Global LCD TV unit shipments stronger than expected

AUSTIN, TEXAS: In a nearly mirror image of Q1’09 results, global TV revenues fell 12 percent Y/Y to $23.7 billion while shipments declined slightly less, down 8 percent Y/Y to 44.6 million units according to the latest results from the DisplaySearch Quarterly Global TV Shipment and Forecast Report.

Not all technologies fared equally though as LCD TVs continued to post remarkably strong unit growth, while all other technologies showed Y/Y declines in units. However in revenue terms, all technologies were down Y/Y as the marketplace remains impacted by frugal consumers looking for the lowest prices amid the global economic downturn.

Globally, flat panel TV share jumped from 68 percent in Q1’09 to 74 percent in Q2’09 as LCD TV price erosion continued at the same annual pace as Q1’09, falling 22 percent Y/Y on average. LCD TV market share increased as a result from 62 percent to 67 percent, acquiring nearly all that market share in a rapid shift from CRT to LCD in China as well as a big increase in North America market share from better than expected sell-through.

Despite tight supply conditions for LCD panels in Q2’09, LCD TV shipment growth managed to maintain the same pace as Q1’09, rising 27 percent Y/Y to 30 million units although revenues fell 1 percent Y/Y. Plasma market share increased about half a percent to 7 percent, while CRT share plummeted from 32 percent to 26 percent on a unit basis. Both North America and China reached record shipment levels.

“LCD TV market growth remains impressive, gaining market share from incumbent technologies like CRT at a quickening pace despite higher prices and a tight supply situation in Q2’09” noted Paul Gagnon, Director of TV North America TV Market Research at DisplaySearch. “Advanced technologies like high frame-rate LCDs and 1080p resolutions also continued to increase in market share as the price premium narrows, even in these tough economic times.”

North America dramatically took back the top position among global regions for TV shipments on a unit basis while reaching more than 10 million units shipped for the quarter. North America reclaimed the crown from China where unit shipments fell 10 percent Q/Q and 14 percent Y/Y, mostly on a large decline in CRT TV unit volume that wasn’t entirely made up by surging LCD growth.

Western Europe continued to experience weakness with total units declining 3 percent Y/Y and was overtaken for the #3 market position by Asia Pacific. A review of global TV shipment performance by technology can be seen in Table 1:

Table 1: Q2‘09 Worldwide TV Shipments by Technology (000s)Source: DisplaySearch Quarterly Global TV Shipment and Forecast Report

On a brand basis, Samsung remained the global brand share leader in revenues for the 14th straight quarter, rising to a record revenue share of 23 percent and also hitting a record unit share of 18.2 percent. LGE remained #2 after surpassing Sony in Q1’09, slightly increasing their revenue share to 13.7 percent with small share gains in both LCD and plasma offsetting a decline in CRT share. Sony held the #3 brand position worldwide in revenues, although losing a little more than a point of share.

Samsung reclaimed the top LCD unit share position from Vizio in the highly competitive North America market. Vizio fell to #2 on a unit basis in LCD TV for North America, but continued to see strong growth from a year ago with distribution in the growing discount channels like Walmart.

Funai, which includes the Philips and Magnavox brand in North America, surpassed Sony and rose to #3, having the strongest Q/Q unit growth among the top five North America LCD TV brands. Funai is prospering from close strategy alignment with discount channels and more frugal consumers.

China remains a very competitive market as well, one dominated by domestic brands. The top five LCD TV brands in China on a unit basis are all Chinese and collectively account for nearly three-quarters of all units shipped to the region in Q2’09. Skyworth was the top LCD TV brand at nearly 20 percent unit share, but was followed closely by Hisense at #2. TCL rounded out the top three with 15 percent unit share.

Many foreign brands are eager to gain a foothold in China’s rapidly growing market, but must compete with lower-cost Chinese brands to do so. Chinese consumer demand is currently being boosted by several government stimulus programs and TV brands are eager to participate, especially domestic brands. A complete review of the top five global TV brands can be seen in Table 2:

Table 2: Q2‘09 Worldwide TV Brand Rankings by Revenue ShareSource: DisplaySearch Quarterly Global TV Shipment and Forecast Report

Samsung cuts into Vizio's lead in US LCD TV market

EL SEGUNDO, USA: While Vizio Inc. maintained its leadership in the US LCD-TV market in the second quarter, No.-2 ranked Samsung Electronics Co. Ltd. closed the gap significantly as buyers gravitated toward its LED-backlit sets, according to iSuppli Corp.

