, 32-, and 36-inch screens, and plan to launch a 42-inch model later this month and a 46-inch model in September.” Bakshi says that while plasmas have a distinct market advantage at present, LCD technology can be better promoted to consumers. “Each format [plasma and LCD] boasts its own unique advantages but the odds are stacked in LCD’s favour long-term,” he says. “The only issues counting against the technology at the moment relate to the availability of large screens and the inherent cost factor associated with manufacturing the screens. LCD dominates the entry-level flat screen display market because plasmas are only available in larger sizes. Long-term this will prove a major advantage given that not all consumers are interested in massive screens. “The other major issue counting against plasmas is that they suffer from issues such as burn-in, which isn’t a problem for LCD TVs. LCDs also offer greater benefits in terms of brightness and image sharpness.” Bakshi cites Sony, Samsung and LG as the company’s major competitors in the LCD TV market. “We base our strategies on tackling these players. We’re trying to expand our market presence. We started with consumer electronics retailers, then hypermarkets, then power retailers, and most recently IT dealers,” he says. Sony remains dominant in the flat screen market, an impressive achievement given the company’s decision to cease production of its plasma range last year. “We believe that LCD TVs represent the future of television technology,” says Neil D’Sylva Sony Gulf’s public relations manager. “The core component of our Bravia range of LCD TVs is the new generation [S-LCD] panel manufactured by Sony [in conjunction with manufacturing partner Samsung]. It enables us to produce large format LCD TVs and market them at a competitive price. Compared to plasma TVs, LCD TVs offer significantly better picture quality and they aren’t hindered by the ‘burn in’ issues that affect plasmas. They also offer lower power consumption and are lightweight.” In contrast, Panasonic is bucking the trend towards LCD TV production by expanding its range of plasma TVs. The company recently launched its 65-inch plasma TV, the TH-65PV500, in the Middle East. Seiji Koyanagi, managing director of Panasonic Marketing Middle East, says the company is “totally committed to plasma technology” and described the launch of the new display as “a significant milestone for Panasonic”. “We are looking to further enhance our production capacity and manufacture larger plasma displays,” he explains. “Plasma technology is the future of television, both globally and regionally, and Panasonic aims to be the largest plasma television manufacturer in the world.” To this end, the company recently announced that it would invest US$ 1.6 billion in building the world’s largest plasma screen manufacturing plant in Amagaski, Japan. The plant is expected to hit full capacity by March 2009 and will produce the equivalent of 500,000 42-inch plasma panels a month, increasing the company’s overall capacity to 11 million screens annually. Koyanagi says Panasonic is aiming for 40% of the world’s plasma television market by 2010. “Plasma and LCD are both important facets of the high-resolution television market, and Panasonic will be offering an enhanced range of products for both lines. Our strategy is to market plasma technology for larger screen sizes over 37 inches and LCD technology for screen sizes below 32 inches,” he says. Another key player in the region is South Korea’s Samsung, which recently announced ambitious plans to five-fold its LCD panel sales in the region this year. “Internally, we refer to this year as the Audio Visual (AV) Year,” says M. Ashraf Sajid, senior manager, Sales and Marketing of Samsung’s ME Digital Media Business. “The market trend is in favour of flat panel televisions with huge demand for LCD panels. As a company we declared LCD TVs the ‘future of television’ in 2002 with the launch of our first 40” LCD model. This declaration was not taken seriously at the time as the model was priced almost twice that of a 42-inch plasma. However, demand for plasma TVs has fallen behind LCDs due to growing consumer awareness of the technology coupled with more realistic price points.” This market consolidation, which will drive competition for market share both between the major vendors and the rival technologies, spells good news for regional channel partners looking to cash in on the booming demand for both LCD and plasma TVs. The introduction of digital satellite television services in the Middle East will only serve to strengthen consumer demand for both formats, as the true benefits of both technologies come to the fore on the shop floor. Regardless of whether its LCD or plasma, consumer electronics resellers and distributors are set to be the biggest winners of the forthcoming digital revolution. ||**||

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