Prices Drop on Giant LCDs

In the volatile world of LCD prices, the upcoming holiday season has a special gift in store: a great buy on that large-size LCD you've been drooling over.

Oversupply coupled with a sharp drop in demand is forcing display vendors into yet another price war that is dramatically driving down the cost of 17-, 18-, and 19-inch monitors, says an analyst.

The LCD industry is no stranger to precipitous price drops, but the most significant decreases have occurred on 15-inch displays. Now that those prices have stabilized, the prices of larger units are dropping fast, says Rhoda Alexander, director of monitor research at ISuppli/Stanford Resources.

This holiday season, you can expect to find 17-inch LCDs selling for an average price of about $560, with some brands dipping into the vicinity of $400, Alexander says. That's down from an average price of about $750 in the fourth quarter of last year, and $1150 at the beginning of 2001.

Even more dramatic are the price drops on 19-inch LCDs, she says. In coming weeks, the average price should hit about $900, with some products dropping below the $800 mark. That's down from an average of $1567 late last year, and it's significantly cheaper than the whopping $4210 average price in the first quarter of 2001.

"End users are going to find some very attractive deals out there," she says.

Why So Cheap?

Already notoriously volatile, the LCD market has been rocked by outside forces in recent months, Alexander says. Chief among them: Sluggish PC sales in a down economy and the recent West Coast dockworkers strike.

Forced to sell 15-inch displays at a loss during the last bout of oversupply, vendors eventually raised prices late in the first quarter of 2002, she says.

They held out as long as possible, but when they did raise prices in March many potential buyers walked away as price tags jumped from about $399 to $449 or $499, according to Alexander.

"It put the brakes on LCD sales growth," she says. If the PC market were still growing, the price increase wouldn't have mattered as much. But with fewer people buying new computers, LCD vendors couldn't maintain those rates, she says.

While demand waned, vendors continued to improve their manufacturing techniques, increasing volume, she says. With supply and demand again out of sync, new price cuts became inevitable.

The dockworkers' lockout stranded tons of displays for weeks. Retailers sought other sources, and when the lockout eased, retailers ended up with more supply than shelf space, she says. The result: Manufacturers are slashing prices further to sell more monitors as we enter the holiday season.

Samsung: CRTs Still Rule

Despite more-affordable prices, large-size LCDs aren't for everyone, says Monica Whipple, product-marketing manager for monitors at Samsung America.

Samsung makes both flat-panel and CRT-based monitors. While the company sees LCD adoption growing, it continues to invest in new CRT technologies because it expects standard monitors to be around for a long time, she says.

CRTs still outperform LCDs in several areas, such as in the capability to offer multiple resolutions and in response time, Whipple says. They're also still far less expensive. While a 19-inch LCD sells for about $800, you can get a 19-inch CRT for about $369 or a 21-inch CRT for about $499, she says.

Response times are critical to people who watch videos or play games on their PC, she says. The fastest LCDs offer a response time of about 25 milliseconds, whereas CRTs respond in about 13 milliseconds. The delay on an LCD can cause a ghosting effect on images it displays, she says.

But Whipple also expects the price difference between monitor types to shrink in coming months. As manufacturing techniques continue to improve, and next-generation processes become the norm, an ever-increasing supply should drive LCD prices down even further.

The Real Goal

Why would LCD vendors sell LCDs for little more than it cost to build them? The answer is in the future: television.

"The carrot for all these vendors is not the monitor market--they have their eyes on the global television market," Alexander says. LCD vendors are jockeying to be in position to sell millions of HDTV flat-panel televisions when the technology and market come together, she says.

That may well be one reason why notebook vendor WinBook has decided to start selling LCD panels. Spokesperson Ed Lukens notes that extensive research convinced WinBook that many of its current customers are interested in buying a WinBook LCD display that they could plug into their notebooks for use with a desktop keyboard and mouse. The company hopes to win over new customers with very aggressive pricing, too--including a 19-inch display for just $800 (shipping later in October).

In addition to selling a few low-priced LCDs, WinBook clearly has its eye on the big picture. The company is currently developing its own HDTV television displays, he says.

"Even on the flat-panel HDTVs, the prices are dramatically lower," he says. "The difference between a $10,000 and a $3995 HDTV is hard to see--you'll be finding the same-size HDTV at much more competitive prices."

In the meantime, PC users can expect to reap the rewards of an ongoing LCD price war, Alexander says. When volume is the name of the game, consumers win with lower prices, she says.