Samsung’s share of US LCD-TV unit shipments rose to 21.3 percent in the second quarter, up 3.5 points from 17.8 percent in the second quarter. The gain represented the largest increase of any LCD-TV brand in the United States in the second quarter. With its strong rise, Samsung of South Korea in second quarter cut Vizio’s lead to only 0.4 percentage points, down from 3.6 points in the first quarter.

“Samsung in the second quarter was very aggressive in introducing and marketing its LED-backlit LCD-TVs, allowing it to boost sales of these sets,” said Riddhi Patel, principal analyst, television systems, for iSuppli.

“US consumers increasingly are warming up to higher-specification LCD-TV models, including those using new LED-backlighting technology,” Patel added. “iSuppli estimates 2.2 percent of LCD-TVs shipped in the US in the second quarter used LED backlights, up from zero during the same quarter a year earlier.

“In mature markets like the United States, while many consumers are moving up from their CRT or rear-projection televisions, an increasing number of LCD-TV purchases are replacements of first-generation flat-panel sets. In these cases, consumers are gravitating toward higher-specification televisions, such as those with LED backlights.”

Unlike traditional Cathode Ray Tube (CRT) televisions that generate their own light, LCD-TVs require an additional illumination source—or backlight—in order to present a visible image. LCDs historically have employed Fluorescent Lamps (CCFLs) as backlights. However, due to price reductions, LEDs in recent years have become a viable alternative to CCFLs.

“LEDs deliver multiple advantages compared to CCFLs,” Patel said. “These include achieving greater power savings and thinner form factors for LCD-TV sets and the elimination of toxic materials employed in CCFL manufacturing.”

Global penetration of the LED-backlight technology for LCD-TV panels will increase to 37 percent of all shipments in 2013, up from 3 percent in 2009, iSuppli predicts.

Vizio retains market lead
Despite Samsung’s surge, Vizio retained leadership in the US LCD-TV market for the second consecutive quarter.”

“US-based Vizio continues to benefit from its combination of low-cost and full-featured sets, combined with its high-volume retail channels, including Wal-Mart,” Patel said. “The company seems to have found the right balance between price and features that appeals to many consumers.”

US LCD-TV market rebounds in Q2
The overall US LCD-TV market posted a strong performance in the second quarter, with shipments rising by 8.7 percent to 6.9 million units, up from 6.3 million in the first quarter. This represents a major turnaround from the first quarter, when shipments plunged by 15.3 percent.

“While sales of consumer electronics often decline in the first quarter compared to the hot holiday season in the fourth quarter, LCD-TVs have been so popular that they have defied this trend in recent years,” Patel said.

“For example, US television shipments rose by 5 percent sequentially in the fourth quarter of 2008. And even though the economic downturn clearly had a major impact on sales in the first quarter, the rebound in the second quarter shows the market has entered a recovery.”

Beyond demand for LED-backlit sets, second-quarter demand was stimulated by declining prices for older models.

Prices for premium- and value-brand LCD TVs converge

EL SEGUNDO, USA: The price differential between LCD TVs sold by premium brands and value brands is narrowing as marquee nameplates vie to capture a wider consumer base by offering less expensive models, according to iSuppli Corp.

The lowest price in April for a 40-inch premium-branded LCD TV was $900. The lowest price for a 40-inch LCD-TV offered by a value brand was $615. Comparable 42-inch premium and value brand sets were priced at $955 and $798 respectively.

This narrow price gap makes the premium brands very competitive with value alternatives.

“The rising popularity and growing consumer comfort with value brands like Vizio is prompting premium competitors to offer cheaper LCD TV models in the 40-inch and larger sizes,” said Riddhi Patel, principal analyst, television, for iSuppli.

However, while price is an important consideration for consumers when selecting an LCD-TV to buy, it’s not the most important factor.

“Consumers’ No.-1 consideration when buying a new LCD-TV isn’t price, but picture quality,” Patel said. “Price is secondary. So even if premium and value brands reach price parity, the dominant factor will still be which television actually looks better to the naked eye, rather than the price on the tag. Obviously, in a perfect world, that would even the playing field. But when it comes to consumer electronics, it is anything but even. Brand recognition is an important asset for any company. Who would choose a nameless Taiwanese or Chinese brand over a Sony Bravia or a Samsung?”

