TV Pricing Seems Headed for Calmer Holiday, Say CE Makers, Retailers

But some signs augur more than a placid Q4. For example, Vizio again is shipping a 720p-capable 60W plasma TV to Costco that’s being promoted at $2,199. Vizio stopped sending Costco the 60W for four to six weeks after price moves by Panasonic with 1080p-capable models; the Vizio pipeline is open again, Jeff Schindler, Vizio vice president of marketing and business operations, told us. Vizio also dropped a 42W plasma TV from its line in the face of price competition from similarly-sized LCD models, Schindler said. Circuit City is selling through “a couple hundred” of the 42W sets that remain, he said.

Panasonic also is said to be readying a 46W plasma TV, a new screen size for the category; pricing and product details weren’t immediately available. Jeff Cove, vice president of technology and alliances at Panasonic, declined to comment. Nor would Cove say whether Panasonic again would be aggressive in Black Friday sales. In panels, Cove suggested Black Friday is a necessary evil, good for calling attention to CE and getting December sales going, perhaps at the cost of shocking discounts. “It’s a promotion for retail that crosses not just the consumer electronics industry, but everything else as well,” he said. “It gets attention for many categories and sets the tone for the entire selling season… The benefit to our industry of Black Friday is to bring attention to the products we want to sell. But there may be some trade offs and real costs for doing that.”

“The marketplace doesn’t even understand how good they already have it,” said Bob Gartland, president of Ingram Micro subsidiary AVAD. “We have lots of TVs to sell for a long period of time that don’t necessarily have to be better than what we have today. They're so much better than what anyone ever watched in the history of television that maybe we all could actually try to make some money on them, which would be a neat concept for the TV business.”

Expected tightness in supply of 32W and 37W LCD TVs all holiday selling season could temper discounting in what have ultra-competitive screen sizes, officials said. Vizio, for example, has less than four weeks’ supply in those sizes, about half the industry average, Schindler said. It expects to sell 3 million units this year, on sales of $2 billion, more than double its revenue a year ago, Schindler said. The revenue rise came courtesy of adding Circuit City, Sears and Wal-Mart, he said.

“When you look at the supply stuff, you wonder,” said Noah Herschman, Amazon AV products director. “You don’t know what the panic button will be, but at the end of the day we always do well because we're a website. We have a lower cost structure and we pass a lot of savings on to the customer. For us, the lower the prices, the more customers will buy.”

Sony Senior Vice President Randy Waynick warned against cutting prices too quickly in a still-growing category for which demand is building. “Prices have declined slightly over the last 12 months despite the arrival of larger screen sizes and that’s not a good sign for our industry,” Waynick said. “Consumers need to understand that HD offers more than just price. We want to bring consumers more options and value and value isn’t determined by price alone. It’s the utility and the entertainment that the set delivers.”

To offset price cuts, many retailers bundle accessories and services with TVs, executives said. Amazon now has an “accessories” tab suggesting products to buy along with a set, such as a remote control or cables, Herschman said. Amazon also has trained reps at its Grand Forks, N.D., call center to suggest items to buyers of TVs and other CE products, he said. As CE prices plummet, retailers should rely less heavily on weaving warranties or services into sales, PRO Buying Group Executive Director David Workman said. “As retailers adjust to falling price points, they have to rethink the bundle, because some of the traditional mechanisms like warranties and services may not work downstream,” Workman said.

Wireless video technology could be a boon for the TV business, but standards for it are two years away, said Syntax-Brillian CEO Vincent Sollitto. Sollitto said wireless could “truly change” how consumers use sets, prompting Mitsubishi AV Marketing Vice President Frank DeMartin to counter that trumpeting its arrival is “a bit premature.”

