More Evidence L.C.D. TV Prices Will Drop Soon21 August 2008
In his now-famous letter to early buyers of last year's first generation iPhone, Steven P. Jobs, the chief executive of Apple, told customers who were angry that its price was lowered by $200 just a few months after launch, that price drops in technology were a given. This is life in the technology lane, he said in an open letter to consumers. If you always wait for the next price cut or to buy the new improved model, you'll never buy any technology product because there is always something better and less expensive on the horizon.
That may be true in the computer world, where price drops happen at best a few times per year. But when it comes to L.C.D. and plasma television pricing, you usually don't have long to wait if you want to save a few dollars.
So for those would-be TV buyers for whom price is a major consideration-which seems to be most people these days-you might want to hold on for a few more months before you pull out your credit card.
Around the October time frame, L.C.D. TVs will see a substantial price drop, just in time for holiday buying. That's the prediction of Andrew Abrams, executive director and senior analyst at Avian Securities, a New York based brokerage and information technology research firm.
The reason is twofold: wholesale prices for the L.C.D. panels themselves have been dropping, and excess inventory is forcing prices down as companies try to get rid of their finished products so they can move in new models.
Which begs the question, why is it so hard for companies to figure out how much product they actually need and manufacture accordingly? I've thought about this for five years, and I don't know, Mr. Abrams said.
One problem might be irrational exuberance. Electronics retailers seem convinced that big events-especially sports-will finally motivate buyers to get off their duff and run into a store to get that 65-inch flat panel TV that they've been lusting after (witness the newspaper ads for big screen TVs before major sports events like the Super Bowl or the Olympics).
But it doesn't always happen that way. After the 2006 World Cup, many HDTV sets were sent back to the manufacturers after they couldn't be sold, Mr. Abrams said.
While it's too early to say how this week's Olympics has influenced TV sales in the United States, it doesn't look to have done much for the home country. A separate note from iSuppli, a company that tracks the world-wide panel market, says that an increase in L.C.D. sales in China, once expected because of the Olympics, fell short of expectations.
Lower than expected demand is contributing to lower panel prices, with dramatic declines in the past few months. For example, the price of a 37-inch panel was $446 in January, according to Mr. Abrams, but will only be $372 in August.
Those drops do not translate into a dollar-for-dollar drop at retail, as the panel price is only one part of the pricing equation. In fact, it's possible that prices won't drop at all, if retailers decide to charge the same to increase their profit margins.
But that strategy is always tricky; if one retailer decides to gain a sales advantage and drops its price, other companies often must follow suit. Which may make it worthwhile to keep on watching that old tube TV for a few more months.