Have LCD TV Prices Hit Rock Bottom?
If you've been holding off on that new flat panel LCD television, you may want to get it in gear. The prices of LCD panels have apparently bottomed out, causing manufacturers of 32-inch and under displays to consider raising prices for the first time since the technology was introduced to consumers. Wholesale prices on LCD panels reached their lowest point this year and actually jumped back up a bit, with price increases in April, and a larger $5-10 price increase in May. As the LCD panels make up the most expensive component in a consumer display (often over 50% of the selling price), price increases in the panels themselves make for a particularly significant change in the retail pricing necessary for manufacturers to continue manufacturing displays. Indeed, some manufacturers have recently (and throughout the years) been absorbed or put out of business by very competitive pricing.
This also ultimately means that those consumers looking for these new displays to drop even further may be waiting too long. Just as the careful stock market investor can miss the lowest entry point for a mutual fund, you don't want to wait so long that the prices actually begin to climb back up to 2006 levels.
The display market is a dynamic one, and LCD panel prices are anything but fixed and predictable. In fact, one thing that we do not see taken into account with these recent reports is the ever-increasing amount of factories being developed abroad (many in Korea) which would presumably lower prices of larger screen sizes and overall manufacturing costs. I believe there is still room for manufacturing improvements and certainly any competitive technologies may also play a role in driving prices down further. For that we'll just have to wait and see.
An interesting chart showed up in the Washington Post which showed that in 2006 HDTV shipments in the U.S. exceeded analogue TV sets for the first time. They didn't just exceed it, they topped the number by over 2.6 million units sold. This shows an interesting turn of events and seems to indicate a driving trend that will pull more HD content through demand. Once that happens, the cycle will continue and manufacturing needs may grow, causing greater need for efficiency. Lower prices almost always follow.
It is unheard of for manufacturers to increase prices on existing product lines, however it may certainly be seen once newer models are introduced (with increased pricing likely hidden by new features). In any case, it's not too late - and prices are certain not to jump up too much. But for those sitting on the fence - it's time to get off and go get your display!
The latest crop of 1080p LCD and Plasma panels are indeed pricey, but the last set of 1080i/720p panels are pretty cheap right now. There are plenty of bargains, it just depends on whether you can settle for a slightly dated model, or whether you have to have the latest greatest.
Any arbitrary number can be used, if no one tries to analysis it.
I think that everyone needs to do a trade-off analysis of potential value verse cost. If a flat screen provides sufficient value to you now to outweigh its cost, then you should buy it... even if you expect it to fall 50% in the next year. IF the value of your time is worth more than the value of 50% cost reduction.
However, most people do look at the falling prices and say to themselves... well, if it is worth X to me now at Y price... then in a year it will be worth X+a (technology improvement) at Y-b (falling prices). However this totally discounts the opportunity cost of time. So, what people have to do is compare X-Y to ((X+a)-(Y+b))/((1+r)^n) where r is the discount rates... or in this case, the opportunity cost of your time.
That's a good point, Mort. I tell people who ask me about buying a flat screen not to worry about if prices will be lower next year. I ask them, do you want to have a TV now, or wait a year?
I would say conversly, why buy something that is not of great use now to you if you can wait? In the computer industry, there is not much point in purchasing more power than you need (ie: future proofing), since prices fall so rapidly and power increases two fold every year. Even in Highly computationaly demanding applications, it is some times less expensive to buy a new workstation every year, to keep up with needs, rather than investing in a server to try to meet needs five years from now. This is enhanced by the fact that deploying a workstation can be a matter of weeks, while a server can take months to be fully usable.
In the case of flat panels, if you don't see the need for a tv right now, why not wait? So what is panel prices go up $100? The electronics, scalers, etc are falling just as rapidly. Also, the panel price increase is only a short term thing. Manufacturing capacity is increasing, the Flat panel volume (worldwide) is not expected to peak until 2011 or later. So even if the US market becomes saturated, Europe, Asia, etc will be rapidly adopting units, keeping costs low. In fact, a few Tier I Japanese manufactures are expected to start assembling units in Mexico, which will significantly reduce logistical and labor costs... which will translate into lower cost units in the stores. In addition, R&D is continuing at a rapid pace, so color quality, brightness, etc will continue to improve.
Nope, the only reason you should by a flat panel, at any time, is if YOU want it. Otherwise, fence sitting just continues to give you better and better options and lower prices.
Which all means, by the way, that I disagree that LCDs have (or ever will have) reached the rock bottom prices.