LCD | September 15, 2007
LCD-TV Price Declines Likely to Resume
After declining or remaining stable for the past six months, the Average Selling Price (ASP) for LCD-TVs rose significantly in July and remained at a higher level in August, according to iSuppli Corp.'s TV PriceTrak service.
The increase mainly was due to the introduction of new LCD-TVs that are more expensive than older sets because of their inclusion of enhanced features like Light Emitting Diode (LED) backlights, an improved viewing experience and support for the full 1080-progressive (1080p) scan format. The ASP was further bolstered by stabilization in the pricing for older-model LCD-TVs in August, ending a period of rapid declines. For all sizes of LCD-TVs sold by premium brands in June, the ASP was $1,799. In July, prices increased because of the addition of new models, rising 7.4 percent to reach $1,933. In August, brand and retailer promotions on some models and new model introductions continued, keeping prices stable at an average of $1,931. A short-term event While the price increases have been a boon for LCD-TV makers, they are not expected to last long. “Unfortunately for LCD-TV brands—but fortunately for consumers—this is only a temporary phenomenon," said Riddhi Patel, principal analyst for iSuppli's television service. “Prices are set to begin declining again in September and will continue to do so in the fourth quarter, even in the peak selling season during the holidays." Flat competition The major competitive battleground for LCD-TV brands in 2007 is the 40/42-inch market. New 40/42-inch model introductions are arriving at a rapid pace as this product has become the sweet spot for LCD-TV vendors, offering the best combination of pricing and volume. Prices for most 40/42-inch models did not change between June and July, but iSuppli anticipates this scenario will shift with prices declining further as the end of the year approaches. Competition in the 40/42-inch LCD-TV segment has hit a fever pitch as a stiff rivalry has developed between Sony Corp. and Samsung Electronics Co. Ltd. in high-end, premium sets. Each company in the United States sells 15 models of high-end premium LCD-TVs that are priced within $50 and $150 of each other. At the value end of the market, Sharp Corp.'s 42-inch model is competing against the value brands of Vizio and Westinghouse. Having taken the market share lead in North America in the second quarter in terms of LCD-TVs unit shipments, Vizio represents a significant challenge to more established brands. Meanwhile, Philips has cut its prices aggressively during the past six months, and has managed to increase its market share in the 40/42-inch segment. “Besides price, the key to success for brands in the 40/42-inch space is aggressive marketing," Patel said. “Brands are in a fight to obtain the best shelf space and to get visibility in all sales channels. To gain an edge in these battles, brands must make effective use of marketing."
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