14 DAY TRIAL // Price cuts are always a welcome news for the consumer market, especially around times when shopping is about to be turned up to eleven, and it seems that the market for LCD TVs is going through this very type of experience.
According to DisplaySearch, which is a division of NPG Group, LED-backlit LCD TV prices have dropped by 44% between October 2009 and October 2010.
This is mostly owed to how LED chips have been getting more and more affordable, though prices of LCDs actually grew during the first half of 2010.
This happened because the segment recovered quicker than expected after the economic downturn, leading to a demand strong enough to cause inventory shortages back in the second half of 2009.
As such, prices of such panels began to drop sharply only after the first half of 2010, though mild decline was seen as early as the second quarter (32-inch and 40/42-inch TVs, for instance, went lower by 10% and 5%, respectively, by the time Q3 came around).
“The falling panel prices in Q2’10 and Q3’10 will have a direct effect on retail pricing during the Q4’10 holiday. If consumers remain sensitive to falling prices, it could help jump start demand in the US,” said Paul Gagnon, director of North America TV market research at DisplaySearch.
“Because profit margins have thinned in the LCD TV category, brands and retailers are somewhat at the mercy of the supply chain when trying to push retail prices lower,” he added.
“The result has been a cooling of growth in some markets, such as the US. As often happens in such cycles, the resulting slowdown in demand for key components including LCD TV panels has once again shifted the supply chain back towards oversupply,” Paul Gagnon explained.
"Holiday circulars consistently feature flat-panel TVs as the marquee door buster electronics category on Black Friday,” stated Ross Rubin, executive director of industry analysis at NPD.
“This year, retailers will seek to offset several months of year-over-year flat-panel revenue drops driven by slowing price declines and rising household penetration,” he added.
“While LED TV pricing is dropping more quickly than that of traditional LCD sets, LED-backlit models still command a significant price premium," Rubin concluded.