The HD TV Evolution: Part 3 – Tomorrow’s TV [Archive]

View Full Version : The HD TV Evolution: Part 3 – Tomorrow’s TV

Felix Torres

06-07-2006, 04:00 PM

Ever since its invention, TV has been watched almost exclusively on the glorified oscilloscope we call a Cathode Ray Tube (CRT). Alternatives have evolved, most recently in the form of flat-panel displays and microchip-based rear projection units and projectors collectively referred to as micro-displays. Nonetheless, close to 90% of TV viewing on planet Earth is done on CRT TV sets, mostly because they are reliable, cheap, and readily available. Given that the earliest HDTVs to hit the market were CRT-based, in both direct-view and projection form, it would be easy to assume the CRT will go on forever. It would be a false assumption. <!> Now, CRTs are not going to vanish overnight off the face of the Earth. But neither are they going to endure in the major HD markets much past 2010, if that long. Why? The very reason they are popular: the CRT market endures, despite razor-thin profit margins, because it is a high volume business. Once the volume starts to shrink even the slightest, the profits will vanish almost overnight. This will lead to a wave of product consolidation as some vendors choose to exit the market, letting their competitors pick up the residual market, rather than contest the scraps that remain. The process, in fact, has already begun: Lucky Goldstar has already announced their withdrawal from the CRT business in Western Europe. Henceforth they will only sell low-end CRTs in emerging markets. Others will follow. The upcoming collapse in the CRT market is due to a combination of two factors. The first, obviously, is the transition to digital HDTV in North America, as CRTs are finding it hard to compete at the larger screen sizes that the higher-res formats enable. The second is that even in HD-less markets like Europe and Asia, customers tend to buy by form factor and in those markets, thin is in, to the point that even high-res micro-displays are unable to penetrate those markets to any great extent. So, the question that arises is, what will be the replacement for the ubiquitous CRT? Plasma Display Panels (PDP), Liquid Crystal Displays (LCD), micro-display rear projection (at least in North America) or some other emerging display technology? The facile answer is: all of the above. The 90% of the market still held by CRT displays will be carved up among most of the existing competitors. The more detailed answer, however, is that the market is not going to be carved up equally; one of the contending technologies is going to easily grab at least 60% of the market and strongly contest the other third or so to be fought over by its competitors. When the dust settles, as much as 90% of all TVs sold in HD markets with run on variants of the same core technology, a technology already on the market and snowballing to an early lead. The televisions of tomorrow (defined as 2005-2015) are going to be overwhelmingly built off LCD technology in one of three variants: direct-view flat panels, transmissive micro-display, and reflective micro-display (aka LCOS). Which isn’t to say there won’t be room for the micro-mirror DLP rear projection systems (lots of them, in fact) or Plasma Displays and other advanced emissive systems like SED or OLED. However, the core TV market, the mainstream that serves as a baseline to define the market, the high volume center of the market is going to be strongly dominated by LCD displays. Why? Price, primarily. Scalability of the technology, too. But also because of reliability, consistency, and ubiquity, all of which which increase consumer comfort with the technology. The ultimate key key is scalability: The same technology that allows for 3.7” VGA panels for handhelds and 17” SXGA Computer displays can also be applied to HDTVs ranging from 19” upwards. And, while LCD-based HDTVs have tended to be more expensive than their PDP and MD-based competitors, at a given size, that is because, the size given in those comparisons tends to be 40+ inches. At smaller sizes, LCDs have dominated, simply because LCDs are the only alternative at sub-40in sizes and you can't buy a display that isn't for sale. And there begins the story of LCD domination: LCDs do small very well. LCDs do big reasonably well today and are doing better at it and getting bigger by the month. Most importantly, LCDs do very small at medium panel sizes very, very well. The migration of the displays to ever-larger, higher sizes is not so much a technology issue as it is a manufacturability issue, of the facilities being optimized to produce less large panels per “motherglass” slab instead of more smaller panels. It is those smaller panels that are the impetus behind the development of LCD technology: consumers are already well acquainted with LCD tech through their laptops, desktop monitors, digital music players, cell-phones, calculators and what-not. LCDs are everywhere. And LCD manufacturers are also everywhere. And they have all decided, en-masse, to invest massive amounts of capital to develop LCD tech suitable for HDTVs, all seeking to migrate from their current, marginally-profitable, small panel markets to the promised land of HDTVs. And they are right to do so. There is a lot of money to be made there. Just not as much as there would be if they weren’t all aiming for it. Folks, there is a glut of high-quality HD grade LCD manufacturing capacity of epic proportions out there. In a market growing at a rate of 50-70% year-over-year, capacity is coming online to exceed even that demand by another 50%. And, since LCD tech is semiconductor-based, it comes with volume-based learning curves that drive down the per-unit cost over time as the manufacturing process is improved and yields rise. And so we arrive at the fortuitous combination of a technology consumers are comfortable with coming to market in ever-increasing volume, at ever-increasing quality and an ever-decreasing price. <PAGEBREAK> Deja Vu? Now, where have we seen this before? Right! Desktop PCs. And like desktop PCs, LCD displays come with a multi-vendor, competitive, component supply