Price of Flat-Panel TVs Rivals the Old Tube Type
According to iSuppli, a research firm, the average selling price of a 23-inch LCD set is $451; three years ago it was $752. The average price of a 32-inch LCD is $600, about half of the $1,182 ticket in 2006.
In the stores, flat-panel prices are even better. Wal-Mart is selling a 32-inch Vizio LCD for $400, and a 22-inch HDTV from RCA for $250.
The price reductions are great for consumers, but not so good for the companies that manufacture the sets. “The manufacturers needed to keep sales momentum going when people cut back on spending, so they’re lowering prices,” said Riddhi Patel, an analyst at iSuppli. “They’re just trying to see if they can survive one more quarter.”
In addition, with less disposable income since the recession, consumers have cut back by buying smaller, less fancy TVs. “Entry-level price points have become more attractive to consumers,” said Bob Perry, Panasonic’s senior vice president for marketing. “There was the assumption that fewer 32-inch LCD TVs would be sold, but more were sold and that drove down prices.”
According to Paul Semenza, vice president at market researcher DisplaySearch, price cuts are occurring even while the cost of the LCD panels used in the TVs has risen. Because mass merchants can survive with smaller margins, the large retailers have been able to lower prices to keep sales going.
“The manufacturers’ attitude has been driven for a long time by market share, not profitability,” said Chris Chinnock, principal with Insight Media, a research firm.
According to Mike Abary, a Sony Electronics senior vice president, a new attitude has developed among consumers: one of “good enough.”
“Cheap and simple is what consumers are demanding now in consumer electronics,” Mr. Abary said. He pointed out that popular products like netbooks and inexpensive camcorders have fewer features than their older brethren. On the Friday after Thanksgiving, Sony’s least-expensive Blu-ray player, available for about $120, was one of the company’s top sellers.
“In TV and video, we’ve recognized that some house brands are moving the quickest,” Mr. Abary said. “I absolutely envision a time when we do a stripped-down line of TVs and a high-end line of 3-D-capable TVs.”
As prices erode further, it puts pressure on the smaller manufacturers; with smaller product lines, they are less likely to be able to weather the competitive storm.
“When a 32-inch TV sells for $249, it’s not possible to make money,” Ms. Patel said.