Coming Attractions

The crystal ball comes out for 2003.

It's that wonderful time of the year again — a new calendar isstarted, resolutions are made, and columnists all over the world try tomake an educated guess as to where their markets are headed over thenext 12 months. Usually, the guess part is more accurate thanthe educated part. Still, there have been some clear trends inthe projector, monitor, and interface industries in recent months thatwill have major impacts on pricing, product features, performance, andeven distribution channels.

The largest impact is being felt from a lingering businessrecession. This, along with overly optimistic sales forecasts in thepast, has resulted in an oversupply of some display components. Marketsparticularly affected include flatscreen LCD and plasma monitors andTVs.

Several Asian manufacturers (Mitsubishi, Sharp, and Hitachi) haveconcluded that there is no future in manufacturing cathode-ray tubes(CRTs) for TVs and monitors and have accordingly shut down (or willsoon shut down) production of tubes in favor of flat-screens. Others(Samsung, LG, NEC) perceive a tremendous opportunity in flatscreens andare ramping up production of LCD and plasma monitors to be ready forit.

Couple all these manufacturers of plasma and LCDs with high-capacityplants with a business slowdown and oversupply of product, and theresult is an unprecedented wave of price-cutting. As I write this, youcan buy an EDTV (852×480 pixel) widescreen plasma monitor fromGateway for just less than $3,000. It wasn't that long ago that 42in.EDTV monitors were close to $10k!

The drop in prices of 42in. glass, along with market demand forhigher image resolution, is driving EDTV panels off the market in favorof “pseudo” HD pixel formats like 1024×768 non-squareor 1024×1024 non-square. First introduced at around $10k, theprices on these panels are also dropping rapidly.

Prices for 50in. HD plasma have plummeted even more quickly. Severalmanufacturers have models that list for $10,000, and you can saveseveral thousand off those prices with aggressive catalog or Internetshopping. Even 60in. panel prices have dropped by almost half sincethey started appearing two years ago.

Things aren't all that much different with AM LCD monitors and TVs.Sharp was the first company to import a 28in. widescreen LCD monitor acouple of years back, and it came at a pretty steep price — about$14k. Today, Sharp's 30in. integrated LCD TV product has a list priceof just less than $7,000. That's a 50% drop in pricing in about oneyear.

There are other market forces attacking LCD prices. One is that acouple of manufacturers (LG Philips and Sam-sung) reached 40in. screensizes faster than expected. Samsung's list price of $10k for its40in.16×9 HD monitor will quickly drop as it is chased in 2003 bya 42in. LG Philips product, Samsung's new 46in. LCD monitor, and LG'srecently announced 52in. LCD offering.

To the average user, the differences between LCD and plasma monitorsmay be hard to see. The attraction for consumers has always been thesuper-thin screens, while systems integrators like the wide viewingangles and bright image under normal ambient lighting. The ultimatedifferentiator will probably be price, and some companies that sellboth types of technology may need to ditch one in favor of theother.

Look for some more aggressive price cuts and a wave of new LCDmonitor products to compete with plasma, along with further pricingpressure on the popular 42in. and 50in. sizes. Can we get to $50 to $60per diagonal inch in 2003? Many industry experts don't think so, but ifanyone can pull this trick off, it will probably be a Taiwanese orKorean manufacturer.

Projector manufacturers face similar pressures. New models are beingintroduced with lower and lower price points, meaning they are lessattractive to traditional commercial and pro A/V resellers of theseproducts. Instead, some projectors may be sold directly through suchlarge retail chains as Staples and Office Max. Don't be surprised tosee one or more models sold in places like Best Buy, Circuit City, andeven Wal-Mart (yes, Wal-Mart) by the end of 2003.

The problem here is that the newer models don't have enhancementssufficient to convince owners of older projectors to upgrade. Truth is,if you installed a 15lb. to 20lb. chassis with 1500 to 2000 lumensbrightness and XGA resolution in 2000, it's probably still adequate foryour needs. If you bought a sub-10lb. XGA portable with 800 to 1000lumens brightness in the past two years, why upgrade it? Is it reallythat heavy?

