At last, flat-panel monitor becoming affordable

Supply: With LCD technology again focusing on computers, not TVs, the cost of space-saving equipment is expected to slide downward.

September 16, 2004|By Jim Fuquay | Jim Fuquay,KNIGHT RIDDER / TRIBUNE

Of all the things folks love about consumer electronics, constantly falling prices probably ranks with big-screen televisions and MP3 players. But in the past year, flat-panel computer monitors refused to go along with the trend.

Now, the space-saving displays are getting into line.

Retail prices started sliding in July, and wholesalers report that prices at Asian factories that produce most of the screens fell 5 percent to 10 percent in July. That is expected to result in further falling of prices for the rest of the year.

DisplaySearch, an Austin, Texas, research firm, said wholesale prices for all LCD (liquid crystal display) flat panels 10 inches or larger fell 3 percent in July, and the firm expected them to fall another 3 percent in August and 2 percent a month the rest of the year.

DisplaySearch President Ross Young said it takes about 60 days for those lower costs to work their way through the retail chain, but prices are definitely coming down. He believes 15-inch monitors - which averaged about $332 in the first quarter of this year - could sell for $299 by year's end, with some promotional models as low as $249.

With prices starting to come down, "it's a good time to wait" if you're looking to purchase a new flat-panel monitor, said Paul Semenza, vice president at iSuppli Corp., a technology research firm based in El Segundo, Calif.

Waiting is exactly what consumers started doing as prices began to rise in April last year and kept going up for more than a year. The higher prices finally took their toll in the first quarter of this year, when flat-panel sales dropped for the first time in three years. And while sales of traditional cathode-ray tube (CRT) monitors had been declining every quarter, they stabilized during the first quarter, he said.

Semenza said iSuppli's research shows that the average retail price of a 15-inch LCD monitor rose 13 percent from $293 in the first quarter of last year to $332 in the first quarter of this year. In the same period, the average price of 17-inch LCD monitors was nearly unchanged, slipping $2 to $425 this year.

A 17-inch CRT monitor, meanwhile, can be had for close to $100.

"The CRT may be big and ugly, but it's a good value," Semenza said.

Not surprisingly, most consumers have opted for the cheaper CRTs.

Basic economics also explains why flat-panel monitor prices rose in the first place. The same LCD panels that make computer monitors make LCD TV sets. With LCD televisions selling for thousands of dollars and computer monitors selling for hundreds, the choice for LCD manufacturers was clear.

Those flat-panel makers, concentrated in Taiwan and South Korea, churn out LCD panels in sizes as large as 2-meter squares, then cut them to meet customer demands, Semenza said. The top seven manufacturers, he said, provide more than 85 percent of the world supply, estimated to be worth $65 billion this year.

"The panel makers looked at the TV market and started converting. They could throw up a 30-inch panel and make a lot more money than selling 15-inch desktop computer monitors," said Gene Ornstead, director of TV products for ViewSonic Corp., a big marketer of computer monitors and more recently LCD TV sets.

As a result, the supply of smaller computer monitor panels dried up, and prices spiked.

"Every month we saw panel prices increasing," said Erik Willey, senior product manager at ViewSonic. "We held off price increases, but the margin was getting squeezed," and the company and its competitors raised prices to retailers.

There was only one problem with the strategy: LCD TV sales didn't rise as much as hoped. Although consumers like having a flat TV set they can hang on a wall, projection TVs are also getting thinner and cost a fraction of LCD or plasma TVs, another flat-panel technology.

"It was sticker shock for consumers - a $3,000 price tag for a 30-inch LCD TV. That didn't fly, so now there's a push back into monitors," Semenza said.

"We see good supply compared to a few months ago," said Willey of computer monitor panels. And Semenza said iSuppli estimates that worldwide capacity of LCD panels will rise more than 50 percent next year.

And that means lower prices.

iSuppli forecasts that the average retail price of 15-inch LCD monitors will fall 5 percent by the fourth quarter to $315, while 17-inch monitors will dip nearly 15 percent to $355.

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