IDC Highlights Changing TV Industry

IDC analyst Bob O'Donnell kicked off the tenth annual USDC Needham Investor's Conference on March 15th in New York City, with a keynote address that highlighted the results of a consumer survey the company conducted recently. Not surprisingly, the survey revealed a lot of confusion among consumers.

O'Donnell revealed that the survey showed consumers often mentioned and accepted PC brands marketing TVs, but when it came time to buy the sets, sales of the PC brands did not match the level of enthusiasm expressed in the surveys. The PC brands are very attracted to the TV market because it offers margins twice as high as normal PC hardware. Brand was mentioned as the fifth most important factor in the survey, but it is the top brands that customers are mostly focused on at retail.

The survey was conducted last fall among 1200 consumers. About 64% of the group was male, the average age was 47 years old, and the average income was more than $110K.

When asked about awareness of TV technologies and preferences, 20% said they would be looking for a projection TV, while 59% were thinking of getting a flat TV.

Within the projection category, 46% would like a DLP-TV, while 19% said LCD, and 4% said LCOS. About 29% didn't know.

Within the flat TV category, 38% were looking for PDP-TVs, while 36% thought LCD would be their choice, with 26% saying they didn't know.

By size, 10% were looking for TVs in the 20-29 inch range; 30% were looking in the 30-39 inch range; 29% wanted 40-49 inch sets; and 18% thought the 50-59 inch range best suited their needs. "Surprisingly, the average came out to 42 inches," stated O'Donnell.

He also called the size range from 20-32 inches the "no man's land," as current flat-panel alternatives are too expensive for a second TV and too small for a primary TV. "Consumers want to pay $500-$600 for their second TV. When pricing hits this level, sales will take off."

As for brands, O'Donnell said that in North America, Sony still tops the charts, but its luster has faded in other parts of the world. "While Sony owns the mind share, that has not translated into market share," said O'Donnell. The PC companies still rank in the bottom half of the list.

Pressures are also mounting in the channel. While 55% still want to buy from a major CE retailer, the wholesale clubs will be gaining share. This will put price and margin pressure on the retailers. Internet sales lagged far behind.

Another trend highlighted by O'Donnell was the move from a vertical integration for TV makers to a horizontal model. As an example, he pointed to companies like Ovideon and Syntax. Syntax sources all of the components for the TVs and focuses on marketing and distribution. In the last year, it has come from nowhere to claim a top five spot in LCD sales - ahead of Sony.