October 1, 2002 1:03 PM PDT

Slump to squash flat-panel prices

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Street prices on flat-panel displays are headed downhill again.

Shipments of the slender monitors dipped during the second quarter, according to a new report, leading to an oversupply of components and sparking a new round of price cuts. DisplaySearch, which tracks the monitor market, said unit shipments of flat-panel displays slipped by 3 percent sequentially during that quarter to 7.3 million units.

Flat-panel display prices rose dramatically during the first quarter, thanks to solid demand from consumers and businesses. But the second quarter saw an abrupt downturn in consumer PC sales, which strangled the relatively short-lived flat-panel rally.

Since then display manufacturers have been enjoying lower prices on the LCD (liquid-crystal display) screens they use to manufacture flat-panel products, which they are now passing on in the form of lower prices for customers, an attempt to spur demand.

Falling LCD screen prices, combined with rebates, have helped push many brand-name 17-inch flat-panel displays below the $500 mark. While that price is still a couple of hundred dollars higher than a top-of-the-line 19-inch CRT (cathode-ray tube) monitor, it's close to the price level of 15-inch flat-panel monitors just a few months ago. Many of these 15-inch displays are now selling for $299 to $399.

Dell Computer was one of the first manufacturers to take advantage of the lower prices to introduce a 17-inch flat-panel display for budget buyers. The Round Rock, Texas, PC maker introduced a 17-inch flat-panel display, dubbed E171FP, with a price tag of $599 on Monday. Dell drops the price to $550 for customers who purchase the display with one of its Dimension desktop PCs.

Meanwhile, other display manufacturers, such as Samsung and Viewsonic, have been offering rebates of $30 to $100 on flat-panel displays to retail customers.

Thanks to these lower prices, DisplaySearch forecasts flat-panel monitor unit shipments will rebound during the third quarter, rising 14 percent sequentially to 8.3 million. This trend will lift flat-panel monitors' share of the total display market from 32 percent in the second quarter to 35 percent in the third quarter, the tracking firm said.

The lower prices should also encourage consumers and businesses to adopt larger monitors, moving from 15-inch to 17-inch, and even to 19-inch, flat-panel screens.

But analysts believe that flat-panel prices will continue to fall as the year progresses, ultimately cutting into manufacturers' profitability.

"You're going to see lots of products out there with a street price below $500" during the holiday season, Rhoda Alexander, director of monitor research at iSuppli/Standford Resources said in an interview Monday. "There will be lots of very attractive bargains out there for the end-user."

 

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