Audio Video News

Electronics retailers might have been hammered into submission over the past few months were it not for the surging popularity of flat-panel televisions.

High fuel prices and fears about the war in Iraq have caused business to plummet for many, but consumers' love of new video technology has kept them afloat. Flat panels are so popular that they are being picked up by home furnishing stores and other businesses that previously avoided electronics. Consumers are flocking to flat panels with the same enthusiasm that they adopted DVD, analysts say.

The Consumer Electronics Association (CEA) recently reported that more than 185,000 units of flat-panel displays were shipped to dealers in calendar 2002—despite typical four-figure prices. Of the units sold in last year, 100,000 of them were plasma display panels (PDPs) and 85.000 were LCDs.

There appears to be considerable convergence between the two technologies. LCDs once dominated the 32" and under segment, and the smallest plasma was typically 42". Now LCDs are being made in ever-increasing sizes and plasmas are getting smaller. Prices for both continue to drop month by month, with pricing breakthroughs almost weekly events. Sampo recently broke the $7000 barrier for a 50" high-def PDP, and China's Apex Digital, which rules the North American market for cheap DVD players, introduced a 42" high-def PDP at $3,999. Gateway Computer got a lot of press a few months ago with its announcement of a sub-$3000 42" plasma display.

Most major manufacturers are in a scramble to build out new flat panel production facilities to feed the public's seemingly bottomless appetite. The rush by retailers to get in on the flat-panel frenzy could lead to a downward pricing spiral that would benefit consumers at manufacturers' expense. "We think flat-panel TV is going to be a very, very robust business for the industry, but we are troubled by a number of the business-model implications we see," said Bob Perry, a Mitsubishi marketing vice president. "We are even more troubled by the fact that many retailers are not taking a value-added approach to retailing the products." Video products have long been discounted to the bare bone by large-volume retailers—to such an extent that they are often sold at only a few points above cost, with the dealer's profit made in accessories and extended warranties.

Sharp Electronics recently announced an across-the-board price cut on its line of Aquos LCD televisions, effective May 1, the result, the company explained, of better delivery efficiencies thanks to a new Mexican production plant.