[SystemShock2]

There are three potentially big short-term factors regarding TV pricing (CES, SuperBowl, DTV transition). What effects will these have?


Or, is it just a simple suppy-and-demand snafu, with LCD and plasma makers having overshot demand (having not seen the global recession as getting so bad so quickly), and once they've gotten production more in line with weakened demand (in a few weeks, via production cuts), prices will go back up again?

Discuss... all well thought-out predictions/theories welcome. Obviously, I'm buying soon, but when?

 

[Zivman]

they will have no impact on the market... at least none that will be instantly seen. Any impact they would have is already factored in.

 

[CP598]

I'm pretty certain CES, and the Superbowl will have an effect on prices. Both of those events have lowered prices in the past.

 

[Solo4114]

Hi there. New to the forum, but been lurking for a bit.


The DTV switchover and Superbowl will happen at roughly the same time, and I think you can expect to see older-gen models go on pretty deep sales (deeper than they are currently) as retailers try to move out old stock. How deep a discount they'll give remains to be seen. There IS a floor, after all, that being profitability. They still want to turn a profit and aren't likely to let those suckers go at cost. I suppose it's possible some will, but they'll be the models nobody really wants anyway.


I think CES itself won't necessarily affect TV prices directly (IE: not like "Well, CES just happened, so all our TVs are now 15% off"), but the new products entering the market will force prices down on current models. But that should be fairly obvious anyway.



The real questions that CES will raise, I think, are:


1.) Is there a new technology on the horizon (IE: 1-2 years out) that is going to completely blow LCD and Plasma tech out of the water AND be able to compete for size and price?


- If so, that may cause top-end models to linger in stores longer (because videophiles are waiting for the "next big thing"), which will push prices down. If not, no real impact other than the usual "make room for the new model and move out the old ones" impact.


2.) Are the new LCD and Plasma models enough of an improvement over last year's models to warrant laying out extra cash for them, or is the manufacturing cycle about a year out of step with the consumer purchasing cycle?


- If the manufacturing market is a year ahead of what consumers can/will spend, and the improvements don't justify the upgrade, the I don't think you'll see a ton of movement. More likely the manufacturers will slow production to keep pace. If the market is roughly in sync with consumer purchasing, then again, I think you'll see the usual "Make room for new models" discounting.




What I think will be FAR more of an impact is the slowing economy on the whole. For me, it's already had an impact in that I'm simply not willing to pay sticker price. I fully intend to haggle when I purchase because I know that TV will be sitting there 2-3 months later, collecting dust, when it comes back into my price range. So they can either make me a deal today, I'll see them in a few months and they can make me a deal then. Doesn't matter much to me.


I suspect that other people are adopting the same attitude. Combine that with slowing demand in general and tightening budgets and I think you'll see more price movement due to non-industry-specific factors rather than things like the DTV shift.



As for me, I plan on buying some time around the end of March, right when Q1 2009 is drawing to a close and companies have to disclose quarterly earnings per SEC requirements. And that's also AFTER all the other obvious sales have happened so presumably demand will be a LOT lower. Add to that the economy will be even worse off then, and I think some retailer out there will be willing to bargain with me.

 

[SystemShock2]

GREAT post, Solo. That's the kind of insight I'm lookin' for.

 

[Solo4114]

Happy to help, but it's all guess-work and logic on my part. I don't have any special crystal ball, and I'm not an industry insider or anything. I'm just putting together bits and pieces of info I've looked at (and guesses I've made), and from which I've drawn my own conclusions.

I may be totally off-base in terms of how retail works and how the manufacturers schedule deployment of new product lines, as well as about how pricing works. There may be a hard floor to how low they can go (IE: no lower than 20% profit), and my guesses as to where that floor is are way off. I have no idea.


But I think in general, if you're willing to pay up front, I'm betting that with the economy tanking and people buying less of everything, you'll be able to bargain after all the big, obvious sale periods are over.


I'd still expect an "end of Q1" sale, but you might even be able to talk them below sale price if they're really sucking wind.



I'm still interested in seeing things like reports on how well the Christmas season went for TV manufacturers/retailers. I'm betting sales were slowing, but not at a stand-still. I'm betting that the post-Christmas sales kept things moving, but still slowly. I expect the obligatory Superbowl sale and the likely "DTV switchover" sale will still move product, but the real question is will enough of it move fast enough for the retailers. There's also a finite amount of demand, especially in a crappy economy. So, anyone who bought an HDTV in the last, oh, 2-3 years? Not buying a new one just to upgrade. ESPECIALLY if the upgrade seems to the consumer to be a marginal improvement (IE: now get recipes from the intarwebz on your TV! And we've improved contrast by 3%!! Please buy one. Please?). Once the big sales (Superbowl/DTV) happen, what kind of demand will be left? I'm betting not much -- which is why I'm timing MY purchase to happen AFTER all of that.

