MONITORS: LCD Shortage Puts CRT Upfront

Just when LCD monitors were beginning to gain popularity in the first
quarter of 2003, came the worldwide shortage, putting CRT monitors upfront in a
stronger position. The LCD shortage began sometime in March 2003, putting a halt
to their sliding prices. Since then the price of LCD monitors has remained
steady or has gone a little up.

However, the growing demand for LCD monitors never put the CRT market in a
weaker position. "It is primarily because of the size and diversity of the
market," says R Manikandan Dy GM, Sales & Marketing (IT Products), LG.

According to him, the price advantage that CRT monitors carry will be
perceived big and hence, there will be a continuing demand for them for a longer
period. But going by the international trend, a strong future for LCD business
cannot be

ruled out.

Princy Bhatnagar, National Sales Manager, Samsung feels that 2004 would see a
major shift towards the LCD, especially with the BPO sector as a major target
audience. At the same time, he feels that Indian masses are five years behind
other developed countries and so it would take time for LCD to become the
product of the masses.

In 2002, 98% of Samsung’s units sales came from CRT and 2% came from LCD.
In 2003, 96% of its sales came from CRT and 4% from LCD. In 2004, Samsung
expects 90% of its sales to come from CRT and 10% from LCD. Going by Samsung’s
statistics, LCD business appears very promising. According to partners, LCDs
shall be restricted to a few segments that benefit significantly from using LCD
monitors.

TREND SETTERS

The total replacement of CRT with LCD monitors may be a distant dream in
India, but, worldwide trend shows that LCD monitor sales to have surpassed the
CRT monitor sales in many developed and developing countries. This trend, along
with an increased use of LCD panels in many other applications, found LCD
manufacturers unable to keep up with the demand.

"The Indian market is five years behind other developed countries and it would take time for LCD to become the product of the masses" Princy Bhatnagar, National Sales Manager, Samsung

iSuppli/Stanford Resources in a recent research stated that the LCD shortage
is caused due to simultaneous surges in demand from the laptop, television and
desktop PC monitor markets. "LCD TVs are becoming popular, and
manufacturers find LCD TV business more profitable than monitor," reveals
Sanjay Maheshwari, Manager - PCD, Philips.

Some industry experts also attribute the shortage to a financial crisis in
Asia, which has restricted the supply of money that is needed to add new LCD
manufacturing capability. According to sources, Taiwan is the prim ary source of
supply for flat

panels, which means that the growth of the market will continue to be suppressed
if demand remains consistent.

Sanjay expects the shortage of LCD monitors will affect India till July 2003.
However, Philips is comfortably placed in India with regards to the inventory of
LCD monitors. "We have stock to support till November 2004," says
Sanjay.

Industry experts believe that by July the shortage will ease because of new
production facilities that are expected to come up in South Asia from some major
LCD panel manufacturers. But, prices may not dip immediately, because starting
July 2004, most vendor will be fulfilling orders placed so far. And soon it will
be Christmas season, which again will increase the demand.

LCD POTENTIAL

The market has a lot of potential for LCD monitors and many corporates have
already started looking for these monitors. But it is yet to gather steam.
"This is because India follows global IT trends although with a slight time
gap. LCD monitors are no exception to the rule," explains Manikandan.



According to him, the total replacement of CRT with LCD monitors will happen
only in the distant future and shall be restricted to a few segments that
benefit significantly from using LCD monitors.

"The growing demand for LCD will never put the CRT business in a weaker position, because of the size and diversity of the market" R Manikandan, Dy GM, Sales & Marketing (IT Products), LG

LCD monitors today are increasingly being adopted by medical professionals,
banks, financial institutions, aviation industry, stock brokers and hotels too.
The SOHO segment holds tremendous potential as prices of the LCD monitor have
come within the sub-Rs 20,000 category.

In the LCD range the 15-inch monitor is definitely the most popular, simply
because of the value it offers at the price it commands. Over the years the LCD
monitor has definitely become more affordable. It is now possible to buy a
15-inch LCD monitor at about Rs 20,000. A year back the same model would have
cost around Rs 10,000 more.

