MONITORS: LCD Trend Sets In

Falling prices and appealing looks have propelled the growth of LCD monitors. Currently comprising 5% of the total monitor business, LCDs are expected to command 12% by the year-end. However, high duty rates and parallel imports have proved to be a dampner for the legal channel. In CRTs, 15" is gradually being replaced with 17" models.

A review of the last two quarters for monitor business in India shows that LCDs have grown by leaps, whereas CRT monitors remained steady. Six months ago, India´s LCD business averaged at 3,000 units per month. Today the ratio has changed to 10,000 units per month. Going by this rate, industry sources hope to sell roughly 4,00,000 units in year 2004.

The reason for this three-fold growth in this segment is falling prices and appealing looks of LCD monitors. Besides, the advantages of using a LCD over CRT are many. With very few disadvantages to point at, LCD monitors are no doubt the focus segment for all display majors in 2003.

Some big players who have big plans for LCDs are Samsung, Philips, LG, Sharp, Sony and Acer. Realizing the potential in this segment, D-Link, HCL, Chemoplast and Umax, joined the bandwagon with their own LCD brands.

QUARTER-WISE PERFORMANCE

During the last six months, Samsung continued to report the highest sales in overall monitor business. It sold 3,02,000 units of monitors, including LCDs, in JFM 2003, which rose to 3,15,000 units in AMJ. The company expects JAS to yield bigger results and is targeting sales of 3,50,000 units.

LCD contributed 5% in JFM and 6% in AMJ of the total monitor sales for Samsung. In JAS, this figure is likely to ride up to 9%. According to Sonal Anand, National Product Head, Samsung Electronics India, the key driver for this product has been the home and the education sector in the last six months.

In the second slot for overall monitor sales, LG Electronics sold 1,46,000 units in JFM 2003. In AMJ 2003 it sold 1,65,000 units and is targeting 1,90,000 units in the current quarter.

Philips sold 8,000 units of CRT and 2,400 units of LCD monitors in JFM 2003 quarter. In AMJ, the sales for CRTs and LCDs were 7,750 and 3,000 units respectively. The company is eyeing a modest target of 8,000 CRTs and 3,500 LCDs for the JAS quarter. “We are not looking at making big volumes. We do not believe in this policy,” says Sanjay Maheshwari, Manager - Distribution, Philips.

He further adds, “Philips is not averse to creating a brand pull like Samsung, but it will be at the cost of channels and hence would not like to do that. Our main aim is to ensure that channels make profit.”

According to him, partners looks for consistency in supply and channel commitment over aggressive marketing. “We have been successful in doing this. Most importantly, we have ensured that the channel remains profitable,” says Sanjay.

For Acer, the CRT monitor business was quite good in JFM and AMJ quarters. But, majority of these monitors sold were bundled along with PCs. In the last six months around 20,000 monitors were sold as bundles.

“The sale has been fairly even in both quarters,” says Rajesh Iyer, Product Manager-Consumer Products Group, Acer India. However, Acer’s LCD monitor business saw a 100% growth in AMJ, over the previous quarter. “The upward trend on LCD monitors is expected to continue. The current quarter is expected to see another 50-60% growth over the AMJ quarter,” says Rajesh. He adds that Acer is planning to garner around 25% marketshare in this segment.

Even Sony, which focuses on niche markets, has reported a LCD growth of 10% each in the last two quarters. It sold around 600 units in JFM and 700 units in AMJ. In the JAS quarter, it is hopeful of achieving another 10% growth.

“Sony LCDs are moving well because of its performance and attractive looks. The HS series of Sony LCDs are popular worldwide for its features. In India too, customers have lauded its features. With the price point of these series coming down from Rs 28,000 to Rs 23,000, sales have steadily gone up,” says Rajesh Goenka, Division Head, of Rashi Peripherals, which is Sony’s national distributor.

A recent entrant in the LCD business, D-Link also reported decent sales with 1,300 monitors sold in AMJ. For JAS quarter it expects to sell 2,700 units. According to Anand Metha, Marketing Manager of D-Link India, the company is positioning its LCDs as value-for-money products with high reliability and picture clarity. As an unique feature, it is offering in-built multimedia speakers.

IBM saw a good increase in its LCD sales with the introduction of an exchange scheme. The scheme allowed customers to exchange any old monitor in working condition for a new IBM LCD montior and get a discount of Rs 3,000. This promotion gave IBM the much-needed push in the southern region. According to channel sources, its sales in some areas doubled with the launch of this scheme.