However, there are exceptions to this rule. For example, US-based Vizio has achieved remarkable success as a premium alternative brand built from the ground up.

According to iSuppli’s Television Market Tracker Service, Vizio surged to the top spot in the US and Canadian LCD-TV market in the first quarter.

Vizio’s lowest ASP for a 42-inch Cold-Cathode Fluorescent Lamp (CCFL) backlit, 60Hz refresh rate, full High-Definition (HD) LCD-TV was $850. In comparison, Samsung and Sony 40-inch LCD-TVs with the same configurations carried ASPs of $1,000 and $1,090, respectively.

The figure presents global average price trends for 40/42-inch LCD TVs, with full high definition resolution, 60Hz refresh rates Cold-Cathode Fluorescent Lamp (CCFL) backlighting.Source: iSuppli, June 2009

A premium on premium features
While the premium brands now are offering less-expensive LCD TVs, they continue to produce higher-end models with up-to-date features.

Average LCD TV prices in April in the 40-inch and larger screen sizes increased by 3 percent on a monthly basis, despite drops for the older models, as premium brands continued to introduce more full-featured sets in the larger sizes during the month.

Samsung in April introduced more LED backlit models, including the 8000 series. Prices on these high-end models in the 40- to 49-inch segment range from $2,500 to $4,000, varying by brand and size.

“The premium brands’ dual-pronged strategy of offering high- and low-end models can help them to maintain market share amid the rise of Vizio,” Patel said.

Beyond LED backlights, LCD TVs capable of viewing Internet videos and web content also are showing up as a new feature for televisions, mainly on the premium brands.

iSuppli expects average LCD TV selling prices to decline slightly in the coming months, as brands and retailers roll out with promotions for the upcoming “Dads and Grads” season. However, average list prices likely will remain flat as more new models are added to the product mix. In general, current inventory levels at the retailers are at a healthy five to six weeks.

Vizio No. 1 in North American LCD-TV shipments in Q1

EL SEGUNDO: US television maker Vizio Inc. surged into the leading position in the North American LCD-TV market in the first quarter, as dwindling disposable incomes sent consumers flocking to buy the company’s low-cost sets.

Vizio’s share of North American LCD-TV unit shipments rose to 21.6 percent in the first quarter, up 7.8 percentage points from 13.8 percent in the fourth quarter of 2008, according to iSuppli Corp. The company surpassed Samsung to take the No-1 position in the North American region.

“Due to its aggressive pricing, Vizio for some time has maintained its position as North America’s top-selling LCD-TV value brand,” said Riddhi Patel, principal analyst, television systems, for iSuppli. “However, since the onset of the economic downturn, Vizio’s share has risen dramatically. With budgets becoming increasingly tight, consumers are finding the company’s inexpensive sets more alluring.”

In the first quarter, Vizio’s lowest Average Selling Price (ASP) for a 42-inch Cold-Cathode Fluorescent (CCFL) backlit, 60Hz refresh rate, full High-Definition (HD) LCD-TV was $850. In comparison, Samsung and Sony 40-inch LCD-TVs with the same configurations carried ASPs of $1,000 and $1,090 respectively.

When comparing 120Hz models at the 40/42-inch size, the price differential between Vizio and Samsung and Sony was $400, with the Vizio set priced at about $1,000.

After first taking the lead in the North American market in the second quarter of 2007, Vizio’s share of LCD-TV shipments dwindled to 8.7 percent in the second quarter of 2008. However, by the first quarter of 2009, the company’s market share had risen by two and half times the level of the low in the second quarter of 2008.

While Vizio has maintained its low pricing, it has managed to add newer features to its LCD-TVs, such as 120Hz, making them more competitive with those from premium brands like Samsung and Sony.

Another factor contributing to Vizio’s success is the company’s use of high-powered retail channels to sell its sets, most notably Wal-Mart.

Are LCD-TVs must-have items?
North American LCD-TV shipments in the first quarter amounted 6.3 million units. While this was down 23.2 percent from 8.1 million units in the fourth quarter, the decline follows the normal seasonal pattern of shipments peaking in the fourth-quarter holiday season and falling to the low point of the year in the first quarter.