15-INCH NOT OUT

Back home, it is a renewed competition from CRT monitors, with ups and downs
in the LCD monitor supplies. The demand for 17-inch CRT monitors continued to
heat up as monitor and system integrators worked to push them on the basis of
the thin price gap that it had over 15-inch monitors.

However, the earlier industry forecast of 15-inch monitors moving out of the
market, did not come true. 15-inch still contributes a major part of the entire
monitor business. Channel partners claim that 15-inch is here for another couple
of years. Sanjay of Philip believes that 17-inch will truly become the
entry-level model only in the mid of 2005.

The potential for the range of CRT monitors is from the home segment and the
SOHO segment. ""Entry-level home users demand 15- and 17-inch models
while the entry-level SOHO user prefers the 17-inch CRT flat model. 19-inch flat
models are sought by a niche segment as it focused at high-end graphic
applications," says Ashish, Country Head - India Operations, BenQ.

According to him, the buying trend today is focused on the 17-inch flat
monitors. Over the years the CRT monitor market moved from 14-inch to 15-inch.
It is now graduating from 15-inch to 17-inch and flat models. "With the
difference between the 15-inch CRT and 17-inch CRT being only about Rs 2000, the
user does not mind going in for the 17-inch model," he adds.

FOCUS ON REGIONS

More and more vendors are looking at B-, C- and D-class cities as a new land
of opportunities. Samsung claims to have its presence in 85 cities with 238 Star
Elite partners. It feels that it presence it fairly strong in all the cities it
is present. It has five distributors and the company plans to expand further in
some B-and C- class cities.

"LCD TVs are becoming popular, and manufacturers find LCD TV business more profitable than LCD monitors" Sanjay Maheshwari, Manager - PCD, Philips India

LG has got strong presence in places like Rajasthan, Madhya Pradesh, Gujarat
and Andhra Pradesh. But despite 460 regional distributors in the country, the
company feels this is still not enough. It is now planning to increase its
presence in some parts of the upcountry market in the coming fiscal.

Philips boasts of strong position in MP, Bangalore, Lucknow, Kerala and
Calcutta, where they were placed either #2 or #3 in the OND 2003 quarter. The
strong presence of two monitor giant in the metro cities have forced, brands
like Philips, HCL, Microtek and other to focus only in certain regions.

PARTNERS SPEAK GROWTH

Most of the resellers feel that the growth in the CRT and LCD has been good
in the last year. The trend shows that mentors are more towards buying LCDs
rather than CRTs and after the reduction of prices in the LCDs, it is seen that
most of the metros are buying LCDs. The growth for most of the resellers in the
CRT and LCD segment were 20 to 25% on a quarter-to-quarter basis.

Since the margins are less in CRT monitor, channel partner find marketing LCD
as a promising business as it command higher margin.

They are also happy that the government is taking enough steps to make the
Indian consumer buy more and this will get reflected in the whole IT market.

About the brand leadership, general market sentiment is mixed for both
Samsung and LG. While many regions reflect, Samsung as the leader in the channel
space, there are partners who find LG as the clear leader. According to LG
partners, the company’s regional distributor is a aggressive approach to
compete with the Samsung.

NELSON JOHNY in Mumbai with inputs from ATANU KUMAR DAS in New Delhi

LEADERSHIP STORY

According to IDC India, Samsung has been maintaining its lead in the overall
monitor business for the last many years. However, LG appears very aggressive
and has done a good job with regards to its penetration in B-, C- and D-class
cities. In some regions, the market feedback says LG is in the #1 position. HCL
has surprisingly come up to the #3 position overtaking Microtek and others.

In the LCD business too, Samsung leads with more than half the
total marketshare in the open market. Philips is placed a distant second with
close competition from LG. According to Sanjit Sinha, Manager Hardware Research,
IDC India, the replacement market for monitors did very well in the third
quarter of 2003.

The LCD business, though very small in base, did fairly well
with marketshare increasing from 1% in 2002 to 5% in 2003. "The LCD monitor
market is expected to grow at the rate of 96%," says Sanjit.