Pricing Wars Could Lead Discount TV Brands in the Dust

As the price of flat-panel TVs continues to come down to jaw-dropping levels, we're seeing signs that the value brands, which often managed to take a significant chunk of the pie because of their cost advantage, are now feeling the heat. Why? Because the name brands have reduced pricing to a point where they're often times actually in line with the value brands!

Research firm iSuppli reports that, during Black Friday weekend in the U.S., premium TV brands like Sony, Samsung, and LG, advertised pricing that was 23% lower than their average, while value brands like Vizio and Westinghouse reduced pricing by only 19%. Continuing on to today, Tina Tseng, an Analyst for the consumer electronics channels at iSuppli, says that the price differential between a 32" premium and value-branded LCD is just US$61. For an extra $60, would you opt for the brand name model over a lesser-known brand? Things probably won't be changing much any time soon either, as retailers scramble to move product during these difficult times.

So what does this mean? Will the value brands be obliterated by the premium models? On the flip side, however, how much money are the premium brands losing by selling products for prices that are essentially almost at cost? While the consumer comes out on the winning end of this stick, the business situation surely can't sustain itself like this for any great length of time.

It will be interesting to see how things pan out once the crazy pricing wars, not to mention the recession, come to an end. Stay tuned.

Discount Retailers Attempt to Take a Big Bite Out of CE Sales

Discount retailers are arguably profiting more, in some sense, from the downturn in the economy as shoppers flock to those stores known to always offer great "deals". So it comes as no surprise that many discount shops are attempting, more so than ever, to take a big bite out of the consumer electronics market this holiday season.

This weekend, I was surprised at the number of Wal-Mart commercials that aired (during my favourite primetime programs!) centred around flat-panel TVs, home theatre, and even Blu-ray. I'm used to seeing plenty of TV marketing dollars from the mammoth retailer, but of all product segments, I wouldn't peg Wal-Mart to be spending so much to plug things like Blu-ray and flat-panels. Kid's toys, home decor items, clothing, DVDs and CDs, yes. But big-ticket CE items? I'm genuinely surprised that so much of the marketing budget went toward this category. The move is a clear indication of one of two things: Wal-Mart is making its mark known as a CE retailer; and/or the retailer is responding to the prospect that home theatre is going to take over as the main activity of choice during these sad, economic times. And of course it goes without saying that one should

Aside from that, pricing is also mind-boggling. Right now, a name-brand 42" 1080p LCD is $950, and an up-converting DVD player is $50. (Interestingly, no Blu-ray players are featured on the Wal-Mart Canada Website, although Blu-ray discs are in abundance). At Costco, a 42" plasma is $860, and a Blu-ray player is $270. At retailers like Tiger Direct, pricing is relatively the same. A colleague told me this morning of a friend who just bought a 46" TV (name brand) for $800 over the weekend! If you can spare the cash and are in the market, now is certainly the time to buy a new TV!

But from a retailer perspective, what happens when these pricing wars continue? The same thing that has been happening for the entire year, even before the recession came into play: other retailers are forced to lower their prices; if not to be in line with discount stores, at least to be close. Products are sold off at almost no margin just so smaller companies can sustain themselves and make it through the storm. And more focus is placed on "added value" services, like free delivery, after-sales service, installation, and product expertise (certainly not a bad thing).

Still, it's an incredible observation overall knowing that just a few years ago, a plasma or LCD could not be had for less than a few grand. To put this in perspective, I searched for some old news stories on our sister Website, http://www.marketnews.ca/, and cam across this 2002 announcement from LG Electronics about the company's brand new plasma displays: the cheapest was $8,500, and the most expensive 60" model was a whopping $26,000: the price of a new car! My, how things have changed...

[Photo: Screen shot at http://www.walmart.ca/]

CEDIA EXPO: Press Day Overview: Can Tru2Way, Internet Connectivity, Do Away with the Set-top Box?

Press day at CEDIA EXPO 2008, the day prior to the show’s official opening, proved fruitful for manufacturers on various fronts. For one, a good cross-section of industry journalists showed up to see the latest and greatest products. And second, the day was blessed with gorgeous weather in Denver, CO that made trudging from one hotel ballroom to another ballroom in an entirely different hotel, hour after hour, a not-so bad experience (we plead with you: please make all the press conferences in one venue next year!). But more important than the weather is the new products, and we got a sneak-peek at plenty of them, including the latest flat-panel TVs and Blu-ray players from the top manufacturers.

