Originally Posted by pdoherty972
What you're missing is that in each instance of a new TYPE of HD tech coming out, despite them being only "slightly" better, people were willing to pay a price premium in order to obtain that slight betterment. So now when OLED is in the same position (but actually bests them ALL) you suggest the formula no longer works?
No, they weren't. That's where you remain confused.
And, yes, the formula will break.
Pretend a billion people needed HDTVs. When Gen 1 came out 200 million bought them. When Gen 2 came out 200 million bought them and the installed based was 375 million (25 million replaced their Gen 1s). When Gen 3 came out 200 million bought them and the installed base hit 525 million. When Gen 4 came out, the installed base hit 675 million. When Gen 6 came out, it hit 800 million. Assume each "generation" sold about 200 million total sets and the ones not adding to the base when to early adopters replacing. Let's just say by the end of next year, before the first OLED TV, we hit a shipment total of 1.5 billion HDTVs, an installed base of 1 billion, and 500 million into early adopter homes as second or third sets.
There is no mechanic like the one you wish existed. It's already gone. Most of the market that exists now is replacement sets, small size upgrades, etc. Existing TVs are more than good enough
for 95% of the marketplace and everyone who wants an HDTV flat screen has an HDTV flat screen
There is no "greenfield" to sell into. This is a huge, huge problem for a new technology that LCD and plasma simply do not have. If I make an improvement to my LCD or plasma, so long as I can produce on an existing line, I can sell tens of thousands and try to mainstream the improvement or sell it as a niche product -- like Sharp's Elite. Maybe I succeed, maybe I fail, but the economics work at tens of thousands. Same 10G Sakai fab as I'm using for my mainstream 70" and I can run said fab near capacity at this point (at least on one line).
Panasonic, similarly, can mainstream an 85" on their 42" lines.
To make OLED work, Samsung needs to sell millions
of them. They can't sell tens of thousands for 3-4 years and declare victory. It has to ramp within 24 months or it fails. If this was a no brainer, they'd already have invested the money and started the fab. It's not surprising they've dithered over this decision for so long
Traditional learning-curve economics are not going to do it here. If they release at $5000, the market is vanishingly small and will never get big enough to pay off their investment
. (I should be clear, there will be some test production that is going to reel in suckers who must have new ga-ga-goo-goo technology and those people will pay $5000 and so there might be an initial $5000 period. To me, that's a red herring; intro is when they state their plans to be in "retailers everywhere".)
The mass intro needs to be at or below $3000. Why? Because high-end 55" displays will be around $2000 by that point. And even $3000 is going to be a very very tough sell. So tough it could easily fail. Above $3000 is automatic failure. How do I know? Because I do. You don't like that? I don't care. Invest in your OLED component makers betting on this success and lose a fortune. People believed all the hype around LCD a few years ago and how it was going to make them money. I watched the announcement said "overcapacity incoming, look out below" and saw margins plummeting before it happened. There is no mass market television above $3000 anymore. That ship sailed a long time ago
. There is no greenfield. Everyone has an HDTV. This isn't the same as previous technological improvement. The OLED isn't even available as a mass market product until 2013 at the earliest. LCD and plasma aren't sitting still. If I type the next sentence, you'll press report post and get me another infraction so consider it redacted.