LCD technology will cannibalize existing CRT market by 2005

As IT resellers and retailers continue to search for new methods to improve revenue, the liquid crystal display (LCD) market consistently provides opportunities. Robust product demand, partially attributed to declining prices, combined with strong inventory have been key features of this market

since the beginning of 2002 through Q2 2003. Finishing the second quarter of 2003 with an estimated 174,000 shipments, vendors in the overall segment increased unit volume by 114 per cent over the same period last year. In an industry that typically experiences second quarter sequential declines in unit volume, quarter over quarter growth (six per cent) is remarkable. Evans Research forecasts strong activity to continue through to 2005, as LCD technology cannibalizes the existing cathode ray tube (CRT) monitor market.

Consumer and corporate LCD demand increased across the product segments in Q2-2003. Representing the bulk (49 per cent) of second quarter LCD unit volume, 15-inch displays accounted for 85,212 shipments. This result was up 41per cent from the same period in 2002. Interest in the 17-inch LCD segment rapidly increased in both the corporate and consumer markets, finishing the quarter with 37 per cent of unit volume. Vendors offering 17-inch LCD products witnessed a collective 334 per cent annual demand increase as shipments jumped to 65,100 units. The 18-inch LCD category experienced a tremendous surge, as corporate purchases increased 392 per cent year over year. Total 18-inch LCD shipments reached 12,300 units in Q2-2003. The sharpest rise in year over year activity was experienced in the 19-inch segment, which felt an 878 per cent increase in unit volume. A strong future is expected, as shipments remained slightly below the 10,000-unit mark for this rapidly growing segment. Vendors shipped a collective 8,800 units in Q2-2003.

Growth in the LCD market bodes well for monitor vendors and resellers alike due to strong partnership opportunities. Monitor vendors, as opposed to PC, currently dominate the segment. As a result, a large number of organizations offer a variety of products. The intensifying competitive market benefits both corporate and consumer clients, as resellers have the opportunity to offer the best solution for specific applications. Not limited to one sole product line, resellers can custom tailor solutions for specific customers. As a result, building relationships with suppliers and clients to provide stellar product and service opportunities, are key functions of the reseller market.

One of the advantages of LCD products stems from the reality that no one disputes the benefits of the technology: attractive form factors, small footprints, environmentally friendly, reduced user eyestrain, improved employee productivity and low power consumption. Up until recently, meeting CRT price points was the main stumbling block faced by vendors and resellers alike. However, pricing has declined significantly in the past two years. Average unit pricing is influenced by many factors, including inventory supply. At the beginning of 2002, inventory was significant in Asia. As supply tightened in Asia, prices stabilized in the Canadian market. This influence has been felt in Canada over the past nine months. As a result, LCD products pricing remains attractive and stable.

LCD price points still do not match CRT pricing. The average unit retail price on 15-inch monitors are approximately double that of their 17-inch CRT counterparts. However, for purchasers looking to make an IT investment for the next three-five years, spending a bit more to ensure enhanced productivity is a viable option, both in the corporate and consumer environments. Aside from contributing to individual productivity levels, smaller displays also contribute to less space required for desks and cubicles. As organizations expand, the incentive to remain in the same office space is an attractive option. The estimated $100 – $300 increased cost for a LCD compared to a CRT monitor pales in comparison.

The benefits of LCD products outweigh, in many cases, those of CRT products. As a result, Evans Research expects continued robust product demand for the LCD segments to 2005, in both the consumer and commercial segments. IT users and purchasers will migrate from CRT technology to the LCD product line, which provides opportunities for resellers to capitalize on increased hardware demand in the upcoming years.

Michelle Warren is a research analyst for Evans Research Corp. of Toronto.

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