Smooth and slick flat-panel TVs are always a main attraction at the Consumer Electronics Show in Las Vegas. Last year's show was no exception: Among the big newsmakers were Sharp's 65-inch Aquos, a lineup of budget models from Syntax reaching the lowest prices yet, and a massive, 102-inch plasma TV from Samsung. So now that this year's show is kicking off on Jan. 5, what's in store for high-tech TV lovers at CES 2006?
It's still unknown whether anyone will unveil a plasma even bigger than last year's gargantuan Samsung. But the action in the TV business, analysts say, will be in the more consumer-friendly 40- to 60-inch range, where prices are dropping fast and a handful of high-def technologies are crowding to grab market share and consumer attention. More 42-inch-plus LCD screens will be debuting, further encroaching into plasma's usual turf, and Toshiba (TOSBF) and Canon (CAJ) are expected to publicly display one of the first so-called surface-conduction electron-emitter display (SED) sets available -- an entirely new flat-panel technology.
It's an exciting time for the high-definition TV business as the market continues to explode. Unit sales of plasma TVs jumped during the 2005 holiday season nearly 200% from last year, and LCD unit sales grew by an aggressive 263%, according to a report released on Dec. 30 by NPD Group. Combined plasma and LCD sales between the dates of Nov. 20 and Dec. 24 were about $747 million.
WHO'S MAKING MONEY? And flat-panel prices continue to plummet. Average LCD and plasma prices dropped by roughly 35% in 2005. This year, the average price for a 42-inch plasma slipped under $3,000 for the first time, with some budget models moving closer to the $1,000 mark. It won't stop there. High-tech TV prices should drop another 35% in 2006, says Riddhi Patel, an analyst with iSuppli "I think the sweet spot for, say, a 32-inch high-definition LCD set is in the $599 to $650 range" says Patel, "and prices will keep falling until it reaches that."
What's behind the steep drop in prices? Strong consumer demand for low-end plasmas and LCDs gives the decline healthy momentum, and aggressive pricing by Chinese and Taiwanese manufacturers only go further in shredding margins and creating a ruthlessly competitive environment for TV manufacturers. "I don't think anybody is making any money other than the retailers, really" says Patel.
Another major factor, however, is improved LCD manufacturing. As new plants ramp up production, leading panel manufacturers like Samsung and LG.Philips -- a joint venture of South Korea's LG Electronics and Philips Electronics (PHG) of the Netherlands -- are able process bigger plates of "mother" glass -- the original plate from which TVs are cut -- creating substantial drops in cost. Not only are the manufacturers able to make many more smaller TVs in one swoop than in previous factory generations, but they can make bigger models too, providing competition for other technologies, like plasma.
NEW TECH IN TOWN. Those advances in LCDs will be reflected by the new products at this year's CES. Ross Rubin, NDP's director of industry analysis, says he expects to see several LCD models in the bigger, 40-inch-plus sizes -- an area dominated by plasma sets until now. "There are a lot of companies with investment in LCD technology...so there's more focus on scaling them up," says Rubin. While the bigger LCD sets will still cost more than comparable size plasma sets, they'll have enough extra features like ambient lighting (where the back of the TV emits a soft glow matching what's on the screen) and slightly slimmer form factors that appeal to the higher end of the market, Rubin says.
Also, the new SED technology will soon enter the fray. The technology, which is being developed through a partnership between Toshiba and Canon of Japan, is said to offer better contrast and deeper colors than LCD or plasma, while still keeping the flat form factor, by giving each pixel its own electron source -- creating a supersharp and bright image.
In past years, the two companies have only given demos privately by invitation. This year Toshiba and Canon are listed as hosting a booth together at the show, spurring speculation that they'll unveil the first SED TV this year. Such a model would cost substantially more than similar LCD or plasma displays this year, says NPD's Rubin, and production is still extremely limited for now.
That could change as Toshiba and Canon rev up their production lines on the new technology. And like everything else in the today's TV industry, it won't be surprising if it happens at incredible speed.
Helm is a reporter for BusinessWeek Online in New York
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