Bigger TV Screens, Lower Prices

Consumer-electronics manufacturers are gearing up for the holidays by cutting prices on high-def TVs. Here's a handy buyers' guide

by Catherine Holahan

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'Tis the season to go high-definition, if prices for big-screen TVs are any guide. As the weather gets colder and the holidays grow near, competition among television manufacturers is heating up. A price war between makers of plasma and liquid-crystal display (LCD) TVs has pushed prices to their lowest point in years.

Wide-screen, 50-inch plasma televisions from makers such as Toshiba (TOSBY) and Hewlett-Packard (HPQ) can be purchased online for less than $2,000 this holiday season. In the days before Thanksgiving, Sony's (SNE) entry-level, 50-inch LCD was listed as low as $1,348, and Samsung's 50-inch Digital Light Processor (DLP) set was advertised for $1,135 over the Net. As recently as two years ago, 42-inch sets were selling for prices in the neighborhood of $4,000 (see BusinessWeek.com, 4/4/05, "Your Next TV,").

On average, HD television prices have declined 50% over the past two years, according to ConsumerReports.org. Since August, the average price of screens in the 40-to-44-inch range has dropped roughly 9%, to about $1,900, according to Pacific Media Associates (see BusinessWeek.com, 10/04/06, "Big-TV Battle: LCD vs Plasma"). "The bigger they are, the faster they fall," says Paul Semenza, an analyst at market research firm iSuppli in San Jose, Calif.

New Technology Paves the Way

And big is the name of the TV-making game these days, especially when it comes to the factories that produce the machines. "What has happened over the past year is the factories have grown big enough to make these big panels efficiently," Semenza says. "Up until a year ago, you couldn't make 40-inch panels [and larger] very efficiently."

Another reason for the price decline stems from the technological advances that help LCD manufacturers produce large screens at comparable cost to plasma. DLP technology adds even more competition, paving the way for firms such as Vizio to enter the market traditionally populated by Sony and Toshiba.

Another contributor to price declines is overall quality of screens. Most high-end televisions are capable of producing a beautiful picture with 1080i resolution, the format used by high-definition broadcast networks, says Semenza. As a result, television manufacturers need to differentiate on price. Retailers such as Wal-Mart Stores (WMT) are also cutting prices to get customers into their stores.

Handy Shopping Tips

While price declines may be bad for businesses squeaking by on small margins, they're a blessing for buyers intent on bringing home an HDTV. Despite the prices, savvy shoppers still want the best big screen for the buck. However, there are some things to keep in mind, aside from price, when browsing for a new set.

High-definition TV is best enjoyed big. Smaller-sized plasmas can have difficulty displaying full HD-quality resolution, says Semenza. LCDs tend to display higher resolution on smaller screens than competitors.

When larger than 50 inches, plasma, LCD, and DLP all produce beautiful pictures, and better models avoid problems typically associated with their type. Plasmas, for example, are known for having good black levels, meaning that you can see details in dark colors when the lights are off. However, images can sometimes leave impressions if the screen displays the same picture for too long. The phenomenon, known as "plasma burn-in," has become increasingly rare as plasmas become better and broadcast networks become sensitive to the damage they can do by keeping their logo in the same place on the screen, for example. Many plasma TVs are now equipped with a "white screen" or "snow screen" option that erases such ghost pictures.