Post by dkennedy on May 10, 2005 6:26:14 GMT -5
Panasonic Flattening Prices For Slim Plasma TVs; Competitors Expected To Follow Suit
Monday May 9, 2005
Patrick Seitz, Investor's Business Daily
Panasonic has fired the opening shots in what could be a new price war among flat TV vendors.
The Japanese consumer electronics giant in recent days has notified retailers that it's slashing prices on its ultrathin high-definition plasma televisions. It plans to publicize the move Wednesday.
Panasonic knocked 36% off the price of its 42-inch model -- the most popular screen size. Last year's model had a suggested retail price of $5,500. This year's model goes for $3,500.
Panasonic also cut the sticker price for its 37-inch HD plasma set by 25% to $3,000 from $4,000. And it took 29% off its 50-inch model, lowering the price to $5,000 from $7,000.
The company, a unit of Matsunutsa Electric Industrial (NYSE:MC - News), sent shock waves through the industry last fall when it cut flat-panel TV prices, forcing rivals to take down their prices as well. This week's news could have a similar impact.
TV vendors have been playing limbo with plasma prices in recent months, seeing how low they can go. But the price declines have been in the hundreds of dollars, not $1,000 to $2,000 as Panasonic is doing now.
"We do see some price wars going on here," said Rosemary Abowd, an analyst with researcher Pacific Media Associates.
New plasma display panel factories coming online in Asia have boosted unit production and efficiencies. That's allowing for the price declines, industry officials say.
Plasma TV vendors are trying to lower the price difference between true high-definition sets and lower-resolution "enhanced definition" sets. EDTV sets are cheaper than HDTV sets, but their picture is optimized for DVD movies, not high-definition video.
Narrowing Gap
Last year the gap between 42-inch HDTV plasma sets and EDTV sets was about $1,000, but now it's about $500, says Ross Rubin, an analyst with the NPD Group.
"The case for enhanced definition is starting to weaken," he said. "If people are going to shell out that much for a television, hopefully they're starting to acknowledge that they should be investing a bit for the future of that set."
In other words, why buy an EDTV set when you can get an HDTV for a few more dollars?
Plasma TV makers also want to stay competitive against microdisplay, rear-projection TV sets, including those using Texas Instruments' (NYSE:TXN - News) Digital Light Processing technology.
Plasma also faces a growing threat from flat-panel LCD TVs. Liquid crystal displays have dominated the market for smaller flat-panel TVs, but now are inching up to the size range where plasma rules -- 40 inches and above.
Overall prices for flat-panel televisions -- including plasma and LCD -- fell significantly between the fourth quarter of 2004 and the first quarter of this year.
Street prices for 40- to 42-inch sets dropped an average of 13% quarter to quarter, PMA says.
Prices for 42-inch, enhanced-definition plasma TVs fell 12.6%. High-definition sets dropped 8.6%. Prices for 40- to 42-inch, flat-panel LCD TVs fell 18%.
The average selling price for a 42-inch, high-definition plasma TV was $4,391 in the first quarter.
The price for a similarly sized enhanced-definition plasma TV was $2,235. The average price of a 40- to 42-inch, flat-panel LCD TV was $5,250, PMA says.
Promotions in Sunday newspaper supplements indicate that prices remain aggressive in the plasma TV market.
Best Buy (NYSE:BBY - News) this week advertised a $500 price drop for a Toshiba 42-inch plasma HDTV. The set now goes for $3,500.
Direct seller Dell (NasdaqNM:DELL - News), meanwhile, announced a $500 price cut of its own on a similar product. That brought its price to $2,999.
"Forget Best Buy," Dell's ad copy reads. "We've saved our customers up to 30% vs. comparable TVs at Best Buy."
The Consumer Electronics Association predicts that plasma TV sales in the U.S. this year will rise 60% to 1.4 million units.
It expects sales to increase 50% next year to 2.1 million units and 38% in 2007 to 2.9 million units.
"We certainly see a lot of interest in plasma," said CEA analyst Sean Wargo. "People really do like the thin form factor, but it's only recently that the price points have fallen to a point where those consumers would actually pony up the money for it."
Panasonic recently singled out plasma TV as a key part of its growth strategy. Matsunutsa announced last month that it was concentrating its capital investments on strategic businesses like plasma displays and semiconductors.
However, analysts don't expect plasma televisions to break through to mainstream consumers until prices fall to $1,200 or $1,000.
