Aris Silzars Display Technology Consulting

DISPLAY CONSULTING

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I Want it – Now!...January 2004

As we celebrate the beginning of another New Year, many of us will let out a sigh of relief that the annual stampede to acquire new material possessions has come to a temporary end. It’s really quite amazing that a Holiday intended to celebrate "peace on earth and goodwill toward all men" can cause so much stress and frustration. And all of that just to try to create a few moments of intense joy that dissipates about as quickly as a puff of smoke in a windstorm. This concept of instant and intense gratification has not been with us for all of eternity. In fact, it is a relatively new phenomenon that grew along with the promotion and wide acceptance of credit cards -- and the now-acceptable concept expressed so wonderfully and accurately by the phrase, "I’ve maxed out my credit". This of course means that one has borrowed well beyond all reasonable limits and even the credit card companies have finally put a stop to further purchases. The unfortunate end result can often be personal bankruptcy.

Haystack Rock

I feel fortunate to have grown up during a time when such "opportunities" were not available to me -- especially during my college and graduate school years. During those ancient and financially unsophisticated times, if one needed to borrow money, one should expect to be put through a humiliating session with a loan officer and re-payments that started on about the same day as the loan was granted. The benefit of this nasty but rigorous process was that quite quickly we learned what we could afford based on our current incomes. And we were, thereby, forced to assess our most urgent needs and abandon those in the wishful-thinking category. These highly visible financial limitations also taught us to evaluate each purchase and to take a very pragmatic look at why we wanted or needed a certain item. But I am afraid that those days are gone -- and gone for good.

However, do not despair. For those of us in the display industry, there is a good news side to this story. And I mean really good news! This new world-order of "instant gratification" has created opportunities for the International display community that we never could have imagined even just a few years ago.

When LC displays and plasma panels were beginning to make their first product-like appearances at industry trade shows, such as the SID International Symposium, many of us were trying to imagine how these new technologies could possibly make commercially successful products. It appeared that the selling prices would be way beyond the reach of the typical consumer. Several of our major display companies even did consumer profiling studies and came to the "clear" conclusion that, for flat panels to compete with existing CRT-based products, flat panel costs could be no more than about 25% above the equivalent CRT-based products. Therefore, if a CRT television set was selling for $350, a flat panel version could not have a price above $450 to be viable. That’s what the consumer studies were telling us and that’s what we engineers and marketers accepted as the goal we would have to try to meet – even though we had no idea how we would ever accomplish such a feat. But from a logical and scientific viewpoint, how could anyone challenge such a reasonable conclusion?

What this seemed to indicate is that the new technologies were going to have to create their markets mostly in professional applications that were less sensitive to selling price. For example, LC displays might be sold for high-priced workstations and Plasma panels might be used in entrance lobbies of large corporations that wanted to project a high-technology image to their visitors. The problem, of course, was that the total size of these markets was not all that large.

Nevertheless, for us engineers this made pretty good sense. And who are we to question the wisdom of the marketing folks anyway? The logic was good and the conclusions seemed reasonable. The worrisome part for the major display companies was that these limited market opportunities would not lead to sufficiently rapid price reductions that would then allow for penetration into the larger consumer markets.

There was just one minor detail that we all forgot. We assumed that consumers behave rationally and that they make logical purchasing decisions. Well, maybe some years ago they did. But we have apparently gone through what management consultants call a "paradigm shift". We have entered the age of "instant gratification" and "I want it now". Therefore, if it’s the latest technology and if it is called "digital," it must clearly be superior to the "old" technology and I need to get it now -- regardless of the price. Therefore, since a flat panel is "obviously" better than a CRT because it’s the "new digital technology," I need it and the cost doesn’t really matter – as long as there is room left on my credit cards.

Thus, in the last one to two years, we have witnessed the advent of a completely new pricing structure for consumer electronics products. Television sets that can make some claim to "digital" or "high-definition" command prices of well over $1,000. During this Christmas Season, plasma panels costing in the $5,000 range or above were considered to be at the top of many "most-desired present" lists. As long as it’s new technology it must all be great. At the moment, most consumers are either ignoring quality differences or simply have not yet learned that all of these products are not of equal performance capability. The differences are quite obvious to those of us in the display industry, but the popular press and consumers seem to be at the very early stages of figuring this out.

So what better news could we possibly want than customers who will buy almost anything that looks like new technology at almost any price? Well, personally I like the part about buying at almost any price, but I don’t like the part about not being able to tell a good product from a bad one. My prediction is that the later will see significant changes in the coming year. As more people acquire flat panel monitors and large screen televisions, they will become better educated and therefore more discriminating. There may actually be some re-evaluation and resurgence of CRT-based products as a better balance between the over-enthusiasm of today and a more thorough understanding of the new technologies is established. This will benefit those companies that produce the best performing products at competitive prices. It will also result in a better balance among the various display technologies. There will, therefore, continue to be plenty of opportunities for other technology approaches such as front and rear projection systems.

We are currently passing through a period of high enthusiasm (perhaps overly high) that is creating a wonderful market opportunity for displays. This excitement has allowed the price thresholds to be reset from the few-hundred-dollar level to the well-above-one-thousand-dollar level. That is very healthy for the display industry. The next step of this evolution will be toward more sophisticated and discriminating consumers. This will benefit those companies that can produce products of truly outstanding value – the best combination of performance and price. It will also allow more technologies to enter and proliferate. All this will bode well for our entire display industry.

I’m looking forward to participating in all this excitement during the coming year, 2004, and beyond. And with that, I wish all of you the best in the coming year. Should you wish to send me your views on this topic or others, you can contact me through this web-site, directly by e-mail at silzars@attglobal.net, by telephone at 425-898-9117, or by fax at 425-898-1727.