Flat-panel HDTV prices still falling, but not as much as last year

Prices on flat-panel LCD and plasma TVs will decline in 2008, but not as dramatically as they did last year, when prices dropped by more than one-third overall. Still, look at the glass as half-full--you'll be getting lots more screen for the money. For the first time, you should find a good selection of LCD and plasma HDTVs with 40- to 42-inch screens for less than $1,000, and so-called "full HD" 1080p models in those sizes for $1,100 to $1,200.

In addition to better values, you'll also find more TV sizes—including bigger LCD displays and smaller plasmas—and a new type of display, OLED, which could be the wave of the future.

Here's what you can expect if you go shopping for a TV during the holiday season later this year.

LCD TVs
In midsized to larger LCD TVs, price cuts will range from 5 percent to 19 percent, according to industry experts at the recent DisplaySearch Flat-Panel TV Conference (click here to see the previous blog). You'll save more on 19-inch 720p models, which will average about $258 by year's end, 25 percent less than in December 2007. (All the DisplaySearch price forecasts listed here are for average selling prices at the end of this year compared to the end of last year.)

• a 32-inch 720p set will sell for $647, down 7 percent from December 2007
• a 37-inch 720p LCD TV will cost $782, down 5 percent
• a 40- or 42-inch 720p LCD TV will sell for $944, down 5 percent
• a 40- or 42-inch 1080p set will sell for $1,123, down 19 percent
• a 46- or 47-inch 1080p set will sell for $1,528, down 17 percent
• a 52-inch 1080p LCD TV will sell for $2,243, down 19 percent

Plasma TVs
DisplaySearch doesn't expect anything close to the cuts we saw last year, when overall plasma prices dropped 35 to 40 percent from the prior December, and prices of 50-inch 1080p models were down an astounding 63 percent. This year, price cuts will range from about 17 to 27 percent, they predict.

• a 42-inch 720p set will sell for $803, down 20 percent from December 2007
• a 42-inch 1080p model—which were scarce last year—will sell for $1,200, down 20 percent
• a 50-inch 720p model will sell for $1,154, down 17 percent
• a 50-inch 1080p model will sell for $1,817, down 27 percent

Other trends
• New TV sizes —55-inch LCDs and 46-, 37-, and 32-inch plasmas—should start to make inroads in the U.S. DisplaySearch noted the growing success of smaller plasmas in other regions of the world, and said that some manufacturers could look to grow their business in the U.S. by offering those sizes here to compete with LCD.
• There will be an increased emphasis on 120Hz technology, which minimizes the motion blur that has plagued LCD displays, even though it can add 30 percent to the cost of a set.
• Expect a shakeout among some second- and third-tier LCD brands as margins tighten and first-tier brands go after market share.
• The use of LEDs will surge, both in TVs and in notebook PCs. In the latter category, they could represent 10 percent of the market by the end of the year and 20 percent in 2009.
• OLEDs will have a breakout year—120 percent growth is predicted—although the technology won't have an impact on the mainstream TV market for several years. It will represent only 2 percent of the overall North American TV market in 2012.
• Wal-Mart and the warehouse clubs will continue to be more important retail outlets for TVs. These retailers are largely responsible for Vizio's emergence as the Number 3 flat-panel TV brand, and sales at these outlets are proving to be less seasonal than at other retailers. Wal-Mart is now the Number Two TV retailer behind Best Buy.
• As average selling prices and margins decline, look for retailers to push larger, higher-resolution TVs, or "bundles" that could include everything from Blu-ray high-def DVD players to accessories and extended warranties. For example, in 2006 the average gross profit on a 42-inch 720p LCD TV was $246; at the end of last year, it was $94, a 62-percent drop.
• Look for a mix of big brands and up-and-comers in stores. Based on unit sales, Samsung is the leading TV brand in North America, with 13.3 percent of the market, trailed by Sony (8.8 percent), Vizio (8.3 percent), Funai (7.8 percent), and Sharp (7.2 percent). But the lead changes hands periodically. Vizio was the number one brand in the second quarter of 2007 based on unit sales, and Sony rose to become the top LCD TV brand for the first time in the fourth quarter.

Despite price advantages in some screen sizes and some technological edges, plasma TV market share will continue to slide as more U.S. consumers continue to opt for LCD TVs. Stay tuned for an upcoming blog that will address our take on the relative merits of the two technologies, and ask for you to let us know which type you'll be buying and why.—James K. Wilccox