EDTV plasma sets could get closer to that range over the next six months, Abowd says.
That would "open up a watershed of demand," she said.
Monday May 9, 2005
Patrick Seitz, Investor's Business Daily
Panasonic has fired the opening shots in what could be a new price war among flat TV vendors.
The Japanese consumer electronics giant in recent days has notified retailers that it's slashing prices on its ultrathin high-definition plasma televisions. It plans to publicize the move Wednesday.
Panasonic knocked 36% off the price of its 42-inch model -- the most popular screen size. Last year's model had a suggested retail price of $5,500. This year's model goes for $3,500.
Panasonic also cut the sticker price for its 37-inch HD plasma set by 25% to $3,000 from $4,000. And it took 29% off its 50-inch model, lowering the price to $5,000 from $7,000.
The company, a unit of Matsunutsa Electric Industrial (NYSE:MC - News), sent shock waves through the industry last fall when it cut flat-panel TV prices, forcing rivals to take down their prices as well. This week's news could have a similar impact.
TV vendors have been playing limbo with plasma prices in recent months, seeing how low they can go. But the price declines have been in the hundreds of dollars, not $1,000 to $2,000 as Panasonic is doing now.
"We do see some price wars going on here," said Rosemary Abowd, an analyst with researcher Pacific Media Associates.
New plasma display panel factories coming online in Asia have boosted unit production and efficiencies. That's allowing for the price declines, industry officials say.
Plasma TV vendors are trying to lower the price difference between true high-definition sets and lower-resolution "enhanced definition" sets. EDTV sets are cheaper than HDTV sets, but their picture is optimized for DVD movies, not high-definition video.
Narrowing Gap
Last year the gap between 42-inch HDTV plasma sets and EDTV sets was about $1,000, but now it's about $500, says Ross Rubin, an analyst with the NPD Group.
"The case for enhanced definition is starting to weaken," he said. "If people are going to shell out that much for a television, hopefully they're starting to acknowledge that they should be investing a bit for the future of that set."
In other words, why buy an EDTV set when you can get an HDTV for a few more dollars?
Plasma TV makers also want to stay competitive against microdisplay, rear-projection TV sets, including those using Texas Instruments' (NYSE:TXN - News) Digital Light Processing technology.
Plasma also faces a growing threat from flat-panel LCD TVs. Liquid crystal displays have dominated the market for smaller flat-panel TVs, but now are inching up to the size range where plasma rules -- 40 inches and above.
Overall prices for flat-panel televisions -- including plasma and LCD -- fell significantly between the fourth quarter of 2004 and the first quarter of this year.
Street prices for 40- to 42-inch sets dropped an average of 13% quarter to quarter, PMA says.
Prices for 42-inch, enhanced-definition plasma TVs fell 12.6%. High-definition sets dropped 8.6%. Prices for 40- to 42-inch, flat-panel LCD TVs fell 18%.
The average selling price for a 42-inch, high-definition plasma TV was $4,391 in the first quarter.
The price for a similarly sized enhanced-definition plasma TV was $2,235. The average price of a 40- to 42-inch, flat-panel LCD TV was $5,250, PMA says.
Promotions in Sunday newspaper supplements indicate that prices remain aggressive in the plasma TV market.
Best Buy (NYSE:BBY - News) this week advertised a $500 price drop for a Toshiba 42-inch plasma HDTV. The set now goes for $3,500.
Direct seller Dell (NasdaqNM:DELL - News), meanwhile, announced a $500 price cut of its own on a similar product. That brought its price to $2,999.
"Forget Best Buy," Dell's ad copy reads. "We've saved our customers up to 30% vs. comparable TVs at Best Buy."
The Consumer Electronics Association predicts that plasma TV sales in the U.S. this year will rise 60% to 1.4 million units.
It expects sales to increase 50% next year to 2.1 million units and 38% in 2007 to 2.9 million units.
"We certainly see a lot of interest in plasma," said CEA analyst Sean Wargo. "People really do like the thin form factor, but it's only recently that the price points have fallen to a point where those consumers would actually pony up the money for it."
Panasonic recently singled out plasma TV as a key part of its growth strategy. Matsunutsa announced last month that it was concentrating its capital investments on strategic businesses like plasma displays and semiconductors.
However, analysts don't expect plasma televisions to break through to mainstream consumers until prices fall to $1,200 or $1,000.
EDTV plasma sets could get closer to that range over the next six months, Abowd says.
That would "open up a watershed of demand," she said.