Falling retail costs and new developments in manufacturing technology have rapidly transformed the flat panel television (FPTV) market. ECN analyses the performance of the market leaders and investigates the key trends shaping the segment's future.
The strength of the consumer markets of the Middle East has made the region a major target for FPTV vendors. With consumers buying FPTVs in record numbers, many vendors are reporting massive increases in sales and profitability.
Industry analyst IDC predicts that consumer anticipation for the introduction of high definition television (HDTV) broadcasting and next-generation DVD players are likely to spur growth in the Middle East FPTV market in 2007.
Taiwanese vendor BenQ is relying on the performance of its LCD TV range to boost its fortunes in the region.
"In the Middle East, we are expecting huge growth in terms of unit shipments," reports Manish Bakshi, general manager of BenQ Middle East and Africa. "We estimate that our total shipments will increase from 72,000 in 2006 to 235,000 by 2009."
Bakshi cited recent reports that predicted the global FPTV market would grow 400% by 2009 to be worth around US$85 billion, with shipments exceeding 101 million annually. Bakshi says the Middle East is almost "twice as valuable" to BenQ in terms of sales compared to Europe, adding that the company's entry-level VA series of LCD TVs are enjoying "unprecedented" demand in the region's emerging markets.
"LCD TV sales have been strong across the Middle East and the huge demand in niche markets such as Kuwait proves the future of digital entertainment lies very much in these products," adds Bakshi.
Samsung Gulf cites research by market analyst DisplaySearch, which ranks the South Korean juggernaut at the top of the global TV market in the third quarter (Q3) of 2006, recording sales of 5.1 million units and revenues of around US$3.8 billion.
DisplaySearch placed previous market leader Philips in second position in terms of unit shipments in Q3, 2006, with an 11.7% market share. Meanwhile, Panasonic closed the third quarter with 12.3% revenue share, while Samsung consolidated its position at the top of the market with 15.5%.
The report also states that Sony ranked third in terms of revenue share throughout the opening three quarters for 2006, eventually falling to 10.9% in Q3.
Samsung and Sony plan to leverage their combined manufacturing prowess through their joint LCD production venture S-LCD Corp, based in Tangjeong, South Korea, to shore up their dominance of the global LCD market. The companies occupied the top two positions throughout the first three quarters of 2006. Sony eventually trailed its South Korean partner in Q3 with 15.2% revenue share compared to Samsung's 15.6%.
"Once our 8G line is up and running, we will assume the leading position as a LCD TV panel manufacturer for the 50-inch LCD TV range," claims Won-Kie Chang, CEO of S-LCD.
Sharp has leveraged its eighth-generation manufacturing facilities at its Kameyama Plant in Japan to double its 40- and 50-inch LCD screen manufacturing capacity to 30,000 substrates per month. The company expects to manufacture 22 million LCD TVs in 2008. "This will enable us to maintain our number one worldwide market share of approximately 15%," claims Takashi Nakagawa, corporate executive director and group general manager of the International Business Group at Sharp Corporation.
The rise in consumer demand for FPTVs has led some industry analysts to predict a shortage of LCD panel displays for the fiscal year beginning March 2007. This recently prompted S-LCD to begin production of its 46- and 52-inch glass substrates ahead of schedule.
"At the moment there is the possibility of a shortage [of LCD screens] in the second half [of 2007]," claims Sang-wan Lee, president of Samsung's LCD business.
Lee also claims that consumer demand for larger LCD screens will stimulate the market in the 40-inch-plus segment. "Size standards keep changing, the next industry-standard will be 46-inches and by 2008 the 52-inch and larger panel market will grow rapidly."
The anticipated shortage of LCD panels and continued increase in consumer demand for large screen FPTVs has prompted LG to turn to its plasma display panel segment (PDP) to revive its fortunes in the flat panel television market after its LCD production company LG.Philips - a joint venture with fellow consumer electronics vendor Philips - posted a loss of US$184 million in the final quarter of 2006.
"We'll be concentrating on the value-added aspects of our high-end products such as the ‘Time Machine' capabilities of our LCD and plasma televisions. Display size is no longer the most important consideration among consumers looking for a premium FPTV," claims Hamad Malik, director of corporate communications and marketing at LG MEA.
The company expects its policy of targeting consumers with large disposable incomes will help it achieve its target of 117% growth in terms of units sold in the Middle East this year. The company is aiming for a 36% increase in terms of PDP unit shipments in the Middle East in 2007.
With the majority vendors committed to LCD and PDP production, cathode ray tube (CRT) televisions are facing extinction. However, some vendors are reporting a healthy turnover in the region's developing markets.
