Plasma HDTV: The Best Man Always Wins?

Monday November 30, 2009 – Stewart Wolpin

Sales of inferior consumer electronics formats often swamp superior all-things-being-equal alternatives, for reasons both mysterious and frustrating. For instance, Beta was clearly superior to VHS in side-by-side videocassette quality tests. Apple OS was and is clearly superior to Windows, yet Windows is the dominant format.

Plasma HDTV is the latest victim of this Bizarro World consumer preference. For a decade, Plasma has been clearly and objectively the superior HDTV technology; every recent LCD technological leap – 240 Hz, LED backlighting, for instance – are designed to pull LCD quality closer to plasma's purity.

Yet LCD TVs far outsell plasma displays. According to CEA, LCD HDTV sales in the U.S. have grown from 1.8 million sets to 26.8 million projected this year, and are expected to continue growing.

U.S. sales of plasma HDTVs, meanwhile, peaked in 2008 at 3.5 million sets, dropping slightly this year, and are expected to fall further in subsequent years.

Why has this happened? Misinformation dissemination on the retail sales floor is the most obvious culprit, according to J.D. Powers, which conducts regular surveys on this specific topic. In the first quarter this year, the survey company found 68.3 percent of salespeople wrong-headedly recommended LCD as the superior technology, a figure that's held pretty steady the last few years.

Continuing the Bizarro theme, in the second quarter the LCD recommendation rate fell to 59.4 percent – when LCD quality was improving – but plasma's recommendation rate held at around 30 percent.

What are salespeople saying to boost LCD purchases? LCD sets last longer. Plasma suffers from image burn. Plasma sets don't last as long. Plasma sets use more power. They reflect ambient light. Each of these claims is either simply wrong or misleading.

Panasonic and the Plasma Display Coalition are fighting back with an information/educational PR blitz touting plasma's advantages and dispelling the annoyingly persistent myths. But the A/V media has been consistent in its praise of plasma vs. LCD to no avail, and it's unlikely this latest PR effort will reach the ears of those hawking HDTVs at retail.

More importantly than why this has happened is what will happen now. Plasma's plunge has pushed plasma pioneer Pioneer out of the TV business, leaving only Panasonic, Samsung and LG selling plasma. As LCD technology improves, the differences between plasma and LCD diminish, which means consumers can concentrate not on quality but on brand choice, where LCD has an enormous advantage, and price, where LCD is gaining ground.

It won't be long before large screen skinny OLED displays enter the marketplace, sadly eroding what's left of the soon-to-be-history plasma HDTV business.

Where will they find $2.5 billion? In a tea cup?

Monday November 23, 2009 – Myra Moore

It’s officially over. The last U.S. DtA converter box coupon has expired and the world’s largest analog shut-off for high-power broadcasters program comes to a close. DTC’s latest estimate for converter boxes shipped into the market is 46.2 million. (From DTC’s converter box tracking service)

DTC estimates the converter box program generated more than $2.5 billion in retail revenue, which came in pretty handy in the midst of the great recession that had many consumers staying out of the stores. They may have not been high-margin sales, but manufacturers and retailers were plenty happy to move those boxes.

How will box suppliers and retailers replace that revenue? With the holiday shopping season officially beginning this week (arriving earlier every year like store Christmas decorations on the heels of Columbus Day), and consumers only unclenching their fists by a small measure, the number of items that can replace the converter box is limited. The stripped-down portable DVD player is one candidate. Many of these are retailing in the $50-$80 range.

Perhaps a more interesting category is the emergence of what I’ll call “tea cup” TVs – little bitty 7” and 9” screens complete with an ATSC tuner, and in some cases, a DVD player. Most TV-only models hover in the $100 range but as we get closer to the end of the holiday selling season, off-brand sets will probably be heavily discounted and perhaps star as loss leaders in the big-box stores.

Some suppliers are finding efficiencies by using existing form factors like digital picture frames to come up with a tea cup TV to carry around in your purse, take to the pediatrician’s waiting room, or in the back seat of the minivan (although over-the-air reception isn’t going to cut it while in motion. Better buy one with a DVD player for the back seat).

And DTC believes that a DtA converter box market will continue for a couple of years. We estimate that there will likely be another 2 million units shipped in the next few years. For one or possibly two vendors and a natural retailer (think Radio Shack) for such a product, the DtA converter box market will continue to live – quietly.

Source: DTC

Internet Connected DTVs: Steadily Climbing

Monday November 16, 2009 – Shelby Cunningham

Internet connected Digital TVs are making their first big splash in the TV market and DTC is forecasting a rapidly growing market in the Americas, Europe and Asia-Pacific markets.

How these TVs will be used by consumers isn’t entirely clear but they are marketed as a way to pull in Internet video content independent of any gated TV services. The result is a competitive threat to gated TV service providers. What is also unclear is how consumer would manage an ever-increasing growing and fragmented line up of programs.