SIZE DOES MATTER

The key trend in the CRT monitor market is gradual replacement of 15" monitors by 17" models. Customers have realized that the monitor is the most visible part of a PC and hence the highest importance is given to a monitor while choosing a system. “17”monitors has moved from being 25% of our total monitor sales to over 33%. This trend will continue and we expect that by year-end 17" will be the mainstay of the monitor business in India,” says
Sonal.

Interestingly, the market is witnessing a transition from the 15" to 17" monitor at a much faster rate than the 14" to 15" monitor transition. “One reason for this is that PCs are no longer being seen as just a machine. Rather it has become a complete mode of entertainment and education,” says R Manikandan, Deputy GM, LG Electronics India.

On the office front, the type of monitors being used depends on the nature of activity. 15-inch monitors are still quite popular for normal office usage requiring mundane deskwork. However specific segments like call centers and financial institutions are increasingly going in for high-end monitors with bigger screen size. Many companies are also opting for LCD monitors due to health reasons (LCD has almost zero radiation) and also because it requires smaller footprint, leading to considerable savings in desktop space.

“The LCD market has been witnessing an upswing because of the advantages it can offer over a conventional monitor,” points out Sonal. According to him, with LCD monitors becoming very trendy across the corporate world, senior executives are scaling up to it.

Internationally too, LCD monitors have caught on like fire. According to a source, worldwide LCD monitor sales have outstripped the CRT market in 2003 in value terms. “The demand pattern for India will follow suit in a few months from now,” says Rajesh Aiyar, Product Manager (Consumer Products Group), Acer India. “The overall market size would exceed the one lakh mark by 2004,” says he.

With more and more consumers realizing the importance of LCD monitors in terms of health benefits, space saving, power saving and reduction of eye strain, there would definitely be a significant shift in favor of LCD monitors.

THE FUTURE BELONGS TO LCD

LCDs comprise more than 5% of the total market of the Indian monitor industry. In developed economies LCD today comprises more than 50% of the total industry demand. Going by this statistics, the demand for India is also expected to increase. Industry analysts expect that by year-end 2003 LCD will command close to 12% of the Indian PC monitor market.

“Given the nature on the Indian market, the percentage of LCD monitors will continue to increase steadily. With the current price point, a 15” LCD has become quite affordable,” says
Sonal.

Sanjay opines that by 2004 LCD will hold 10-12% of the total monitor market. “It should be around 30% by 2005,” he predicts.

However, Manikandan disagrees. According to him, the introduction of LCD monitors does not mean CRT will move out of the Indian market. “This is primarily because of the size and diversity of the market. The price advantage that CRT monitors carry a big perception when purchase decision are made. Hence, there will be a continuing demand for CRTs for a longer period.” He adds that 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.

Worldwide, consumers are becoming more and more aware of LCD monitors. They have started understanding the value a LCD monitor can offer and have started adopting the usage in a significant manner. Globally, majority of 17" CRT monitor and flat monitor consumers are now migrating to LCD monitors.

According to Manikandan, Indian market has a lot of potential for LCD monitors, especially among corporate users. But it has 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,” says
Manikandan.

But there is no denying that with the growing realization about the benefoits of a LCD, usage will certainly increase. This process will continue over a period of time till LCD monitors would become the preferred monitor option for users. Industry sources say that the transition towards this scenario is expected to happen over the next two years.

WHEN THE PRICE IS RIGHT

During the last two quarters, prices of CRTs have remained stable. Sanjay says, “Price of CRT is more or less stagnant in the case of 15”, which is selling largely because of the schemes accompanying it. Margins in promoting the 15" models are low, as Philips models are usually priced below market price, which is around 1% less.”

By 2004, 17" monitors are likely to settle at a price point of Rs 5,500 and by 2007 the product is expected to be phased out of the market. “LCDs will takeover the 17” monitor market,” says Sanjay.

Over the last few quarters LCD prices have tumbled from Rs 23,000 to Rs 19,000. On an average a 15" LCD monitor now costs less that Rs 21,000. “This has led to a demand explosion,” states Sonal. According to Sanjay, LCD prices are dropping by an average of 3% every month. It should stabilized at Rs 10,000 by July next year.

Shibu Mathew, Product Manager, BPL Monitors feels that CRTs will have a smooth sailing, until LCD prices fall below Rs 15,000 mark. “Price is the only deterrent. Once that is addressed, LCD sales will take off.” But Rajesh of Acer feels, India is not just a “price conscious” market. “The Indian buyer is a “value conscious” customer. Prices offered are pegged against the features and benefits available,” he explains.

