Originally Posted by Airion
I think if OLED comes out and it looks better than the LCDs and plasmas available at any given time, then there will be demand for OLED even if the difference in picture quality isn't very noticeable. Videophiles will notice (or think the notice). Regular people might not notice a difference, but they'll think they notice. If it gets into the mainstream that OLED is the new, superior technology, then people will want it.
Of course, I've never suggested otherwise.
. But if the argument is OLEDs won't sell because they won't look that much better than LCD or plasma, I don't buy it.
And, again, I've never suggested otherwise. People seem to wish to read otherwise, but the text is actually there and that's not in fact what it says at all. It suggests it will be very difficult to sell many millions at premium prices based on some small superiority. And absent selling many millions it will be impossible to drive the price down. And absent driving the price down, it will be impossible to sell many millions. And we are back to square one.
Again, I urge people with their own preconceived notions to just move on. You are right, everyone will be watching a Samsung or LG 55" OLED in just a few years and no other TVs will even be on the market because those OLEDs will not only be the best TVs ever
they will be the cheapest TVs ever.
Anyway, back to this "square one" thing. I've followed technology for 35 years or so. All sorts of things have been "givens" or "just around the corner" or "certain to happen" for as long as I can remember. And, remarkably, many of them never happen. And the reason is that a lot of them can't solve some of these "square one loops".
It has been speculated here that Sharp's 70-inch displays have been sold "below cost" because they are not properly amortizing their cost of the Sakai plant on a per-unit basis into each display. I personally find this kind of logic specious because it presumes that the lifetime of the plant is some kind of fixed value and they are required to plug in an amortization value per unit now
that is essentially equal to [ total present value cost of plant * (size adjustment value / total units the plant will produce )].
The denominator is basically all the displays the plant will ever might but might plug in 1.2 for a 70" display and 0.8 for a 50" display to get a bigger cost associated with the bigger display. Sample math: $5 billion * (1.2 / 25 million) = 240. Here's the thing though. What if you change that to 30 million displays instead of 25 million? It now only costs $200 per display in amortization. And here's the thing about Sakai, Sharp really doesn't know precisely how long it will operate, but they can rest easy knowing a couple of things:
(1) Demand for LCD TVs will be robust as far as the eye can see.
(2) It's fairly unlikely the plant will become functionally obsolete since it uses 10G substrates when the rest of the industry is still stuck with 8G substrates (and there are logistical reasons why much larger substrates will never exist as they are actually not possible to transport).
Now there are legitimate arguments to be raised about how amortization is typically charged. For example, is it normally billed higher earlier? (I have no idea). For example, did they claim the output would be 25 million over 10 years originally and then decide later that ouptut would be 30 million over 12 years? (Again, I have no idea). This kind of moving the bar is financial shenanigans and would make me question whether I'd want to buy stock in Sharp. But unless the assumptions surrounding the lifetime of the plant or the ultimate output are outside the realm of reasonable, they don't make me think Sharp is using unreasonable amortization expense as an input in their display pricing decisions.
Now, after that long-winded explanation, let's compare that to Samsung and OLED. What if they build a $3 billion 8G OLED line and they claim it's going to produce 25 million 55" OLED TVs. Is anyone worried? I am. Not only do they have to amortize the fab at $120 per display but they also have to cover the variable cost per unit. Oh, and they have to probably do this over 10 years at like 2.5 million per year producing about 40,000 substrates per month.
So what worries me here is:
1) No one has ever produced that many OLED substrates per month.
2) There is no proven demand for OLED TVs.
3) There might not be any demand for premium-priced 55" TVs by the time these ship.
4) The variable cost for producing OLEDs -- at least initially -- will likely far exceed what Samsung's display division can recoup in wholesale pricing unless they price the early units very very high.
5) High pricing will dampen demand.
6) Low demand will not lead to higher utilization.
7) Large-area OLED displays have never been produced period, so I don't even know what yields will look like and that might lead to even higher variable costs per unit (it will for the first several years, guaranteed)
8) My masking/patterning method might not work
9) By fostering the developing of IGZO I might make for even better/cheaper LCD TVs and create stronger competition for OLED
10) IGZO might not be better / cheaper and OLEDs might remain more expensive indefinitely
11) LGs patterning / masking might be cheaper or better than mine and I might not be able to compete or switch to their method
12) Apple or Google might buy a ton of OLED displays from someone else given them a leg up on developing OLED technology and they might do something differently than me and might be to market with a better/faster/cheaper development and I might not be able to compete having invested in an inferior method
13) Global economics might cause consumers to only seek cheaper alternatives and I might find next to zero market acceptance of premium products
14) Insert another 5000 possible issues here
So you see, it's very challenging to basically invent an entirely new technology and bring it to market. It was another thing entirely to dip the toes in slowly and make the Galaxy phones real and even there, Samsung still sells LCD phones despite having the production wherewithal to drop them from their product portfolio.
One significant way to cut the risk of building an 8G OLED fab would be to have a supply contract with a tablet maker (specifically Apple) to purchase a large quantity of 10" OLED screens for tablet use in 2013 and beyond. That would ensure the investment would be successful even if the TV thing didn't pan out
. Unfortunately, those two companies are not getting along very well right now. Perhaps the winds will shift in that regard.