AVS Forum Addicted Member
Join Date: Dec 1999
Location: Stop making curved screens
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Of course, this pricing is no death knell. It does suggest, however, a much, much lower volume target for 2015 than we'd be led to believe/hoping for.
I don't for a second buy into the theory that 200K sold TVs + 400K panels for wholesale is at all LGD's target. Nor, for what it's worth, do I believe that wholesale panels would logically exceed TVs sold anytime soon.
If you assume an OEM would perhaps require 3 months worth of panels and would reasonably be expected to sell at most 1/4 the volume of LG itself in the near term -- a figure I'm going to replace with 1/2 to show the absurdity of those calculations -- an OEM could need. Perhaps 1/2 of LG's 4th-quarter TV sales, which I'll estimate at 80,000 based on these prices and the fact that sales are basically commencing with 9-10 months left in the year, depending on model. You'd need then 40K for an OEM in Q4. Multiply that by 3 OEMs, double the production for two quarters worth and you get an OEM need of 240K panels (it's lower, because Q3 LG sales would be and the OEM would be just starting out) at the absolute high end. And those forecasts / production numbers are ridiculous.
Why? Because if LG were ramped up, they would have these panels to sell, of course. If they were ramped out, however, they wouldn't be pricing for a sliver of the TV market so small that they are literally competing for 50% share of the top 2% of the market -- a row which is going to be awfully tough to hoe, I might add.
In short, production is nowhere near forecasts -- yet. This is typical of the LG OLED story and doesn't mean it's a death knell. It means it's still taking far longer than anticipated to ramp things up. If it weren't, you'd see significantly more aggressive pricing. LG would need >50% share of the top 5% of the market to sell 600K units. Again, that's a completely unbelievable market share achievement at price parity with competing products. So you'd actually see LG priced along with the top 8% or so of the market and basically selling against clearly inferior goods.
Once it had established an ability to do that, it would not be necessary to cut prices as quickly to continue taking share. In the other scenario, it's unrealistic to believe LG will ever obtain 70, 80, 90% share of the top 2-3% of the market -- no matter how good the product. And OLED would be locked in a niche.
I don't see that happening. And therefore I see the current pricing as an admission of an inability to price "aggressively" where clearly inferior products are also targeted.
There's a saying about "everything in moderation". If only it was applied to well, you know...