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For many users, 2001 will be remembered as the year LCD flat-panel monitors finally became affordable. A steep drop in their cost over the last 12 months has brought them in range of most users' budgets. But, a leading industry watcher warns, now may be the time to snap up a bargain as prices may not hold at current levels.

A sharp increase in demand for LCD monitors in the last six months has caught many manufacturers by surprise and has factories working much closer to full capacity, according to DisplaySearch, an Austin, Texas-based industry analyst. The increase in demand may lead to shortages that in turn push prices up.

Monitors that cost $1000 a year ago are now selling for below $400--not only a market-jolting drop but a steeper fall than many had dared to predict. It also explains why some manufacturers' production capacity is so far behind demand. A year earlier most industry watchers were predicting a fall to the sub-$500 range.

There is some evidence that price rises are in the pipeline. At the recent Comdex Fall show in Las Vegas, some LCD monitor makers were talking of slight price rises during the last month. Robin Tsou, a sales manager at Tatung of America, said he had seen rises of between $10 and $20 per panel in the 15-inch market in the preceding months, though the changes are yet to be seen in end-user prices.

Deals Remain

Still, bargains abound at this screen size at present. Users can pick up 15-inch monitors from NEC, Mitsubishi Electronics Display of America, Viewsonic, and Korea Data Systems USA for under $350. Planar Systems is selling a unit now priced at $299 (after being introduced earlier this year priced over $400). Such prices seem even more attractive when users consider that a 15-inch LCD screen produces an image roughly equivalent in size to a 17-inch CRT monitor.

Even at these prices, the cheapest option remains a conventional monitor. Consumers can find low-end 17-inch monitors from companies such as Samsung Electronics, Viewsonic, KDS, Hitachi, and Koninklijke Philips Electronics for between $150 and $170 without too much trouble.

Larger screen sizes are dropping in price as well. The cheapest 17-inch flat panels cost around $700--a steep drop from a year ago but still a long way from the price of 15-inch panels, leaving many to predict that there is still some room for price cuts at this level.

Shipments Jump

As a result of the unforeseen jump in demand, DisplaySearch revised its market forecast for LCD monitors on Tuesday. Based on a fall to sub-$500 prices, the company had expected third-quarter shipments of monitors to reach 4.0 million units, but with prices dropping $100 lower than expected, the company now estimates that third-quarter shipments hit 4.2 million units. Looking ahead, Display Search said it is also revising its forecast for fourth-quarter shipments from 4.9 million units to 6.0 million units.

The company now expects shipments of LCD monitors to reach 15.5 million for the full year and for shipments in 2002 to continue benefiting from low prices and to hit somewhere between 25 million and 28 million units.

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