chain. A supply chain that is already taking the first steps towards commoditization. Consider the following charts: 32” LCD Display parts cost breakdown projections, US$ <img src="http://www.digitalmediathoughts.com/media/users/634/Part%203%20-%20table%201.gif" /> A name brand panel that sold for $2000 at a national bricks 'n mortar store in summer 2005 is expected to retail for as low as $1000 by next Christmas. That’s a 50% price drop in 18 months. Not quite Moore’s law but still plenty good. And these price cuts are expected to continue unabated for the foreseeable future: LCD Display price projections (Name brand at B&M retail. Club/online prices 20% lower; 2nd tier lower still) <img src="http://www.digitalmediathoughts.com/media/users/634/Part%203%20-%20table%202.gif" /> Direct-view LCD TVs are already the dominant non-CRT HD displays in '06. After that, the only question that remains is how soon will they usurp CRTs' top spot. Forecast: HD-ready sales, US (2005-2007) <img src="http://www.digitalmediathoughts.com/media/users/634/Part%203%20-%20table%203a.gif" /> Looking at the projected pricing trends, it would seem 2008-'10 is a good time for a CRT market implosion in North America; right around the time 32” LCD displays hit the $600 price point. Now, of course, all this simply refers to market forces; nothing says that people will want to buy the LCD TVs. Proponents of other technologies will argue that their preferred tech is superior. Just as proponents of alternative PC architectures and OSes have long argued their favorites are “clearly” superior...which I’m not going to debate; each technology system has its strengths and its weaknesses and in the HD business the strengths of a given technology (PDPs, for example) come with directly linked weaknesses and vice-versa. The thing to keep in mind that in HD, even the worst is very, very good. And that, as Adam Osborne said: “Adequacy is sufficient.” LCDs are, frankly, the MS Windows of HD; they are simply “good enough”. Good enough to replace 27” CRTs. Good enough to watch sports and soaps and newscasts. Good enough for XBOXes and Playstations. Good enough to watch in brightly-lit living rooms. Good enough for the average consumer. Take for example the greatest bugaboo of LCD criticism; their “limited” color gamut. Yes, Direct-view LCD TVs’ color gamut—the variety of colors they can accurately reproduce—range from about 70-90% of the NTSC spec, whereas PDPs and microdisplays run close enough to 100% as makes no difference, right? One small problem: what customers are used to is actually worse. "Huh? CRTs are better than that!" Nope. Yes, professional grade CRT-monitors ARE better than that. But consumer-grade TVs (those 27” $299-699 baseline sets that dominate the analog TV market?), those only display about 60-70 percent NTSC. Which is why when consumers take LCD TVs home they are invariably pleased by the brightness (LCDs’ calling card: see below) saturation, and purity. It’s not that LCDs are the perfect display; it's just that they are better than what came before. And that is before addressing the strengths of LCD tech. Strengths such as: high full screen brightness, high contrast, and above all, high consistency. LCD brightness and picture quality is constant. Rear projector lamps dim over time; CRTs and PDPs lose brightness over time as the phosphors erode. But direct-view LCDs remain steady as a rock over a decade or more. And consumers already know this because of their exposure to LCD tech in their laptops and desktop displays. Finally, the nature of LCD tech allows a greater degree of product differentiation within a single company’s line than its current competition. It is easier for a company to create a line of products along the traditional good-better-best market segmentation philosophy that allows for cheap entry-level products that don’t cannibalize the high-margin premium products. (More on this later.) A company can, for example, build a three-tier LCD product line based on 720p CCFL backlight panels for the low end, 1080p strobing-CCFL panels for the midrange, and 1080p LED-backlight panels for the high end. All at the same 37” size. Or 42”. Or whatever. The thing to keep in mind is that they are not the best display technology for any single display characteristic one might measure, but they are a solid second or third in most of them. And they are cheaper: cheaper to build, cheaper to sell. Just like PCs. HD Display sample Specs: <img src="http://www.digitalmediathoughts.com/media/users/634/Part%203%20-%20table%204.gif" /> Bottom line: The HDTV market is headed toward the same economies that rule the PC business and just as in the PC business, adequacy rules. Rule number two of HD: “Good enough is exactly that; good enough.” The mainstream TV market will not go to the technology that best pleases techies and home theater aficionados; it will go to the tech that allows Joe-six-pack to sit back and watch his NFL or reality TV shows in the environment he is most used to at the best possible price. Absolute brightness is a must. Crisp, high-res images is a plus. Low-price is a big plus. So, while PDPs, micro-displays (most of which use LCD tech, btw), and future emerging technologies will have a place in the overall market, that place will be as complements to the mainstream direct-view LCD, not as a challenger. Because LCD is too far along the price/performance curve for alternatives (some of which can’t even play at the size/price combos that are LCD’s domain) to catch up. From now on, any alternative HD display tech that wants Joe six-pack's business has to match LCDs in size and price AND be demonstrably better, or offer a compelling answer why not. It won’t happen soon. What will happen is that microdisplays and PDPs will specialize and move into safer, more profitable, niches. Next up: HD likes to be big. And Microdisplays can do big cheap. Felix Torres is a dabbler in home entertainment electronics and a survivor of both the home computing wars of the 80's and the multimedia wars of the 90's who is currently most interested in home media networks and the North American transition away from broadcast media.

