Holidays shake up LCD TV market

Sony is suddenly in unfamiliar territory. And that's not a bad thing.

The consumer electronics company, which has long put a premium on quality over TV volumes, was the leader in LCD televisions shipped in North America during the fourth quarter. At an almost 13 percent unit share, it's a fairly dramatic leap for the company, which jumped from fourth place to first in the space of one quarter.

(Credit: Vizio)

Sony entered the last year with caution, saying that flat-panel TV prices were dropping too fast, but ended on a decidedly different note.

Sony Electronics President Stan Glasgow seemed to have seen this one coming. Back in November he told CNET News.com that judging by the orders the company had taken, "it could be the best holiday season in the last couple of years."

Display Search analyst Paul Gagnon said it wasn't any particular pricing scheme that pushed Sony into the lead, but rather that the company was able to provide exactly what big-box retailers wanted to sell. "They pushed big screen sizes, 1080p (resolution), and high-value, high-margin products," Gagnon said.

Sony seemed to recognize early in 2007 that something needed to change and altered its traditional strategy, coming out with some less expensive TVs for Wal-Mart and Target stores. To get these TVs to the price points they wanted, Sony bought off-the-shelf components from third-party suppliers.

After Sony, Samsung shipped 12.3 percent of all TVs, followed by Vizio with 10.7 percent, Sharp with 8.4 percent, and Polaroid with 8.1 percent.

An industry stalwart taking hold of the LCD marketplace again signals yet another shift in a market that's showing itself to be hard to predict. In August, upstart brand Vizio shocked its competitors by earning the No. 1 crown in units shipped to retailers. Vizio has since dropped to third place in unit share, but its overall market share remained steady.

"It's not like they lost ground," Gagnon said. "We've just seen a much stronger reaction from top-tier guys, Sony and Samsung, who were surprised by the upstart. They reacted with aggressive promotions, heading off Vizio at certain screen sizes. But by no means is Vizio falling."

Former leader Sharp failed to maintain previous strong growth during the last quarter of the year and fell to fourth place with 8.4 percent of all TV models shipped to retailers.

With talk of an impending economic recession, it's quite possible that consumers are going to be spending less on luxury goods like high-definition televisions, but that shouldn't have too much of an effect on the TV manufacturers, according to Gagnon.

"Maybe there won't be quite as many super-big-screen sales 40 and larger (as) we expected, but I wouldn't expect a real dramatic shift. Consumer demand has been exceeding supply for quite a while," he said.

The demand has so outweighed LCD manufacturers' ability to produce enough panels for TV makers that vendors are beginning to turn to computer monitor manufacturers to fill in the gap. Next year there will likely be an influx of more 19-inch and 22-inch wide-screen televisions, Gagnon predicts, as monitor panel makers rise to meet the demand for TVs.

[fred dunn]

I Think Gagnon's predictions are wrong....

First and foremost HDTV across the board is too expensive...period.

Second HDTV hardware is in a state of flux where improvements are made almost every week and who wants to get stuck with the "old" technology.

Third HDTV content (other than "over the air") is a service that comes with a premium price. It is like buying a cell phone, it's normally not the cost of the phone you have to be concerned about but the ongoing service fees you will have to pay indefinitely to use it.

And finally (at least my take on it), If I have to take out a loan just to buy a TV then it is not going to happen. With the credit crunch and recession for most middle income Americans this is just a luxury and is prioritized behind food, transportation, mortgages/leases on housing, and the ever increasing cost of living associated with those priorities.

My humble opinion is that HDTV is going to be flat in sales for 2008 for the commodity HDTVs and sales of high-end HDTVs is going to slow.

[gsmiller88]

So true...

Companies like Sony and Samsung way overprice their HDTV's and
cost hundreds more than products from companies like Vizio, and
in the end the quality really isn't any better. All you're paying for is
the name 'Sony'.

[gerrrg]

Disagree.

LCD screens represent a long-haul investment (I don't really mean investment because it loses value, but whatever) for most people, as they tend to last for a very long time. With the upcoming digital conversion, either you buy a box, switch to a service, or upgrade to LCD/Plasma.

My gut feeling is that there are a lot of people out there like me, with an older tube, that would like to upgrade instead of buy a conversion box.

Essentially, 8 years ago the price of a 37" tube is what you'd pay for a 37" LCD today...so why not upgrade?

My 2 cents.