Traditionally, when we talk about connectivity with a TV, it’s in reference to a video source like a cable or set-top box. But as the Internet continues to play an important role as a conduit for good-quality video content, people are more often looking toward the PC as a source of entertainment. Flat-panel manufacturers are picking up on this growing trend, and coming out with innovative partnerships and designs to accommodate. In fact, connectivity is one of the key components of Panasonic’s “Viera message”, and the company’s latest plasmas certainly fall in line with it. A feature called Viera Cast allows a TV to essentially work as an IP device, connecting to the Internet via Ethernet, than porting content from partners, who range from YouTube to the Weather Channel and Bloomberg news. Sony is also continuing its focus in this area with new Bravia models, including the sexy new ultra-thin 9.9mm thin model, that utilize the company’s Internet Link technology. Sharp’s gorgeous new limited edition XS LCDs (I’ve never seen reds reproduced so sharply, excuse the pun!) incorporate Sharp’s ongoing Aquos Net feature that provides content as well as remote tech support. All companies plan to come out with new Blu-ray models that include BD Live as well for enjoying additional content from the ‘net while watching a compatible Blu-ray disc title.

Tru2Way

The most interesting new method of getting content to the TV, however, hails from a new initiative called Tru2Way, which is essentially a cable technology that will download applications to the TV itself, including channels, guide, pay-per-view specialty content, etc., where the content will continue to reside. The technology, if it takes off, will essentially replace the need for a set-top box altogether! Panasonic, one of the key companies involved with the technology, will have Tru2Way operating and on display at its booth, so I’ll definitely be checking it out. The company also says that it will announce Tru2Way products in the coming weeks that will be available in time for the holiday shopping season. It’s unlikely we’ll see them that soon in Canada, if at all, but stay tuned!

Auto Picture Control

Manufacturers are also showing a greater focus on automatic picture adjustment that can adjust an image, in sections, based on room conditions and factors like ambient light. Toshiba calls its variation on this idea AutoView, which includes an ambient light sensor and film content detection to not only improve the picture, but also to conserve energy at night time. Another significant new technology developed by the company is called SRT (Super Resolution Technology), and this works to improve picture by up-scaling essentially any video source that’s connected to it, whether that be a DVD, cable signal, or video game. Sony employs Advanced Contrast Enhancer Pro to help improve picture quality; and Sharp’s version, which adjusts the brightness of a screen according to ambient light, is called Optical Picture Control.

Going Green

An area in consumer electronics that is becoming of more and more importance is energy efficiency, and every manufacturer has officially jumped on that bandwagon. Panasonic claims that its new Blu-ray players consume 20% less power than previous-generation models; while Sony’s new models are 55% smaller, resulting in reduced packaging (not to mention shipping weight!) Sharp, a company that has been at the forefront of environmental friendliness, says its new LE series promises to be up to 30% more efficient than traditional LCDs using the new Picture Control function. The company’s new D85U and D65U models, available in 42”, 46”, and 52” sizes, are also RoHS and Energy Star 3.0 compliant, resulting in 20% less energy consumption. A dedicated power-saving mode also helps to conserve energy.

This merely scratches the surface of what’s at the show, but it sure starts things off on an enticing note: CEDIA EXPO officially begins today. Stay tuned to this Website for daily updates from the show floor, including information on new products, as well as an inside look into some of the courses being offered.

A Few Neat Product Highlights:

Panasonic: A new DECT multi-cell wireless phone that is home automation-capable. By simply depressing keys on the phone, customers can perform tasks like adjusting lighting or temperature in the home. The phone is also really rugged, able to withstand drops, and even water spills!

Toshiba: The new XV Cinema Series Regza LCDs are top-of-the-line, employing the aforementioned Auto View and SRT technologies, along with a new double-skin cabinet, whereby you can see through the top layer into a second layer of design.

Sony: The new BRAVIA KDL-52XBR7 LCD TV features ultra-fast 240Hz refresh rate that the company calls Motionflow (or “Mo-Flo” for short!) The new KLV-40ZX1M LCD is just 9.9mm thin, and also boasts Motionflow (but at 120 Hz). Frustrated customers will also be happy to know that Sony claims its new Blu-ray players, of which there are five, will employ a quick-start feature that makes an inserted video ready to go in six seconds. Sony also whet our appetites with the promise of a 400-disc Blu-ray changer to be available in 2009.