DRIVING FORCES

The key driver in the monitor business is the consumer application and the need for a large display. Given the fact that key PC usage today is centered around Internet and gaming, size of the screen is becoming an important factor. In the CRT the trend is increasing towards 17" screens.

CRT will have a long life, thanks to the considerable differential in pricing. However, corporate sector especially the BPO segment has helped in the LCD business to grow. Home segment is yet to adopt LCD monitors on a visible scale.

End-users look for value for money products. To them, a good brand becomes a deciding factor while going for purchase. Service and support are other aspects that influence buying decision for monitors. “I feel they are not really worried about the prices. What they are looking for is a VFM product. They are ready to pay a premium if the product is worth it. Customers will not pay for a feature that he/she will not be able to use it for the next two years,” says Sanjay.

BENEFITS OF LCD OVER CRT

Corporates have better return-on-investment on LCD monitors in the long run because its energy consumption is much lower than a CRT monitor. LCD monitors are preferred due to zero radiation, which keeps the employees stress free, eventually increasing productivity.

LCD monitors can also be utilized for in-house presentations in lieu of projectors. These monitors are also aesthetically designed as compared to a regular CRT monitor, and occupy almost one-fourth the space of a CRT monitor. Most manufacturers have managed to bring the viewing angle of a LCD to 160 degrees.

There are plans to increase this to 170 or 180 degrees. Another winning feature of LCD monitors is the acceptable range of white dots on its screen. The internationally accepted standard is around five to eight dots. Philips boasts of ‘zero bright dots’ in all its models. Others talk about ‘zero dots’ in higher-end model.

CONCERNS AREA IN LCD BUSINESS

A prime areas of concern in the monitor business is the high duty structure. “It is around 38%,” rues Sanjay. However, this has not restricted the growth of LCD monitors.

The reason is the growth of grey or parallel imports in the country. This has surely pinched the legal suppliers in India but has benefited customers in general. Parallel importers under-value their products and import goods paying fewer duties. The transactions are then completed through the havala route. These goods land on the Indian shores and are then sold in the market at a much lower price after keeping aside a good margin.

“Parallel imports have made it difficult for the legal channel to sell the products. They are spoiling the market,” alleges Sanjay. “Philips being a reputed company cannot resort to under-valuing of goods while importing,” he adds.

But the fact is that low-priced LCDs have propelled demand. Because of such imports vendors are forced to lower prices. Which could mean that a quality product may be competing with grey market product, making life difficult for legal players.



REFURBISHING THRIVES

Currently over a dozen vendors sell LCDs in the country. A crowded market has surely increased competition and has brought prices down. But, in the process, the customer has failed to notice the price game that some LCD vendors play.

A lot of refurbished monitors have entered India through both legal and illegal channels. “Some reputed names are also involved in marketing refurbished monitors,” alleges a vendor, who does not wish to be named. According to him, low customers awareness of LCD monitors has helped all those involved in the refurbished business to thrive.

“Refurbished market is the biggest concern for quality brands like us. The market is flooded with refurbished products. Many companies have resorted to selling refurbished monitors in the Indian market as new. Of course, they invest in refurbishing LCDs. But, they are cheating innocent customers, by offering it for almost the same price that a new LCD would cost,” says Sanjay of Philips.

All those involved in selling refurbished monitors will be hesitant to divulge the MTBF (mean time between failure) hours. MTFB hours deciphers a refurbished and fresh monitors identity.

“The only way for the customer to find the truth about refurbished monitors is by asking vendors about the MTBF. MTBF is the life of the monitor in hours. Customers should be made aware about this,” says Sanjay, adding that Philips LCD monitors offer 50,000 hours of MTBF. “Our LCDs have the revolutionary LightFrame feature which is software driven and hence less taxing on the hardware,” he claims.

FUTURE TECHNOLOGIES

That the LCD is the future of monitors stands without doubt, But there are other technologies in the offing too. Though these might not become mainstream products, they will still find use in certain niche buyer verticals.

In the future, we can hope to see touch screen panels, cordless or wirefree LCDs, and the regular technical upgradation in LCDs. Already, some big names have incorporated TV tuner and multimedia features in to the LCD monitors. After all, not just seeing, but even hearing, is truly believing.

NELSON JOHNY in Mumbai, SUNILA PAUL in
Bangalore,
BALAKA BARUAH AGARWAL in New Delhi.