November 11, 2008 5:00 AM PST

Flat-panel TV shipments begin their decline

One of the hottest products in consumer electronics is finally cooling off.

A report released Tuesday confirms that flat-panel television shipments to retailers are beginning to tail off. Specifically, LCD and plasma TV shipment grew just 21 percent, and 20 percent, respectively year over year during the third quarter of 2008, according to DisplaySearch's Quarterly Global TV Shipment and Forecast Report.

(Credit: CNET)

That's by far the most meager growth for this category in the past two years. The previous six quarters' growth have all exceeded 41 percent compared to the previous year.

We're on the brink of a worldwide recession, so it's none too surprising that pricey televisions would be cut out of consumers' budgets. But what's potentially scarier for the TV industry is that most of the data for the third quarter was collected before the financial industry's late-September meltdown. In other words, the numbers for the fourth quarter, even with the late-year holiday sales push, could be even worse.

That said, some of the top TV manufacturers actually fared pretty well during the third quarter. Samsung, already the top producer of TVs, maintained its dominance, and actually increased its year-over-year growth in shipments by 99 percent. No. 2 Sony grew its shipments 73 percent.

Meanwhile, upstart Vizio, which has faded to No. 4 overall in TVs, is still the No. 3 manufacturer of plasma TVs and is the fifth-largest manufacturer of LCD TVs. For the year, its LCD shipments were down 8 percent, but due to its new entry into the plasma market, its plasma shipments were up a whopping 251 percent.

Another interesting tidbit from DisplaySearch's numbers: TVs with screens smaller than 40 inches have now increased shipments for two consecutive quarters, after declining for the previous year. It's a sign that consumers are looking to save money when buying a new TV, and also notable because the industry's prescribed antidote to rapidly falling prices has been getting customers to upgrade to bigger TVs. DisplaySearch reports that TVs larger than 40 inches "slowed to (their) lowest growth rate in over two years."

Erica Ogg is a CNET News reporter who covers Apple, HP, Dell, and other PC makers, as well as the consumer electronics industry. She's also one of the hosts of CNET News' Daily Podcast. In her non-work life, she's a history geek, a loyal Dodgers fan, and a mac-and-cheese connoisseur. E-mail Erica.