Aris Silzars Display Technology Consulting

DISPLAY CONSULTING

The Display Continuum

If you would like to receive the latest column by email each month, please enter your address here:

It must be hard to explain…March 2004

It was only a few years ago that display companies did marketing studies that concluded that for flat panels to have significant penetration into the CRT-dominated display industry the costs would need to be no more than about 25% higher than those of comparable CRT products. A few "strange" voices were also heard to suggest that flat-panels could be sold into office environments based only on their smaller footprints. The proposition was that this would be useful to increase worker density even further. But even the space planners promoting these ideas would typically include other cost savings features such as lower energy utilization. So what happened?

Haystack Rock

In some magical way (perhaps we should call it skillful sales promotion?) our price point thresholds were "re-adjusted" so that today when we see an advertisement for a plasma panel for just under $4,000 we think it is a bargain that we shouldn’t pass up. And similarly, an LCD monitor that is more than twice the price of a comparable CRT monitor is considered a great purchase because it is the "new digital technology". Perhaps some of what is going on can be explained by an article that I recently read in USA Today. (I should mention that in general my impressions about this newspaper are favorable and I even get it by home subscription. Therefore, my use of the following example is not for the purpose of making them look bad. It just is what it is.)

The title of the article was, "Fans make a run on big TVs before big game" and it was written by Lorrie Grant. (USA Today, January 30, 2004) Here is a sampling of what she wrote.

"January is traditionally the slowest shopping month of the year, but the Super Bowl – and new digital technology – has turned the month into a retail event… About 1.5 million TVs were expected to be sold for the Super Bowl, says a National Retail Federation survey.

The big screen (exceeding 40 inches) in important for the big game. Hottest among them is the middle-market LCD flat-panel TV. It has a sharper picture than the standard projection television but costs much less than plasma TVs, which have the highest picture quality.

A 50-inch plasma TV can cost $9,000 depending on the brand, while a 52-inch LCD is in the $3,500 range and a 52-inch projection TV is around $1,300.

"This is the trend we’ve seen all year. Everyone wants plasma, but the LCD is in the sweet spot of what they can and want to spend," says Bill Cimino of Circuit City."

Can you figure out what she is talking about? I can’t, but I sure get the impression from reading these excerpts, and the rest of her article, that I had better hurry up and join in the big-screen purchasing stampede, and buy whatever technology I can afford. From this article and many others, we are led to the inescapable conclusion that it is important to have these "great new digital technologies" because they are "so much better". Now exactly what that means is seldom made clear.

I found one recent exception to this in the March 2004 issue of Consumer Reports. Here’s a sample of their way of writing about big-screen TVs.

"The hoopla about flat panels and big screens notwithstanding, you’ll still get the best combination of picture quality, viewing angle, and price from familiar direct-view TVs – the tube-based sets you’ve been watching for decades."

Perhaps this kind of bland commentary does not make for exciting reading in the popular press, but it’s something that makes more sense to those of us in the technical community. Much of this March issue of Consumer Reports is devoted to unscrambling the misinformation about display technologies and the various choices for TV and HDTV. In general, I found the commentary to be about as accurate as I would know how to make it. For that reason alone, it may be worthwhile to take a quick look at it. Let me know if you disagree. For me, it was a refreshing change from most of what we get to see and read.

It appears that when the marketing studies were done a few years ago -- that predicted flat-panel prices would need to be close to those of CRTs -- we were being way too logical and behaving too much like engineers and not enough like real live consumers. We were surveying the world as it was then, with buyers who were thinking about the prices they were seeing for TVs and computer monitors at that time. Therefore, a $350 price for a TV seemed about right and even less for the typical computer monitor. When the first advertisements for $5,000+ plasma panels came out, the prices looked like a misprint or maybe even a bad joke. But after a few months, they didn’t look completely ridiculous – only very expensive. Then a few more months later, we were favored with an occasional ad promoting special sales of these panels for "only" $4,995. Wow! Just as we suspected, the prices were coming down! Now, the slightly-under $5,000 price was not only not ridiculous, it was getting to be a downright good buy, while the recently introduced $10,000 50-inch panels were the ones that now seemed too expensive. How quickly we forgot and how quickly we re-adjusted. And, as we can now see, this set the price acceptance point for all the other new display technologies at numbers much higher than we thought were possible for large volume sales.

However, the consumer behavior that is perhaps most difficult to accept for us engineers is that the most important performance criteria – the quality of the display itself – has become secondary to the form factor and the futuristic appearance of the new panels. I suppose the secret of business success is knowing how to predict such behavior and then to have the confidence in one’s convictions to make a large investment in a factory to produce a product that can only be sold at this premium price.

However, the end result is that this consumer behavior has created an incredible opportunity for those of us in the display community. We are in a time of unprecedented growth where, in a few years, the display industry will be approaching the size of the entire semiconductor industry. That is a great accomplishment indeed.

Should you wish to send me your thoughts on this topic or others, you can contact me through this web site, directly by e-mail at silzars@attglobal.net, by phone at 425-898-9117, or by fax at 425-898-1727.