Jeremy Charette

06-07-2006, 08:33 PM

Looking at the projected pricing trends, it would seem 2008-'10 is a good time for a CRT market implosion in North America; right around the time 32” LCD displays hit the $600 price point.

I think you'll see name brand 32" LCDs hit the $600-700 price point by the end of the year. You can already find 32" LCDs from 2nd and 3rd tier manufacturers at $700-800 today. The implosion will happen before 2008, probably around mid-late 2007. All the better for consumers.

Felix Torres

06-08-2006, 12:28 PM

Quite possible.
I was trying to be...conservative...in my estimates of what other folks will be doing with their products and money, especially since the "Name Brands" (more specifically, the big Japanese and Korean CE vendors) don't *want* prices to drop that fast and are currently in denial about the growing commoditization of HD.

The other thing I may have underestimated is the penetration of LCD outside NorthAM.
Witness:
http://news.com.com/LCDs+to+overtake+tube+TVs+in+2009/2100-1041_3-6080053.html

Even taking this with a full pound of salt, it does seem LCD adoption outside the HDTV markets will be quite fast; I didn't expect LCDs to hit 50% worldwide this decade from the 05 numbers I saw. NorthAm, yes (I thought 67% was doable); worldwide? No.

With the newer data in, it is quite possible we will see some name-brand entry-level (720p) 32"ers hit $600 this fall, since the 1080 explosion is just about ready to go off and the new product tiering will put extra pressure on the low-feature content, entry-level market.

Still don't think we'll see 27"ers hit $300 this year, though. ;-)
Sound fair enough?

