by Brian L. Clark
There's nothing quite like covering a technology in its infancy. Take HDTV, for instance. It seems every day, there's something new coming around the bend. And as the markets for those technologies wax and wane, they all have an impact on prices.
For example, a couple of weeks ago, a reader wrote to inform me of something called thick dielectric electroluminescent (TDEL) technology. In theory, TDEL offers "a viewing experience that is much closer to the CRT and superior to other flat panel TV technologies," according to Nick Khoury, President of iFire, the company pushing it. Earlier this year, iFire built its first manufacturing plant to produce engineering samples of 34-inch flat panel displays for HDTV. Khoury claims the technology could shave 30 to 40 percent off manufacturing costs, and that translates into more affordable TVs.
On the surface, TDEL sounds great, but when I spoke to industry analyst David Naranjo, his feeling was that new efficiencies in LCD manufacturing would erase any price advantage pretty quickly. "The general feeling," he says, "is that as more time passes before the commercialization of TDEL, flat panels will have become good enough in terms of picture quality and certainly in terms of price." Naranjo added that Sanyo was the only major CE manufacturer to have signed a partnership deal with iFire.
Then there are the market factors. Last Friday, 3M warned analysts it would not meet second quarter earnings estimates. The reason: Lower than expected World Cup demand had helped create a glut of optical film, a key component in LCD televisions 3M says makes them significantly brighter, more energy efficient and more vibrant in real-life lighting conditions. 3M's optical film technology offers consumers more flexibility to put a TV in a variety of locations without sacrificing picture quality.
A glut is almost always good news for potential buyers and bad news for the companies involved. So while the news that 3M had overestimated demand sent its stock reeling, analysts began to speculate on what it would mean to the price of TVs.
J.P. Morgan said 3M's inventory issues should be confined to the second quarter, but frankly, we're entering the slow season for TV purchasing, and I don't see the company clearing up excess inventory until demand picks up in late Q3 or early Q4 of this year. In fact, according to research firm DisplaySearch's PriceWise data, the price for LCD panels will have dropped another $100 from May through the end of July. "Prices will continue to come down fast," says Charles Annis, who tracks components for DisplaySearch. That, he adds, "will drive more demand and stabilize panel prices somewhat in the latter part of the year."
The moral of the story: It pays to pay attention to what's going on in the components market. Because when manufacturers are caught overestimating demand, there's a very good chance consumers will come out ahead.
So hold on, HDTV shoppers, your patience will pay off. As for me, I will continue to wait for that sub-$1,000, 40-inch LCD TV. If things continue at their present rate, I may get my wish sooner than I think.