While industrial sales of projectors are slow, a new market forprojectors, one that has been priced out of the market until now, willstart to emerge — primary and secondary schools. Projectorproduct managers know that SVGA projectors continue to sell wellbecause they are attractively priced when compared to similar XGAmodels, even when this year's XGA model has dropped to the price levelof last year's SVGA offering.

With SVGA LCD projectors approaching the $1k street price mark, weshould see sales into the educational and nonprofit markets pick upconsiderably. XGA projectors will start to dip below $2k, a point thatmakes them even less attractive to mainstream pro A/V dealers but moreso to the big box stores. These will be marketed as plug-and-playproducts with direct manufacturer technical and service support, justlike Dell and Gateway computers.

To drive sales of higher-priced units in 2003, projectormanufacturers will try to stuff every bell and whistle they can intothese products. Look for widespread adoption of 802.11b wireless LANcards, PCMCIA card viewers, LAN control and IP addresses, multi-angledigital and mechanical image offset correction, and other goodies tosell larger portables and desktop/installation models.

Companies that lived off large-venue projection markets during theconversions from older light valves and CRTs to LCD and DLP are nowfinding the pickings slim with each passing year. The traditional priceadvantage that LCD imaging has over Digital Light Processing willcontinue as high-volume projector manufacturers sign more OEM deals toget their products out of warehouses. One large-venue manufacturer isalready pursuing the market with lower-priced, high-brightness LCDprojectors that cost half as much as its own xenon-lamped DLPdesigns.

To add further confusion, many high-end staging and rental customersare abandoning (perhaps permanently!) front-projection technology forlight-emitting diodes (LEDs). LED walls are better suited to highambient lighting conditions and can be arranged in tiles. They're alsoeasier to ship and are a true one-piece display solution.

Look for more of the traditional large-venue projector companies toadd smaller LCD projectors, tiled LED displays, and possibly plasma andLCD monitors to their lines, just to keep some cash coming in the frontdoor. There may also be some consolidation in this segment of theprojector industry. There are too many companies trying to sellprojectors right now, and the alternatives are either to get out of thebusiness (which has happened before) or merge operations with anothermanufacturer.

The interface marketplace is in a similar state of flux. Just as onecompany comes out with a clever product, everyone else copies it, and aprice war ensues. Systems integrators are wrestling with the move fromanalog signal distribution to systems like Cat 5 balanced line (UTP),LAN, and even fiber optics. Will one win out? Will all of themsuffice?

My guess here is that Cat 5 UTP distribution will eventually fallout of favor as pure digital modes like fiber optics and LAN with IPaddresses take over. A migration from UTP to a LAN system is easy topull off because the wiring is the same. Fiber optic-basedinfrastructure wiring faces much more of an uphill battle, but it is atrue broadband system and has benefited from substantial reductions inmaterials costs in recent years.

You'll also see growth in aftermarket video signal processorsdesigned to plug in to plasma and LCD monitors as well as frontprojectors. Other than the home-theater channel, there aren't many bigmarket opportunities for stand-alone video scalers, and many userswould just as soon have these gadgets (as well as seamless switchers)built into their front projectors and monitors.

The big names in video signal processing have already been signingdeals for some time now to sell their de-interlacing, motioncompensation, and pixel scaling chips directly to manufacturers of DVDplayers and other video sources. It won't take long for more savvymonitor and projector manufacturers to “open up” theirarchitecture and accept plug-in cards with interfaces for DVI, SDI,HD-SDI, and other formats.

The expansion of DTV broadcasts and HDTV programming will lead moremanufacturers to support the 16×9 aspect ratio standard. It'salmost de facto in the 22in. and larger plasma and LCD markets. Expectto see more front projectors that use 16×9 native LCD and DLPimaging not only for the home-theater market, but also for installationand staging and rental projectors.

Finally, keep your eyes out for emerging technologies like Sony'sGrating Light Valve (GLV) and organic light-emitting diodes (OLEDs).Although neither is ready for prime time, they have tremendouspotential to turn their respective projector and monitor markets ontheir heads over the next five years. There will be more demos of bothtechnologies in 2003, and you'll likely see small OLEDs show up inPDAs, cell phones, and game controllers in late 2003.

To comment on this article, email the Video Systems editorialstaff at vsfeedback@primediabusiness.com.