And yes; it is good for consumers.
Doubly so, since the more HD sets get out there, the sooner the content providers will get off their butts and finally migrate all content to HD. ;-)

Jeremy Charette

06-08-2006, 02:00 PM

Dropping prices will be a double edged sword. Though 720p panels are less expensive than 1080p panels, and that will be the primary cost savings for the manufacturer, many of the 1st tier manufacturers (Sony, Sharp, Philips) won't be able to hit those price points with the very best panels they make. As they try to hit budget price points, we'll start seeing lower end models from 1st and 2nd tier companies that use older, less sophisticated panels, with poor black level control and limited viewing angles. Syntax Olevia and Westinghouse are two companies that are straddling the market, slightly more expensive than "budget" LCD HDTVs, but not in the same price range as a Sony or Sharp set. Picture Quality is on par with the best, but features are somewhat limited (1-2 HDMI inputs, lower end image processing chipsets).

I fear that what we'll see is two market segments: the very high end, 1080p, ultra-wide viewing angle sets, in larger sizes; and very low end budget panels, 720p, limited viewing angles, and a limited number of inputs. The current space occupied by Syntax Olevia and Westinghouse (720p panels with good picture quality and wide viewing angles) will go away as they jump to 1080p and raise prices, to compete in the same market segment as the 1st tier companies.

So, it just might be an excellent time to get a set from one of those two companies. Really good 720p sets are still available (particularly from Syntax Olevia), and prices are dropping everyday. Syntax Olevia's LT42HVi has a 720p panel, outstanding PQ and viewing angles, and can be had for as little as $1500 right now. The closest thing from any other company runs $2200-2500, even Westinghouse. Looks like they're blowing out stock for a forthcoming 1080p 42" set.

Felix Torres

06-08-2006, 02:54 PM

Syntax Olevia and Westinghouse are two companies that are straddling the market, slightly more expensive than "budget" LCD HDTVs, but not in the same price range as a Sony or Sharp set. Picture Quality is on par with the best, but features are somewhat limited (1-2 HDMI inputs, lower end image processing chipsets).

I fear that what we'll see is two market segments: the very high end, 1080p, ultra-wide viewing angle sets, in larger sizes; and very low end budget panels, 720p, limited viewing angles, and a limited number of inputs. The current space occupied by Syntax Olevia and Westinghouse (720p panels with good picture quality and wide viewing angles) will go away as they jump to 1080p and raise prices, to compete in the same market segment as the 1st tier companies.

So, it just might be an excellent time to get a set from one of those two companies. Really good 720p sets are still available (particularly from Syntax Olevia), and prices are dropping everyday. Syntax Olevia's LT42HVi has a 720p panel, outstanding PQ and viewing angles, and can be had for as little as $1500 right now. The closest thing from any other company runs $2200-2500, even Westinghouse. Looks like they're blowing out stock for a forthcoming 1080p 42" set.

:) Branding is probably a nice subject for a whole column.

You want to take a crack at it?

The Westinghouse lineup is two liered:
On one hand they have the LTV-series of (fairly conventional) HDTVs in sizes from 27-40", and those generally max out at 720p (or more precisely, WXGA).
On the other hand they have a fairly unique line of 1080p HD monitors at 37, 42, and 47" street-priced at about $1500, $2000, and $3500(introductury list price, almost defintely going to drop closer to $2500 once the distribution channel hits BB and Wal-Mart).

Syntax has several lines; the Olevia, Kolin, Brillian, and Syntax Signature. Kolin and Olevia are aimed at the low end and the Brillian line is aimed at the home theater market. The really interesting line is the Signature series which is supposed to offer premium electronics and pre-tuned sets at mainstream Name Brand pricing.

Might be worth explaining my use of "second-tier", btw; the way I see the market today there are basically three levels of mainstream HD products, outside of the various grades of Home Theater gear. Home Theater is a separate niche I do not consider part of the mainstream TV market though there is some overlap at the high end, for now. This is quickly going away.

