Buyer’s guide: Flat panels buck recession

The EMEA commercial flat-panel market has posted its strongest quarter on record, reaching 163K units in Q3 09 following a solid first half-year performance.

The phrase ‘recession proof’ may be overstating the situation, but certainly if we look across other products in the pro av/IT area, flat-panel equipment sales is one of the few outstanding performers. Of course there are caveats to the overall strength of the sector, with a vast amount of consumer TV still pouring in at the expense of purely professional monitors and consequently driving down market value.

So what have been the major stories over the past quarters and what can we expect during 2010?

A good starting point is to look further back and examine the historical battlegrounds between vendors. Just a few years ago key marketing messages focused on the relative strengths and weaknesses of LCD/PDP and the rush to pack more pixels into a display. Vendor ranges were very limited, typically one per screen size category, using expansion slot technology to tailor the display to project requirements.

Technology ceasefire

Nowadays we do not tend to receive these boasts. It is rare to hear about the technology battle as vendors hedge their bets on LCD and gradually pull away from PDP. Panasonic is the obvious exception to this trend, but even it has toned down its technology messages. The move to higher resolutions has stopped for now and the legacy of the ‘pixel push’ has been an acknowledgment that different resolutions offer a sound basis for product differentiation. This has allowed vendors to develop an entry-level unit, which has been critical in 2009 and has helped challenge the glut of consumer TV, where price point has been the decisive purchasing factor. Indeed, volume sales of pure professional monitors displays grew by 19 per cent in Q3 on Q2 09.

However one message that has remained constant is screen size. At one time this issue fuelled the technology debate, but now LCD is able to match, and more recently surpass, PDP technology. While larger screen sizes have been front of mind for analysts and vendors alike, the 46in LCD segment has been the standout performer in Q3 becoming the second-strongest size in the B2B market. The strength of this size poses some interesting questions about future end user’s trade-up patterns. At one time it was thought that 46in might be skipped, much like the 37in category, as PDP vendors push hard in the 50in space and LCD vendors follow with 52in. However, the result in Q3 indicates a steadier pattern more akin to that seen in the consumer TV market.

Another point to make on the screen-size shift is the correlation between volume and value. In terms of volume the less than 46in sizes accounted for more than 80 per cent of the market in Q3 09, but just 55 per cent of the value. It is for this reason that we have seen vendors develop dual strategies pushing high volume for entry-level products in the smaller screen sizes and looking to generate value from larger, less-than-50in displays.

There has undoubtedly been a clear focus on vertical markets with vendors introducing dedicated display ranges to suit all needs in 2009. This has led to a marked expansion in product line-ups and a move away from a ‘one-size-fits-all’ approach seen in previous years. Examples include the introduction of high-brightness displays, touchscreen-enabled, in-built PC/players, audience measurement and ultra-thin/narrow bezels. Samsung alone offers close to 50 different models in its commercial line-up. High brightness and ultra-thin bezel displays have certainly generated much industry hype in 2009, but ultimately will remain relatively niche.

In contrast, Futuresource expects to see touch-enabled displays grow strongly over the next few years with 2009 already witnessing the introduction of dedicated touchscreen displays from a number of vendors in the market. Historically, vendors used a third party to enable standard displays to overlay technology, so the introduction of dedicated models is a clear indication of the industry’s expectations. The release of Windows 7 will also be an important driver to touchscreen development. From a demand perspective the jury is still out on the integration of PC/media players, with much depending on the project size and scope. From a supply side viewpoint, the temptation to add more hardware, especially in the face of such heavy price erosion, will surely prove too much. Coupled with this comes new lightweight chipsets from other areas of the IT industry, netbooks being a great example, whose future integration will add very little to the display BOM costs.

MicroTile game changer

One final important display observation is the recent launch of the Christie MicroTile. We often hear the term ‘game changer’ banded around in this industry, but this product might actually live up to that tag. The interesting implication of this product is its potential integration into architectural design to become quite literally part of office, facility, stadium or shopping mall architecture. This is a must-see product for anyone still not in the know.

The flat-panel market is forecast to enjoy strong growth into 2010 to reach 900K units as display prices fall and products penetrate a multitude of vertical markets. Vendors will continue to look beyond hardware at the broader signage industry for revenue opportunities.

Recent Futuresource research shows that the western European signage market was worth $1.6bn in 2008 of which hardware accounted for more than 40 per cent. Branded vendor signage software systems are nothing new, but are becoming an increasing focus. And if the introduction of what is essentially an aggregation platform by NEC in the US market is anything to go by, then the focus away from hardware seems set to continue.