We assume that the middleware and software whizzes will eventually help consumers from drowning in the sea of unmoored programming and those consumers will want the option to access select video-centric sites on their connected TVs. To that end, DTC estimates that more than 6 million connected IDTVs will ship into these three markets in 2009, tripling to about 18 million units shipped in 2010. Although IDTVs only make up about 4% of total TV shipments in these regions at the moment, they quickly rise in numbers to 33% of all shipments in 2012.

Source: DTC

This fast growth can be attributed to price range and competition amongst suppliers. Connected DTVs are in the upper price range of TVs, which were not so popular during this economic downturn. Competition amongst top suppliers will pull IDTVs down into the popular mid-range pricing which will increase shipments, and consumers will start snatching them off the shelves in greater numbers in 2010.

Will Cisco’s Chinese Power Play Challenge Motorola’s Digital Cable Dominance?

Monday November 9, 2009 – Antonette Goroch

Motorola has dominated digital cable STB shipments for some time, with little challenge to its industry wide hegemony in terms of market share. Cisco’s latest acquisition, however, might provide one of the most credible threats to this industry order in some time. Cisco announced last week its intention to buy the STB holdings of Chinese manufacturer DVN Holdings, a leading player in the growing Chinese digital cable STB market. This move will immediately strengthen Cisco’s position as the second largest cable STB supplier, and draws attention to intense competition in the STB industry, as well as the growing importance of the Chinese market.

Cisco bought its way into cable STBs back in 2005, acquiring the number two U.S. digital cable supplier, Scientific-Atlanta. Since then, though, Cisco has lost market share—failing to gain traction in international markets that hold the industry’s growth prospects, while new competitors have entered the U.S., Scientific-Atlanta’s core market, posing a threat to existing shipments.

Source: DTC

This latest acquisition could position Cisco well to strengthen its international presence though, and even challenge market leader Motorola in future years. In units alone, DVN won’t bring Cisco to Motorola’s size, since DVN shipped only about 2.5 million STBs in 2008. Along with Cisco’s 6.5 million, this would bring the total to only 9 million, just over half of Motorola’s 15 million. Still, China is the largest cable market in the world, with some 160 million subscribers (and growing), fewer than a third of which have upgraded to digital. If Cisco’s financial backing can help DVN grow its market share to somewhere between 25%-30% of Chinese shipments, Cisco could be looking at an additional 6-7 million units shipped annually, well within range of Motorola.

E-book v. tablet PC: Who cares?

Monday November 2, 2009 – Stewart Wolpin

With the introductions of the Barnes & Noble Nook, the IREX Reader, the coming Plastic Logic Que proReader (TBA at CES in January) all enjoining the Amazon Kindle and the varying Sony Readers, e-book readers have entered the ballyhoo and hoopla phase of media and gadget geek mindshare.

And further ballyhoo and hoopla will accompany Apple's rumored early 2010 launch of its tablet PC and how it will affect the e-book market.

My response to all this e-book v. tablet PC ballyhoo and hoopla is folderol and balderdash.

E-readers are likely to be this year's version of personal navigation device (PND), which enjoyed its own short-lived ballyhoo and hoopla period.

Let's start with e-book reader sales. Forrester forecasts just 3 million e-book readers will be sold this year, 10 million next year.

A tidy little business to be sure, and certainly the ballyhoo and hoopla surrounding each new e-reader introduction helps spread the e-book gospel a bit further.

But just as consumers discovered they didn't need a standalone PND, they also will discover they don't need a separate $259 e-reader since they likely have one already: an iPhone/iPod Touch, an Android, a Palm Pré or a BlackBerry, or a laptop or netbook PC. All of these smartphones and varying portable PCs offer multiple e-reader apps.

In 2010, a variety of sources estimate that 328 million smartphones will be sold, and a large percentage of these will be the app-happy models mentioned previously.

And it is estimated that shipments of over 180 million portable PCs in 2010, with DTC estimating about 35 million of those will be netbooks.

Between smartphones and portable netbook PCs, we're talking a total of about 514 million e-reading capable devices in 2010, compared to maybe 10 million standalone e-readers. This is like marveling at the suddenly perfect kite-flying breeze – blithely ignoring the F5 tornado behind it.

Equally silly is the speculation surrounding Apple's long-rumored tablet PC. "Experts" have been predicting the domination of the tablet PC for nearly a decade, and they've never been right. Even with the emergence of multi-touch touchscreen technology mainstreamed by Apple and the iPhone, no one has yet made a case why the average technology customer would spend $600-$1000 on a tablet with an exposed 10-inch screen and no physical keyboard when only slightly less cool but far more functional netbooks are half that price.

In other words, technologists are vigorously debating whether a technology the market has shown it's not interested in (tablet PCs) will challenge a product that only a few well-heeled people want (e-book readers).

E-readers have definitely sparked a revolution in how people acquire and read books. But it will be already purchased multifunction devices – smartphones and portable PCs – that will serve more frequently as our e-reader.