HDTV Update: Prices Plunge on Hi-Def Sets

Aug 22, 2005  •  Post A Comment

With more flat-panel manufacturing facilities coming online worldwide, the prices of high-definition television sets are plunging to record lows in time for the holiday season.

HD sets, particularly plasma and liquid crystal display units, are becoming more competitive with the boxy rear-projection sets that have dominated the wide-screen TV marketplace since they entered the scene. According to last week’s DisplaySearch quarterly global TV shipment report, flat panels overtook RP units for the first time during the second quarter of this year.

Until very recently, flat-panels, consistently ranked as a top wish list item for consumers, have lingered in the pricing stratosphere. Last year, plasma market leader Panasonic’s flagship 42-inch HD consumer model had a suggested price of $5,499. In May the model’s successor debuted at $3,499. Industry experts expect prices to drop yet again next month.

Among lesser-known manufacturers, price cuts are even more severe. Two weeks ago, Costco members snatched up 42-inch high-definition panels by upstart company Maxent for an unheard-of $1,699.

The price shifts are the result of dozens of companies, in Asia and stateside, competing ferociously for a piece of an extremely lucrative market. Last year, according to a report in BusinessWeek, flat-panel makers earned a combined $8 billion in profits that they promptly poured right back into development and manufacturing.

The flat-panel price plummet is expected to put the squeeze on traditional cathode ray tube sets, digital light processing and microscreen units, and on so-called “enhanced-definition” models-a less-than-HD format that has allowed flat panel manufacturers to sell lower-cost versions of their sets.

For consumers, the changes have been both exciting and frustrating, as buying a television set has become increasingly similar to buying a home computer-any newly purchased model is invariably trumped months later by a less-expensive version with superior technology.

Purchase Trepidation

Some, writing on popular home theater message boards such as AVS Forum, confess they have “paralysis by analysis” and are unable to pull the trigger on spending thousands on a set when the field is constantly shifting.

“Obviously, there are a lot of choices out there and there is trepidation about what the salesman is trying to sell them, and we’re still dealing with a fairly high price point,” said industry analyst Bruce Leichtman of Leichtman Research Group. “Generally, though, we’re not talking about your average consumer. We’re still talking about a high-end consumer, though becoming more mainstream.”

Last year Americans bought 3.4 million flat-panels, an increase of 116 percent over 2003, according to the Consumer Electronics Association. Traditional direct-view TVs still sold more-19.9 million-but that figure was down 4.4 percent from 2003.

CEA has forecast that flat-panel sales will reach 5.3 million units next year as discount models by Maxent and Westinghouse lead the charge down into mainstream price brackets, with brand leaders Panasonic, Sharp and Samsung not far behind.

In addition to the friendly mainstream prices, demand is expected to be boosted by the debut of Microsoft’s Xbox 360, which will be released before Christmas. The 360 will be the first game console to output in high definition. Next year Sony will release the Playstation 3, which not only uses high definition but also will include a Blu-Ray HD DVD player.