LCD TV retail prices fall by 7.5% QoQ in 1Q09; Smaller-sized TVs drop more than larger-sized sets
According to WitsView’s 1Q09 LCD TV retail price survey, prices for the mainstream 19~52" segment declined by an average of 7.5% QoQ, a smaller drop compared to the 8.9% QoQ drop in 4Q08. The 22" and 26" witnessed the biggest declines, while the 46" and 52" fell the least. In WitsView’s opinion, the bigger price declines in the smaller-sized segment highlight their growing popularity among consumers amid the economic downturn. TV brand vendors and retailers also believe demand can be better stimulated via price discounts on the smaller-sized segment.
Small size: 19" lower than $300; 22" cheaper than 20"
Down by 7.7% QoQ, the 19" LCD TV fell past $300 for the first time. In the US, it slipped by 5.7% QoQ to $297. Meanwhile, in Japan it was retailed at $522, roughly the same as in 4Q08. In Korea and Taiwan, the markets do not appear to be placing high hopes on the 19". This can be inferred by the respective release of just one model in the Korea market by Samsung and LG. As for Taiwan, there are no 19" models being sold by the Tier 1 players. Separately, the 22" fell by 13.4% QoQ, the largest drop in our survey. This led to its price being lower than the 20" for the first time. In the US, most Tier 1 brand vendors have chosen selling the 22" over the 20". By contrast, the adoption of the 22" is more fragmented in the UK. Sony and Samsung currently offer 20" models only, while LG and Samsung supply just the 22" LCD TVs.
Middle size: 32" nears $600; 37" falls below $900
In 1Q09, the 32" tumbled by 9.5% QoQ to $605. In the US, prices slipped by 3.4% QoQ to $609. After the large sales promotions in 4Q08, the changes in the US average retail price grew smaller in 1Q09. Currently, the lowest-priced 32" can be bought for $400 in the US, similar to last year’s BlackFriday sales. Meanwhile, China recently launched its ‘Home Appliances to the Countryside’ policy, where a 13% subsidy is provided for TV purchases priced below RMB 2,000. The program has prompted several TV makers to try to include the 32" LCD TV, as well. However, based on the current cost structure, it is still difficult to produce a RMB 2,000 (roughly $250) priced 32". Nevertheless, China was still the cheapest region in WitsView’s survey, where the 32" was available for $521. The cheapest 32" model was the $287 priced AOC’s L32BN3.
After falling below $1,000 in 4Q08, the 37" broke the $900 mark in 1Q09. Japan is currently the only market where the 37" is priced higher than $1,000. This is attributed to the release of many high-end models. Most of the locally made 37" LCD TVs support FHD. Meanwhile, Sharp’s 37" product lineup are all equipped with 120Hz refresh rates. Taiwan currently sells the cheapest 37" sets, roughly at an average of $739. Unlike Japan, most of the 37" models sold in Taiwan are supplied by local brands. Although 35% of the sets support FHD, none is 120Hz.
Large size: average 5.2% QoQ; 46" and 52" drops only slightly
The 40/42" was retailed respectively at $1,137 and $988, down by 4.4% and 7.2% QoQ. This marked the first time for the 42" to be priced below $1,000. The 40/42" are considered the most basic sizes of most brand vendors’ mid to high flagship products. For example, Sony’s W and Z series are all 40" or above. Meanwhile, the display size of Samsung’s A750 and above and Toshiba’s RV525 and above high-end lineup all begin from 40/42".
Posting the smallest price decline, the 46" fell by 2.5% QoQ to $1,689. In 4Q08, prices were relatively the same in the US and UK. However, in 1Q09, a big drop was seen in the latter, resulting in the 46" in the US ($1,457) to be higher than the UK ($1,304) for the first time. Separately, the 47" declined by 7.2% QoQ to $1,524. Among the surveyed markets, the lowest average price of 47" was found in China. Priced at $1,042, it was only a third that of the sets sold in Japan.
The second smallest price decline was the 52", where it was retailed at $2,264, down by 3.3% QoQ. In the US, prices fell by 3.7% QoQ to $1,778, while in Japan they instead rose by 7.3% to $3,163. China witnessed the biggest decline, where it fell by 12.2% QoQ. However, its $2,041 average street price was still higher than in the US or UK.
LCD TV retail price outlook in 2009
Aside from the sales promotions, the LCD TV street price is also affected largely by the material cost and product spec changes. In 1Q09, the quarterly retail price drop reached 7.5%. Although this was less than the 8.9% quarterly decline in 4Q08, it still exceeded the 5.3% drop seen in 1Q08. This shows that the 2H08 panel price plunges helped sharply drive down the LCD TV material cost and the final retail prices. However, with panel prices expected to hit bottom in Mar09~Apr09, further sharp material cost downs will unlikely occur in 2009.
From a TV product spec standpoint, despite the global economic woes, Tier 1 brand vendors continue to add more value to their more premium TVs. LED backlights and 240Hz refresh rates will be the key highlights this year. Deemed as a premium feature last year, the 120Hz has now trickled down to the mid-end TVs. Moreover, as integration of the Internet into TVs becomes more widespread, many TV makers are spearheading the product spec and business model. This can already be evidently seen in Japan, the US and Europe. As the LCD TV has already passed the high growth phase, the addition of more high-end specs will be the key source in maintaining a higher ASP and revenue generation for TV makers. In 1Q09, may Tier 1 vendors have started to unveil their new 2009 lineup. However, up until now, it has mostly been concentrated on the low-end models. The more premium TV are set to be launched beginning from 2Q09.
Based on the current material cost and product specs, the LCD TV price drops in the next 3 quarters should be more moderate in contrast to 2008, where the average drop is predicted to be less than 5%. Nevertheless, given the higher price/inch of the 46" and 52", growing supply from the Tier 2 makers and addition of new low-end products from the Tier 1 players, the two should still witness more notable price declines this year.
