The global market for high-definition televisions (HDTV) and their ancillary products — personal video recorders, DVD players, game consoles and set-top boxes — will eclipse US$25 billion this year, according to a report released Wednesday by ABI Research, of Oyster Bay, N.Y.
As the HDTV market grows, commoditization will threaten margins and attract new players into the fray, noted Vamsi Sistla, the author of the report titled “The Future of the High Definition Television Market.”
“When you look at a high-end product, you think of Sony, Panasonic, Hitachi and Sharp,” he told TechNewsWorld, “but now, with the proliferation of vendors and commoditization of the technology, most people can make these TVs these days.
“That will drive the supply and the supply will drive the price pressures that will create commoditization over the next few years,” he added.
Focus on Price
Right now, TV makers are focusing on price and volume, maintained Stephen Baker, an analyst with the NPD Group in Port Washington, N.Y.
“They’re very much a digital product category,” he told TechNewsWorld, “and one of the characteristics of digital product categories are not only rapid price declines but access to high volumes to keep the fabrication factories going at full tilt.”
As digital products, TVs are also attracting manufacturers outside the consumer electronics realm. “HP and Dell are coming out with their own TVs,” Sistla said. “Motorola will probably do the same, and Cisco might do the same, too. Very soon you might see a Cisco TV with a Cisco router right next to it.”
No More Boob Tube
Unlike CRT-based TVs, waggishly referred to “boob tubes,” new generation LCD and plasma TVs need intelligence or at least processing power to support reception of digital TV signals through an ATSC tuner and to display HDTV programming.
According to Sistla, as HDTVs become commoditized, vendors will be looking for ways to differentiate their products. That will bring them face to face with the old external-versus-internal component dilemma.
Some manufacturers want to build more components into the TV itself — things like digital video recorders and dual tuners.
Others argue that those things are best left as external devices that can be replaced as technology changes.
“You don’t want to build too much into the TV,” said Baker, of NPD. “Consumers tend not to want too much built into their televisions, and the technology for a television doesn’t move quite as fast as the technology for the external devices that are going to help you manage all your entertainment.”
Hedging Their Bets
Nevertheless, TV makers appear to be hedging their bets on the market.
“Since nobody knows yet which of these positions will prove truer, most vendors are trying to cover all the eventualities,” Sistla said. “They want to make sure they have a product for every type of consumer who walks into a retail store.”
That’s certainly the case with the number four LCD TV maker in North America, Westinghouse Digital, of Santa Fe Springs, Calif. Its product line spans the spectrum from TVs with built-in DVD playerss to highest resolution, 1080P, HDTV monitors.
“I think we have a sufficiently large product portfolio today to hedge our bets,” Vice President for Marketing Rey Roque told TechNewsWorld. “The market is sufficiently large for us to provide a number of flavors.”
“We’re providing a variety of products for different places into the home,” he added.
What consumers choose for a TV depends on their application, he explained. In an environment where they’re concerned about many sources of digital entertainment, then a monitor-only TV might make sense for them. In a bedroom environment where there might be concerns about size and clutter, then a combo TV may be more appropriate.
“In the past, LCD TVs have been relegated to uses for small sized TVs,” Roque observed. “As we introduce 47-inch and in the future, 56-inch LCDs, the technology will not be limited to a particular room or particular application.”