 

[RandyWalters]

The Federal DTV Coupon agency is running out of money and coupons so i wouldn't be surprised if the government delays the DTV transition again. I'm starting to doubt that they'll stick to their plan to turn off the analog broadcasts on February 17th - i betch they'll delay it. Again.

 

[Solo4114]

I don't know. I keep hearing news reports, promos, ads, etc. touting it. They might not turn off regular airwave transmissions, but they might still require broadcasting DTV in addition. Sort of a gradual transition.


It's a moot point for me. I have digital cable already.


Either way, the market for HDTVs is, I think, shrinking and a bad economy encourages people to save rather than upgrade, so retailers can't hope for current HDTV owners to go out and buy one.


My folks have an early-gen Panasonic 32" 720p set and despite the size and lower res (which won't really matter for them), they aren't planing on getting a new one any time soon. Like, probably not for another, oh, 5-7 years? I don't think they're alone in their attitude about buying a new TV.

 

[joemama127]

My prediction is that prices will be lowered on current models after the new ones are unveiled at CES...but supply will be less. Manufacturers are cutting back on production already and retailers aren't stuffing warehouses with electronics they may have to severely limit profits on just to get rid of. In other words, if you see a really great deal then jump on it. If supply dries up and demand remains high, then the prices may actually rise a little for the few remaining units...and may stay there once stores are replenished.

 

[zombywoof]

The superbowl and CES are interesting milestones. Here is my take...


The whole industry at this time of year is driven by inventory levels, as it will be every year. The superbowl represents the final buying spike of the model year, thus discounts for the superbowl will be driven by inventory levels left over from the prime holiday season. These discounts will be specific and will differ by brand and model number.


There is a floor for the sales price, but only as it applies and is applicable to pricing strategies for the following model year. The manufacturers control this by dictating the "lowest listed price" that you will see. Retailers get around this by such things as:


On a website, you have to put the item in your shopping cart to see the price.


In your Best Buy flyer, you will see some items that say $1,500 and in small letters say "before savings", then a "save $200" tag next to it. Final price, though not advertised is $1,300.


Remember, product stuck in inventory is a retailers and/or manufacturers worst nightmare. This represents cash that could be applied to getting inventory for the next years' model on the shelf. This is extremely important as the new year model pricing is far more profitable for them, as there will be consumers waiting, and willing to pay for, a premium related to the newest feature, in this case, picture quality. You can see elsewhere on this board where people are waiting to buy the next KURO.


My point is that some models will be sold at or below cost in order to generate cash flow, which in turn allows the cash flow to go towards quantity discounts on more units purchased of next years' hot product.


CES is where the buyers go to gauge the market and to choose which products that they believe will best fit into their sales strategy. Sears is a great example. They do not devote nearly the shelf space as Best Buy, thus they will choose more carefully the models and products that they choose. No stores want to pay for shipping back to a central warehouse, so the final discounts found will not only vary among retailers, but among individual stores of the same retailer.


The digital transition, in my opinion will only have an effect on lower end models, as those without a set top box at this point are not TV people to begin with.


As to when to buy, for the quasi-enthusiast (if you are posting on this board, then you probably qualify) I say it makes little sense to wait. If you are interested in a set that is $1,800, and you know it has been discounted throughout the last model year, then what more might you expect? Another 10% would be $180. But you risk losing the set you really want in favor of a $200 savings...which may never occur in the first place.


For me, on a set that I will watch 5 days per week for the next 5 years, this is too little to worry about. Further, spending 20 hours finding the bargain is just not worth the time.


If, however, you are a starving college student who just wants to get in the game, and price is major driver, wait until the end of February.

 

[Solo4114]

Interesting points!


I'm not a starving college student, but I'm still saving money for the set I'm leaning towards (Kuro Elite 111FD or 151FD). Frankly, I don't have $5K-$6K to spend on that...although I've got almost $3K saved at the moment and a planning on saving more as the months go by.


I'm hoping that, even with the reduced manufacturing, demand will still be pretty low, and low enough that retailers will want to move models out to make room for new ones. I don't expect the Kuros to come down to anything like say, $2500, but I could see a retailer trying to get one out of there for $3500 if things get bad enough.


Anyway, I'm going to keep watching the deals like everyone else, but I still think prices will go down. I think the major factor in this will simply be the slowing economy and fewer and fewer people buying new TVs.