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All good things end, flat panel TV shipments to dip

Posted: 02 Apr 2012 ?? ?Print Version ?Bookmark and Share

Keywords:flat panel TV? shipment? 3D display?

TV manufacturers have probably seen this coming. Increasing from 38.6 million units in 2010 to 39.1 million units last year, IHS Inc. has predicted that U.S. flat panel TV shipments will decline for the first time this year to 37.1 million units, down five percent from last year.

Flat panel TVs include LCD TVs, plasma TVs and rear-projection TVs. Shipments of the products peaked last year, but are forecasted to weaken for the next three years until at least 2015. "The U.S. flat panel TV market has never declined on an annual basis, even at the height of the recession in 2008 and 2009," said Lisa Hatamiya, TV research analyst for IHS. "The decline starting this year suggests that demand may have crested for the mature U.S. TV market. Sales in the U.S. now are being driven by consumers who are replacing their older flat panel sets with new models boasting more advanced features. This contrasts with developing regions of the world where vibrant, untapped markets remain for buyers making their first-ever purchase of flat panel sets."

flat panel TV shipment forecast

Shipments of flat panel TVs into the American market are forecast to decline to 37.1 million units this year.

Why the dip in sales?
Beyond the long-term maturation of the U.S. TV market, sales will contract in 2012 because of specific supply and dynamic developments that occurred last year.

In retrospect, TV brands were also too optimistic last year, contributing to this year's expected historic downturn. Believing that consumers were finally ready to buy new TVs and part with their money, manufacturers increased shipments in 1Q11only to be proven wrong when the hoped-for sales failed to materialize. A negative chain reaction then ensued that lasted throughout the year, with sets being very aggressively priced toward H2 to make up for a frail H1.

flat panel TV shipment forecast

Shipments of the products peaked last year, but are forecasted to weaken for the next three years until at least 2015.

The price cuts hurt profits across the board for almost every vendor. As a result, brands will be very cautious this year. Manufacturers will attempt to control new shipments into the U.S. market, so that prices remain steady and won't drive as much demand as last year. The attempt to rein in pricing could also prove dicey, possibly risking the ire of a purchasing public used to discounting or a pattern of gradually lower prices. The overall effect will serve to inhibit shipments this year.

A silver cloud to the lining will be that despite the projected shipment decline, the industry as a whole expects to be more profitable, with less discounting bringing in more revenue.

LED light at the end of the tunnel
This year will also see LCD TVs with LED backlighting catapult to dominance in the U.S. for the first time over older-generation, slightly bulkier LCD sets featuring CCFL technology. U.S. shipments of LED-backlit sets will reach 23.7 million units, compared to 8.7 million for CCFL models. Only last year, the tables were turned, with CCFL claiming higher shipment numbers at 18.8 million units, against 14.5 million for LED sets.

LED-backlit sets are expected to see rapid double-digit growth in the upcoming years as brands focus on marketing this feature and making LED-based models standard in their lineup. The sets will emerge in small- to medium-sized TV panelsspecifically in the sub-40in range.

While U.S. flat panel TV shipments are projected to move down starting this year, the market continues to aim for increasingly more advanced features in new sets being produced, in order to continue luring customers into new purchases. Trends currently taking shape in the U.S. LCD TV market include a continuing transition to larger sizes, a steady move from 120Hz refresh rates toward 240Hz and even 480Hz, standardization of the Full HD 1080p specification in sets, inclusion of Internet-enabled capabilities and increasing emphasis where 3D is concerned toward passive 3D displays that include battery-free, less expensive 3D glasses.

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