Using Audio for Flat-Panel TV Differentiation

By Keith Cheney

September 25, 2006

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Since the day that they first appeared in retail stores, flat panel televisions have garnered as much consumer and media fascination as perhaps any product in consumer electronics history. Signaling an end to the days of heavy, boxish CRT and mammoth projection television sets of previous generations, this new era of television sets " with sales spurred by increased availability of high-definition content " have sparked a revolution in home entertainment.

Unfortunately for these flat-panel TV manufacturers, there's a gathering storm on the horizon. The early adopter days of high prices and high margins are quickly fading. Sparked by continued advances in display manufacturing technologies and fierce competition that have driven down prices, flat-panel televisions risk becoming commoditized. No longer novelty products " play toys for those wealthy enough to shell out $5,000 - $10,000 or more for a 50-inch and above plasma sets, flat-panel TVs (primarily LCD and plasma displays) are becoming mainstream consumer products, with projected sales in 2006 of 52 million units, growing to 136 million by 2010.1 With higher volume sales and increased competition, however, consumer retail prices are plummeting. Great news for consumers, flat-panel TV prices are projected to fall up to 88 percent from Q1 of 2006 to Q4 of 2009. For manufacturers, that translates into reduced profits that continue to quickly erode. Additionally, many predict average brand gross margins will fall from around 10 to 12 percent from Q2 of 2006 to Q2 of 2007 due to the commoditization of the small-screen-size LCD TV market.

With higher volume sales and increased competition, however, consumer retail prices are plummeting. Great news for consumers, flat-panel TV prices are projected to fall up to 85 percent from Q1 of 2006 to Q2 of 2009. For manufacturers, that translates into reduced profits that continue to quickly erode. In fact, average brand gross margins are expected to fall around 10 to 12 percent from Q2 of 2006 to Q2 of 2007 due to the commoditization of the small-screen-size LCD TV market.2

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