New components like LEDs and lasers may be a life buoy for the rear projection TV business, which has slumped as flat-panel TVs have surged, executives said. Mitsubishi expects to bow a laser-based 60W or larger rear-projection set at CES, DeMartin said. Lasers mean Mitsubishi will develop sets with a design that is a “pretty dramatic departure from current technology,” DeMartin said. “But it remains to be seen how dramatic we can get going forward and it may translate beyond microdisplays several years from now. Laser has the ability to take large and smaller screens down to 50 inches into new growth areas.”

Despite technological advances, the rear projection TV remains “challenged” and needs to be “evaluated and looked at,” said Waynick of Sony, which markets LCoS-based SXRD TVs. “A lot of it is form factor and how it fits into peoples’ homes,” Waynick said. “Dollar for the inch, it’s certainly the best proposition out there and will be for quite some time.” -- Mark Seavy

DisplaySearch HDTV Conference Notebook…

While Amazon suffered spot shortages of iPods, digital cameras and plasma TVs last holiday season, it isn’t expecting similar problems this year, Herschman said. Plasma TVs and iPods are in ample supply, and Amazon will benefit as a top seller of digital cameras, Herschman said. “There is going to be a lot of plasma,” Hirschman said. “With cameras, it comes and goes and generally speaking we're such a good camera dealer that we have a preferential allocation,” he said. Amazon also continues to receive good response to its “Click to Call” option and premium delivery services for TVs, Herschman said. Click to Call, launched last year, allows consumers to enter a phone number at the Amazon site, prompting a customer service rep to contact them with information about a product (CED Jan 12 p6). “We're seeing 43 million customers a month so you don’t have to have too many of them click to get thousands of calls,” Herschman said. “But the truth is most people shop online because they don’t want to interact. If they get to something where they can’t make a decision based on all of the myriad of data we present them, they call.” Amazon ships all TVs free of charge “because we need that for the customer experience and to make sure the TV is working, Herschman said. Those delivering TVs for Amazon unbox and set them up, but don’t handle installations, he said.

----

The PRO Buying Group will add another four vendors to its program for forecasting product purchases, said Workman, who declined to identity the suppliers. Two vendors likely will sign on in early 2008, the others later in the year, he said. PRO unveiled the program with Panasonic earlier this year (May 11 p1), but held off adding suppliers so it could tweak the program’s software. PRO went live with Panasonic in April and all but “a couple” of the group’s 18 members have joined, Workman said. Manufacturers added to the program will service a broad swath of the membership, Workman said. Portions of the system will likely be automated to allow for easy exchange of data, Workman said. PRO expects to get a report back by month’s end from Claritas on a program it ran this year with Sony ES receivers, XBR products and Blu-ray players. Nielsen was hired to collect and analyze customer data. The Claritas Prizm NE system divides a population into 66 segments ranked socioeconomically. “Basically you take your list of customers and start matching products with them,” Workman said.

----

Syntax-Brillian expects to finalize a consent decree with the FCC within “a couple of months” over its alleged DTV tuner mandate violations, Sollitto told us. The company had expected to get a “preliminary number” from the FCC earlier this year (CED July 17 p2) on how much it must pay to settle charges it shipped 22,069 analog-only TVs in violation of the mandate (CED June 28 p1). “We're in negotiations and I think this is going to resolve itself pretty quickly,” Sollitto said. Syntax also is awaiting a final decision from the Chinese government that will likely dictate its strategy for LCoS-based rear projection TVs. A limited number of sets have shipped in the U.S., including an entry-level $1,999 model, but that could expand if the Chinese government follows through on a pact to jointly fund light engine production in China (CED May 16 p2). The company’s existing joint venture, Sino Brillian Display Co., started light engine production last year and has capacity to make about 5,000 units monthly. The joint venture’s aim is to build a million units annually by 2008, assuming it gets the Chinese government backing it needs. “It all depends on what happens with the Chinese government because there we're talking about a million TVs,” Sollitto said. “By itself, it’s not a big enough business. It’s certainly enough if you're not trying to be a $2, $3 or $4 billion company, which is what we're trying to do.”