(What you describe as a reduction in the features of the name brand products I see as the beginning of the decoupling of the Premium Mainstream products (say, Sony SXRD) from the Home Theater market. That is, mainstream buyers don't know or *want* to know about service menus or calibration disks; they just want to turn the thing on and start watching "good enough" HD.)

The name brand vendors need no introduction, of course; Sony, Sharp, Panasonic, JVC, Toshiba, Samsung, LG, etc; they're the establishment. Been around for a while. At some point, they were all second or third tier vendors. (Wonder how many folks dropping $7 grand on an LG plasma remember they were selling drugstore B&W TVs less than a decade ago as Lucky-Goldstar?) :wink:

Anyway, second tier vendors in my jargon are those with enough of a track record and a market share to actually impact the market by making the Name Brand vendors take notice. Syntax, Westinghouse, and Philips' Magnavox line fall in this area. DELL and HP would like to be there, as would others. Maxent probably ranks, if you're in the market for a plasma. Polaroid almost does, Norcent probably doesn't. Sceptre and a bunch of PC monitor vendors are trying to get in the game but so far aren't.

Its a murky line between the second tier and the third, the wannabe low-ball brand-x vendors who sell stripped-down or trailing-edge tech at rock-bottom prices. Most house brands (iLO, Insignia, etc) tend to straddle the line; they have some pretty high-power backing in BB and Wal-Mart, but the tech inside is largely unknown, so its harder to tell what you get.

And knowing what you get for your money is what Branding is about, no?

The funny thing in HD today is that the second-tier vendors are a *lot* more forthcoming about what is in their products than the Name Brand vendors, who try to obfuscate and hide their features behind marketting-speak. Which raises the question of what are they trying to hide, no? Turns out: a lot. But that is a topic for another day. :twisted:

Before I forget: you are absolutely correct that anybody that *wants* a premium 720p set should get it now.
(I talk more about this in a future chapter of my blather-fest.)
For now, enough to say that 720p combined with premium controls and electronics will *not* be a part of the mainstream market past this fall.

Jeremy Charette

06-08-2006, 03:02 PM

Good explanation of the 3 tiers of branding, that's precisely along the lines I was thinking of, though I might bump Philips up to 1st tier (with their ambilight technology etc.), and Polaroid down to 3rd tier, but that's just nit-picking.

I think we'll still see 720p as part of the market after this fall, but it will be relegated entirely to 3rd tier companies like Norcent, iLo, Insignia and the like. I don't suspect you'll see 720p panels from any of the 1st and 2nd tier suppliers in 3-6 months.

Felix Torres

06-08-2006, 05:10 PM

Good explanation of the 3 tiers of branding, that's precisely along the lines I was thinking of, though I might bump Philips up to 1st tier (with their ambilight technology etc.), and Polaroid down to 3rd tier, but that's just nit-picking.

Not nit-picking; fine-tuning. ;-)
I would agree Philips (as a brand) is first tier, but Philips (as a vendor) is all over the place, just like Syntax-Brillian wants to be. Specifically, Philips' Magnavox brand plays more in the second tier than the first. And they might even dabble in third tier product if they still own Sylvania. (Did they ever, anyway? I vaguely remember they did.)

I know LG now owns Thomson so they are the current owner of GE and RCA and Zenith, which means they play in all three tiers. (Nowadays Zenith is strictly bottom of the pile, no?)

Hard to keep track of who owns what these days.
I even heard Matsu****a (panasonic) might divest themselves of JVC...

And somewhere out there, somebody is still using Curtis-Mathis...

Jeremy Charette

06-09-2006, 09:34 PM

You won't believe this. Today, two 37" LCD HDTVs, 720p native resolution, both $1100. From Wal-Mart. The Initial model has gotten stellar reviews, has a 13 channel PIP function, and uses a Sharp LCD panel. Incredible.

http://www.walmart.com/catalog/product.do?product_id=4381801

http://www.walmart.com/catalog/product.do?product_id=4288242&sourceid=32213789840030138546

They also have a Tatung 50" Plasma, Samsung panel, for $2300. 8O