Competition in the North American LCD-TV market intensified in the first quarter as the battle for the sales lead tightened up between the Top-3 brands, according to iSuppli Corp.
Unit shipments for the region’s leading brands, Samsung Electronics Co. Ltd. of South Korea, Sony Corp. of Japan and Vizio Inc. of the United States, were separated by a mere 0.3 of a percentage point in the first quarter, down from 1.8 points in the fourth quarter.
The three companies are engaged in an aggressive pricing battle as they vie to attract the attention of consumers.
“Following Vizio’s surprise rise to leadership in the North American LCD-TV market in the second and third quarters of 2007 due to its rock-bottom pricing, Samsung and Sony have struck back with their own cuts and new low-cost sets,” noted Riddhi Patel, principal analyst, television systems, for iSuppli. “The competitive battle and price cutting among these three companies has made it a struggle for other competitors, such as Sharp Corp. and Philips Electronics N.V., to keep pace.” The Top-3 OEMs accounted for 40 percent of unit market share in the first quarter, indicating they are starting to separate themselves from the pack. In the first quarter, 4.7 percentage points of market share separated No.-3 Vizio, from No.-4 Sharp, up from 2.9 points in the fourth quarter.
“This is beginning to take a toll on the other players,” Patel said. “For example, Philips has announced its exit from the U.S. market and has licensed its brand to Funai. iSuppli predicts value brands in the market soon will start to encounter immense competitive pressure from new low-priced LCD-TVs from Sony and Samsung.” The attached table presents iSuppli’s North American LCD-TV unit shipment market-share ranking for the first quarter of 2008.
Winning strategies
Beyond price cutting, Samsung has been engaging in a strategy of LCD-TV product differentiation in North America. Examples of this include Samsung’s introduction of new sets that incorporate the company’s Touch of Color (TOC) concept, which improves picture quality by blending an amber hue into the display bezel frame.
Sony’s strategy in North America is focused on price, offering a line of products that are competitively priced with the value brands. Vizio also is maintaining a price-driven strategy, offering value products at value prices.
Samsung dominates LCD-TV sales in the 21- to 24-inch range. Sony leads in shipments of televisions in the 40- to 41-, 45- to 46- and 50- to 54-inch ranges, while Vizio dominates the market in the 25- to 29-, 30- to 34-, 35- to 39- and 47- to 49-inch segments.
Slower LCD-TV sales growth expected
As prices plunge, the pace of LCD-TV sales growth in North America is starting to slow. LCD-TV unit shipments in North America are expected to rise by only 26.6 percent in 2008, reaching 27.4 million units. This will be down significantly from the 88.8 percent rise in 2007 and the 92.6 percent increase in 2006.
The first quarter is typically the weakest period of the year for the LCD-TV market in North America, and 2008 is no exception. Unit shipments in the first quarter amounted to 5.6 million units, down 30 percent from 7.96 million units in the fourth quarter.
“After years of explosive growth, the North American LCD-TV market is undergoing a deceleration due to deteriorating economic conditions,” Patel said. “Furthermore, price declines for some key television sizes, such as the popular 32-inch dimension, have stabilized, negatively impacting consumer demand growth.” While the first half of 2008 will see a slowdown in television shipments, the second half will rebound. The main reasons for the rebound in the overall TV market and more specifically the LCD TV market are:
- The economy will rebound. With 2008 being a presidential election year in the United States, the government will do everything in its power to minimize the impact of the recession. However, this will not come quickly enough to restore strong growth to the North American LCD-TV market in 2008, and rather will pave the way for a stronger 2009.
- LCD-TV price deals will start to appear near the end of the second quarter of 2008 as brands and retailers start to clear out inventory.
- Analog television broadcast shut-down deadlines are looming. Consumers will want to ensure that they have a “working” TV, propelling sales growth of LCD-TVs.
- Brands will continue to push their product lines to larger sizes.
LCD-TV shipments in North America will continue to rise during the coming years, expanding at a Compound Annual Growth Rate (CAGR) of 10 percent from 2008 to 2012, iSuppli predicts.
For more information, please contact:
Jonathan Cassell
Editorial Director and Manager, Public Relations
iSuppli Corporation
Office: 408.654.1714
Mobile: 408.921.3754
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