Captain Video
01-12-2007, 02:04 PM
This is a very curious article that was printed today at "Folha de São Paulo" , the most important newspaper here in Brazil. I tried my best to translate it to English:
PRICE OF THIN TVs IS FALLING, AND INDUSTRY FEARS TROUBLE
Rising in the number of TVs sold didn’t compensate the fall in the value of the sets; price in the country may stop to decline
Manufacturers of thin TV sets ( plasma and DLP ) are having a rare moment of agreement: the fall in the prices is here to stay, and an “earthquake” in the world’s industry may be unavoidable. This fall in the prices also happened in Brazil in the last couple of years, and executives in the country say that they even sell sets without making profits.
“There are so many manufacturers in the market. But how many are going to survive?” asked Dong Jin Oh, CEO of the American Division of Samsung Electronics, during the Consumer Electronics Show, the biggest fair of the sector in the world, that finished yesterday in Las Vegas.
“The demand is growing too fast in the USA, but the fall in the prices is so huge, so big, that [ a “quake” in the industry ] is unavoidable” , he said.
In the evaluation of Michael Ahn, Operations Director of LG Electronics in the US, “only some companies will be able to survive and become important makers” in the world.
In Brazil, companies like Panasonic, Philips and Gradiente [ a local brand ], have already informed that their 42 inch sets, sold at R$ 4.999 [ something around US$ 2,500 ], are being sold “in the red” ( without making profits ), by the companies who are willing to sell at that price. “For less than R$ 5.999 the market is selling without profits. There’s no way to operate with such low prices” , said Rui Pena, Director of Panasonic in Brazil.
It might not make sense one industry manufacture goods without guaranteed profits. But it might happen as a reflex of an aggressive war price, in which one offer stumbles over the next, in a velocity difficult to control.
When the prices started to fall in a more accelerated manner in Brazil in 2005 – in November that year the TVs were being sold at R$ 9.999 – it was expected that the volume of sales would compensate for the fall in the values. The amount of sets sold grew, but, with war price between brands and stores there was no balance between price and volume.
José Fuentes, Vice-President of the Electronics Division of Philips for Brazil, believes that, for now on, considerable falls in the prices are not to happen.
According to Eletros [ the Brazilian association of manufacturers of consumer electronics ], the field of DLPs and plasmas grew 400% in 2005, with 58.000 units sold ( 0,6% of the totals ) in the last year. The field may represent 3% of the sellings until 2008, according to the association.
The estimate of the manufacturers in the country is that plasma and DLP TVs represent 2% of the sales of TV sets – something around 200.000 units – this year.
As a way to cut losses, new technologies ( like the High Definition system of images ) make the prices of these sets a little more expensive – or prevented an even bigger fall in the prices on the last year. But it didn’t rose the margin of profits of the manufacturers in the country.
Suppliers of electronics all around the world had huge expectations that the new wave of TV sets put on the walls would be a new motivator for profits. But this US$ 84 billion market has been affected by a never ending fall in the prices – making the profits more and more smaller for many companies.
That could change if some companies decide to abandon this field – which is terrible for the consumer. He may ending paying more for the product, with less concurrence. However, it’s good for the finances of the companies.
The global demand for TVs of liquid display ( DLP ) and plasma might increase at 52% this year in the world, according to the research company DisplaySearch.
However, because of the deflation in the prices, in terms of revenues, the world growth in the field may be of only 22%. In Japan, the earnings of the market of thin TVs might diminish as well. A joint-venture between South Korean Samsung and Japanese Sony might result in a new DLP factory this year. Matsushita ( Panasonic ) expects to begin operations of its most recent unit for production of plasma screens until the middle of this year.
PRICE OF THIN TVs IS FALLING, AND INDUSTRY FEARS TROUBLE
Rising in the number of TVs sold didn’t compensate the fall in the value of the sets; price in the country may stop to decline
Manufacturers of thin TV sets ( plasma and DLP ) are having a rare moment of agreement: the fall in the prices is here to stay, and an “earthquake” in the world’s industry may be unavoidable. This fall in the prices also happened in Brazil in the last couple of years, and executives in the country say that they even sell sets without making profits.
“There are so many manufacturers in the market. But how many are going to survive?” asked Dong Jin Oh, CEO of the American Division of Samsung Electronics, during the Consumer Electronics Show, the biggest fair of the sector in the world, that finished yesterday in Las Vegas.
“The demand is growing too fast in the USA, but the fall in the prices is so huge, so big, that [ a “quake” in the industry ] is unavoidable” , he said.
In the evaluation of Michael Ahn, Operations Director of LG Electronics in the US, “only some companies will be able to survive and become important makers” in the world.
In Brazil, companies like Panasonic, Philips and Gradiente [ a local brand ], have already informed that their 42 inch sets, sold at R$ 4.999 [ something around US$ 2,500 ], are being sold “in the red” ( without making profits ), by the companies who are willing to sell at that price. “For less than R$ 5.999 the market is selling without profits. There’s no way to operate with such low prices” , said Rui Pena, Director of Panasonic in Brazil.
It might not make sense one industry manufacture goods without guaranteed profits. But it might happen as a reflex of an aggressive war price, in which one offer stumbles over the next, in a velocity difficult to control.
When the prices started to fall in a more accelerated manner in Brazil in 2005 – in November that year the TVs were being sold at R$ 9.999 – it was expected that the volume of sales would compensate for the fall in the values. The amount of sets sold grew, but, with war price between brands and stores there was no balance between price and volume.
José Fuentes, Vice-President of the Electronics Division of Philips for Brazil, believes that, for now on, considerable falls in the prices are not to happen.
According to Eletros [ the Brazilian association of manufacturers of consumer electronics ], the field of DLPs and plasmas grew 400% in 2005, with 58.000 units sold ( 0,6% of the totals ) in the last year. The field may represent 3% of the sellings until 2008, according to the association.
The estimate of the manufacturers in the country is that plasma and DLP TVs represent 2% of the sales of TV sets – something around 200.000 units – this year.
As a way to cut losses, new technologies ( like the High Definition system of images ) make the prices of these sets a little more expensive – or prevented an even bigger fall in the prices on the last year. But it didn’t rose the margin of profits of the manufacturers in the country.
Suppliers of electronics all around the world had huge expectations that the new wave of TV sets put on the walls would be a new motivator for profits. But this US$ 84 billion market has been affected by a never ending fall in the prices – making the profits more and more smaller for many companies.
That could change if some companies decide to abandon this field – which is terrible for the consumer. He may ending paying more for the product, with less concurrence. However, it’s good for the finances of the companies.
The global demand for TVs of liquid display ( DLP ) and plasma might increase at 52% this year in the world, according to the research company DisplaySearch.
However, because of the deflation in the prices, in terms of revenues, the world growth in the field may be of only 22%. In Japan, the earnings of the market of thin TVs might diminish as well. A joint-venture between South Korean Samsung and Japanese Sony might result in a new DLP factory this year. Matsushita ( Panasonic ) expects to begin operations of its most recent unit for production of plasma screens until the middle of this year.