Sharp: The Aquos XS series LCDs produce gorgeous, sharp, and ultra-bright pictures, and will come in 52” and 65” sizes. Other features include 1080p technology (of course) RGB-LED backlighting, and integrated speakers developed jointly with Pioneer. The new D85U and D65U series models (the latter of which replaces the existing D64U series) are RoHS and Energy Star 3.0 compliant, and employ neat-looking angled edges for a slightly different look than what you might be used to.

[Photo: Chris Matto, Senior Brand Manager, Sharp Electronics of Canada Ltd. (left) poses with Daisuke (“Doug”) Koshima, CEO & Chairman of Sharp Electronics of America and the company’s new limited edition XS series LCD TVs. Two iterations will be available in 52” and 65” screen sizes, both featuring advanced technology like RGB-LED backlighting, 1” thin frames, and an audio system developed jointly with Pioneer.]

Plasma Reaches Less Than $600

Vizio is offering a 32", 720p plasma TV through U.S. Wal-Mart stores for less than US$600, further proving just how competitive the flat-panel TV arena has become. Additionally, the manufacturer is selling a larger, 42" model for just $200 more.

Has the $600 pricing decision been made because of the stronghold that LCD technology has on the 32" flat-panel HDTV market? After all, in Q1 2008, research firm DisplaySearch reported that 32" LCDs dominate the market, representing more than 40% of total LCD TVs shipped. Indeed, it looks this way since Vizio is also launching new LCD TVs for more reasonable pricing: $1,499.99 for a 42" 1080p model and $1,899.99 for a 47" model. If Vizio is looking to help plasma increase marketshare in the 32" category, these aggressive pricing can surely help.

It's mind-baffling to think of a company essentially "blowing out" plasma TVs. How will this bode for the category as a whole? DisplaySearch indicated for Q1 2008 that, although worldwide plasma shipments grew 53% year-over-year (Y/Y) to reach more than three million units, they have shown a quarter-over-quarter (Q/Q) drop of 19%. Interestingly, 32" plasma panels actually rose 4% in the first quarter of this year to account for 15% of the market. Will Vizio's new sub-$600 plasma, which is already available in all 3,400 U.S. Wal-Mart stores, take a huge bite out of LCDs 32" pie?

Indeed pricing in the plasma category (and arguably LCD) has been dropping to meet both consumer demand and the increasingly competitive landscape. There's no doubt that a $600 plasma from Wal-Mart won't do anything to help the price erosion crisis.

And to think that just a few years ago, plasma TVs were products for just the elite of society, costing in the thousands and thousands of dollars...

Underestimating the Power of Secondary Features

Have you ever spent tons of money on a birthday or Christmas present for a young child, only to find that he/she is more fascinated with the box it came in? I've noticed a similar situation when it comes to high-tech products and the "average" consumer. Sometimes the feature that you just gloss over during your presentation, or worse, don't even mention, is one that's likely to pique the customer's interest.

This Father's Day was a case in point for me. We arrived at my parent's house, where my dad was overly enthusiastic about showing us a new discovery he made about his flat-panel TV and DVD player. When he puts in a music CD, the track titles come up on-screen, along with a standard play/pause menu, controlled via the remote. He had no idea, but absolutely loved the ability to pop in a CD, sit on the couch, and scroll through some tunes! My mom is planning a party with the girls next weekend, and she plans to set up her background music using this newly discovered method of theirs. Of course they don't really have any speakers, but let's take things one step at a time...

We often overlook simple functionality like the ability to play back CDs and control them using your TV. The same goes for features like being able to play back photos on the big-screen, or even connecting the TV to a computer and surfing the 'net using the flat-panel as an oversized monitor.

These hidden gem features go way beyond just TVs and DVD players. Lots of consumers don't know that you can use the same flash memory card in a digital camera that you can in an MP3 player or a digital camcorder, for instance. I'll bet lots of dads that received iPods this Father's Day (or Father's Days past) don't realize they can also play back photos and video on the device. Or what about that portable iPod dock? I'll bet many owners don't even know that they can connect other things, like a different portable player, speakers, or even a CD player attachment, to that nifty device using an AUX input on the back.

It's amazing how much we take for granted that the consumer knows. If you're selling technology products, learn to read the customer and gauge what features he/she might like, and might not care about. It doesn't hurt to say "did you know that this product X and can also do Y?" You might just be surprised at the response.