Compared to a year earlier, in the first quarter of 2008, regional shipments in the first quarter of 2009 were up by 10.5 percent, indicating the LCD-TV market remains strong despite the economic downturn that has caused sales of most other consumer-electronics products to decline.

Rather than stopping their purchases of LCD-TVs, consumers are focusing on lower-priced sets.

“With LCD-TV sellers in the first quarter maintaining their promotions from the holiday season, and with prices declining, television sales managed to grow compared to the same period a year earlier,” Patel said.

Insignificant others
Vizio posted the largest increase in market share and shipments among the Top-5 North American LCD-TV brands.

The combined market share of the smaller players, accounted in the “others” category, saw their portion of shipments plunge to 21.9 percent in the first quarter, a significant drop from 29.4 percent in the fourth quarter of 2008.

“Smaller brands saw their share of shipments decline so rapidly because of increased competition from the premium brands in terms of pricing and availability of 32-inch and smaller sizes,” Patel said. “Premium brands priced some of their product lines very competitively with their value alternatives, compelling consumers to go for names that they recognize.”

Source: iSuppli

Plasma panel shipments fall Y/Y for second quarter in a row, down 22 percent to 2.8mn units

AUSTIN, USA: As global demand remains weak due to poor economic conditions, plasma panel shipments from panel makers to brands fell Y/Y for the second straight quarter after posting strong growth during most of 2008.

According to the latest Quarterly Global TV Shipment and Forecast Report, Plasma and LCD TV Panel Shipment Module from DisplaySearch, shipments fell 28 percent Q/Q in Q1’09 and 22 percent Y/Y to just under 2.8mn units, down from 3.5mn units in Q1’08.

Most of the decline was due to 32” models being discontinued in 2009, but even 42” and 50” panel shipments fell in Q1’09. Some brands announced their withdrawal from the plasma TV business in Q1’09, like Pioneer, while other brands decided to shift away from plasma to focus on LCD TV only, like Vizio. The result was weaker than anticipated shipments as the number of brands consolidates.

Additional notable developments from the Q1’09 shipment results include the following:

* 50”+ share of shipments reached a new high of 33 percent in Q1’09 from 30 percent in Q4’08 as the 32” market subsides and plasma TV brands focus on the 50”+ market where they remain more competitively priced than LCD.
* 1080p share of shipments dipped slightly from 25 percent in Q4’08 to 22 percent in Q1’09 as manufacturers focused on offering the lowest priced products to consumers, such as 42” and 50” 720p models, at a time when consumer price sensitivity continues to climb.
* As the 32” shipment share declined, most of the share was picked up at 50” with a smaller share increase at 42”.
* 46” shipment share continues to struggle to rise over 3 percent of unit volume for two reasons. 42” and 50” HD products are priced at very compelling levels, and competitive 46” and 47” 1080p LCDs are priced similarly to 46” 1080p plasma, limiting growth.

"As bad as plasma unit shipments were in Q1’09 relative to a year ago, plasma panel revenues were even worse, declining 36 percent Y/Y as falling prices were needed to stem even steeper demand falloff," noted Paul Gagnon, DisplaySearch Director of North America TV Market Research. "With future investment in capacity expansion on hold at almost every plasma panel maker except Panasonic, improvements in technology, such as greater luminance efficiency and more efficient manufacturing at existing fabs, will be the key areas of investment to maintain cost competitiveness against future LCD fab capacity expansion."

The top plasma panel suppliers on a unit basis were Panasonic at #1 with 37 percent share in Q1’09 and Samsung SDI at #2 with 31 percent, followed by LGE (26 percent). Since Hitachi and Pioneer will withdraw plasma module production in 2009, only three major panel makers are left in the plasma industry.

As shown in the following table, the ranking in terms of revenues was the same with Panasonic’s lead a little stronger due to a greater mix of 1080p. However, both Samsung and LGE are quickly increasing their 1080p production. Only Panasonic was able to achieve a slower level of revenue decline than the category average with LGE and Hitachi both falling more than 50 percent Y/Y.

Table 1: Plasma Panel Revenue Share and Growth by SupplierSource: Quarterly Global TV Shipment and Forecast Report, Plasma and LCD TV Panel Shipment Module