Flat Panel Makers Ask Retailers to Lower Prices

[Lensman]

From the November 3rd edition of the Wall Street Journal:

"Flat-TV prices are falling but they're not low enough, say the makers of the screens, who blame retailers' margins"

"The world's biggest LCD-panel manufacturers have been cranking out the flat screens faster than the TV industry can absorb as new screen factories have come online. That has prompted the panel makers to cut their wholesale prices by as much as 30% in recent weeks, a move that has lowered their profits. Now they are calling on TV makers, distributors and retailers to do their part to move the screens by reducing their markup on LCD-TVs -- which amounts to as much as 40% of their retail price, according to analysts."

The complete article is available to view free during WSJ's "Open House" this week. It can be found here:

http://online.wsj.com/article/0,,SB109944523532363153,00.html?mod=gadgets%5Fprim ary%5Fhs%5Flt

[eqm]

From the November 3rd edition of the Wall Street Journal:

"Flat-TV prices are falling but they're not low enough, say the makers of the screens, who blame retailers' margins"

"The world's biggest LCD-panel manufacturers have been cranking out the flat screens faster than the TV industry can absorb as new screen factories have come online. That has prompted the panel makers to cut their wholesale prices by as much as 30% in recent weeks, a move that has lowered their profits. Now they are calling on TV makers, distributors and retailers to do their part to move the screens by reducing their markup on LCD-TVs -- which amounts to as much as 40% of their retail price, according to analysts."

The complete article is available to view free during WSJ's "Open House" this week. It can be found here:

http://online.wsj.com/article/0,,SB109944523532363153,00.html?mod=gadgets%5Fprim ary%5Fhs%5Flt

This sounds a little dishonest from the manufacturers...it sounds like they overestimated how many people really want flat panels at their current prices (which they were more than happy to charge) and are now placing the onus on the retail side to make up for their overzealousness. Maybe someone else a little more familiar with the buying side could confirm this, but I would assume at this point that any decent retailer would have the buying agreements done for the holiday season already, so any price reductions would have to either come during the next buying cycles or would have to be rebated. But simply asking the retailers to "drop their prices" won't happen until after the all-important holiday sales happen. Any other thoughts?

[topspeed]

Great article Lensman.

Would you mind posting this question over at avsforum.com? There are a lot of retailers and industry people that frequent that site and I'd like to see what they have to say. I've been hearing about his price drop for over a year now and I'm still waiting for it happen.

[Woochifer]

Excellent article! It culls together a lot of bits and pieces that I've been reading about since the start of the year. Like topspeed, I've been targeting the end of the year to make a HDTV purchase, but with all the discussions about overcapacity that I've been reading about, I don't mind waiting a few more months for a potential price break.

It is interesting though that the panel manufacturers are trying to put pressure on the TV distributors and retailers to cut their prices. If anything, I doubt that they will comply until the market trends tell them that they have to (think February, after the holiday and Super Bowl TV buying binges). Big screen HDTVs are one of the few big ticket items that retailers and consumer electronics firms can use to prop up their bottom line. Most other product categories are either getting rapidly commodified (e.g. DVD players) or serving relatively mature markets with not a lot of rapid growth potential (e.g. AV receivers, speakers). Big screen HDTVs don't account for the bulk of unit sales, but they account for a huge portion of the revenues and profits for the manufacturers and retailers. It seems that the panel manufacturers have to rely on ramping up sales volume in order to recoup their investments, but the manufacturers and retailers are living large right now, and obviously would like to milk the cash cow as long as they can. My local home theater store told me that it's primarily the big screen TVs and home installations that are keeping him in business. Audio equipment and video sources are not nearly as important to his bottom line.

If anything, the trend towards accelerated adoption of new technologies has commodified consumer electronics items a lot faster. From what I've read, a lot of DVD player manufacturers and retailers feel burned by how quickly the profit margins for DVD players disappeared, as knockoff brands flooded the market with $40 players. We haven't seen the bottomfeeders enter the plasma and big screen LCD markets yet.

[Lensman]

Great article Lensman.

Would you mind posting this question over at avsforum.com? There are a lot of retailers and industry people that frequent that site and I'd like to see what they have to say. I've been hearing about his price drop for over a year now and I'm still waiting for it happen.

Apologies, I just saw your request. I'll do that.

[Lensman]

For those who missed reading this story last week during the free open house on WSJ.com, here's a link to on it ContaCostaTimes:

http://www.contracostatimes.com/mld/cctimes/10179644.htm?1c

[topspeed]

Which forum at avsforums did you post it to?

[Lensman]

Which forum at avsforums did you post it to?

It's on "Plasma and LCD Flat Panel Displays" under the same title as this thread. Just got it up. My cable company decided to do maintenance work the past two days so my service was out at home. I tried joining the forum from work, but the activation e-mail disappeared into space (probably caught by the company's spam blocker), so it's posted by "Flandry". I apologize for the delay.

[Lensman]

Here's the latest free link for this news story for anyone who still hasn't read it and wants to:

http://www.delawareonline.com/newsjournal/business/2004/11/07flatscreenprice.html