"CRT is a significant market in terms of sales results and turnover, especially in the developing markets of the Middle East and Africa," claims Leonard D'Souza, general manager of G-Hanz. "Markets such as Saudi Arabia, Yemen, Oman, Sudan, Egypt and Nigeria, still offer attractive volumes to companies with competitively priced CRT sets."
D'Souza also claims that the lack of competition from the Middle East's CRT market creates additional opportunities for entry-level brands unable to compete with the market leaders in terms of profit margins.
"The prices in the CRT market have stabilised and there is less pressure from the major brands," claims D'souza. "The burgeoning middle classes in the region has added to the demand for large screen CRT sets in the MEA market. I think this will be the case for some time in the region."
The fall in retail prices and rapid development in display technology has undoubtedly led to a more diverse FPTV market as vendors scurry to exploit untapped consumer demand.
LCD TVs are widely regarded as providing vendors with the greatest commercial opportunities given their inherent marketability. However, Middle East consumers are demanding greater product performance at cheaper prices. With the industry's ‘big three' - Samsung, Sony and Sharp - set to do battle in the eighth-generation substrate field it appears that LCD technology will eclipse the CRT and PDP segments in terms of sales in the coming years.
Since pulling out of the plasma TV market in 2006, Sony has achieved great success with its Bravia LCD TV range in global markets. The company recently revised its sales forecast for 2006, predicting that global shipments of its Bravia range would exceed initial forecasts of six million units in the financial year ending March 2007.
An anticipated LCD panel shortage in 2007 has also resulted in unconfirmed reports that Sony is planning a return to the plasma TV market.
The company's latest LCD TV to be launched in the Middle East boasts a screen size of 52-inches.
"Unlike most TVs, the BRAVIA X-Series isn't just HD-Ready; it's ‘Full HD'-capable. Instead of scaled images which have been digitally reduced to fit lower resolution panels, Full HD reproduces HD 1080p images as they were intended," says Masaru Tamagawa, MD of Sony Gulf.
Sony Bravia LCD TV
Bravia and Triniton series
Samsung leveraged its impressive LCD panel manufacturing resources to wrest the top spot in the global television market from Sony in the final quarter of 2006.
According to market analyst DisplaySearch, the South Korean company led the Middle East market for LCD TVs in 2006. In the UAE, the company enjoyed a 27.6% share of total LCD TV sales, while in Iran, it held a staggering 48.9% share, according to GfK Marketing Services.
"Samsung Electronics has captured the market in major markets in the region with premium LCD and PDP products, and achieved the accolade of taking the global lead in total unit sales and revenue," said Chi Won Suh, president and CEO of Samsung Electronics Middle East and Africa headquarters.
Samsung Bordeaux LCD TV
Bordeaux, LA, PS and SP ranges.
Eros, SMB Distribution.
Sharp is another major player in the LCD TV market. In its home market of Japan, the company's Aquos range accounts for more than 40% of all LCD TV sales, while it has also achieved considerable success in Europe and the United States. At the recent Consumer Electronics Show in Las Vegas, Sharp also unveiled the world's largest LCD TV, which boasts a screen size measuring a whopping 108 inches.
The company's stated aim is to shift 8.5 million LCD TVs in the Middle East and North Africa by 2010.
Sharp Aquos a TV
Aquos, CTV Pure.
G-Hanz is trying to keep pace with the major players in the Middle East FPTV market by marketing products in most LCD and PDP screen size categories.
Like many of its rivals, G-Hanz is reporting "marginal" growth in terms of sales of its plasma TVs, compared to massive consumer demand for its LCD TVs in the region.
Dubai-based G-Hanz FZCO managing director Leonard D'Souza claims that developments in LCD and PDP technology have resulted in "a more level playing field" among the major players in both segments, but concedes that all channel players are suffering from retail price erosion as competition in the market heats up. D'Souza also reports strong demand in the GCC markets for G-Hanz's LCD and PDP ranges with screen sizes exceeding 40-inches.
G-Hanz Alexius LCD TV
Cacilia, Alexius and Beatrix series.
The New Store (UAE).
The South Korean manufacturer is priming itself for a further surge in sales across its flat panel display portfolio this year, after overtaking China's TCL as the top television manufacturer in terms of total sales mid-way through 2006, according to figures published by market analyst iSuppli.
LG expects LCD TV sales to make a major contribution to realising its target of achieving annual turnover of US$42.7billion in 2007.
The company expects to sell eight million LCD TVs and a further 2.5 million plasma TVs this year. While LG had not confirmed full-year sales results for 2006 at the time of press, it admitted that meeting its targets in 2007 would require a doubling of its overall sales achieved in 2006.
LG plasma TV
CT, RT, f-, L- and P-series.
Al Sayegh Brothers.