Glass Shortage Won’t Derail Black Friday LCD-TV Deals

Although pricing for LCD panels used in televisions now is rising due an acute shortage of glass, the shortfall is expected to be resolved in time for the all-important holiday buying season, allowing LCD-TV brands to offer their customary Black Friday deals, according to iSuppli Corp.

Amid an extreme oversupply situation in the fourth quarter of 2008, suppliers of glass for the kinds of large-sized LCD panels used in televisions started cutting capacity to less than 50 percent of full utilization at the end of 2008, according to Sweta Dash, senior director, LCD research, for iSuppli. Some glass makers even shut down some of their glass-producing tanks.

Because of this, panel suppliers now are unable to increase their LCD panel production capacity despite strong television demand from China and other regions. Global prices for large-sized LCD panels are expected to rise for a fifth consecutive month in June.

However, this situation is not expected to last, with prices for nearly all sizes of LCD-TV panels peaking in September and commencing a decline that will persist through the remainder of 2009 and into 2010.

This will help pave the way for the customary round of price reductions and Black Friday deals that historically have driven LCD-TV sales during the holiday selling season.

“If the LCD-TV brands hope to come anywhere near their sales targets for 2009, they will have to offer aggressive pricing deals during Black Friday and the following weeks,” said Riddhi Patel, principal analyst, television, for iSuppli. “If the deals don't materialize, sales this year will fall well short of predictions.”

Pricing for 32-inch 720p (progressive) scan LCD-TVs are expected to decline to $480 by November, with Black Friday specials possibly as low as $299. This is down from an average of $634 in June.

For 42-inch Full High-Definition (HD) or 1080p sets, pricing in November will fall to $628, down from $856 in June. Black Friday specials could be as low as $499.

Figure 1 presents the pricing trends for popular sizes of LCD-TVs.
 
Priceless pricing
While LCD-TV buyers have increased their focus on factors like picture quality, pricing remains a critical element in influencing purchasing decisions.

The phenomenon has been apparent this month, when LCD-TV sales are softening due to the cessation of pricing deals offered in April and May.

“Once the price deals went away, demand went away,” Patel said.

Pricing is the key factor driving consumers to recommend an LCD-TV model or brand to their friends and family members, according to iSuppli’s U.S. TV Consumer Preference Analysis Service, which uses surveys to determine American consumer attitudes.

Beyond reduced panel costs, television brands also are set to reduce prices by utilizing less expensive sales channels.

“Consumers are becoming more comfortable with buying LCDs from Internet retailers and mass merchandisers, and they have become more concerned about paying too much for a television set,” Patel observed. “These outlets offer televisions at lower prices than traditional electronics specialty stores.”

With the essential Black Friday deals expected to make their annual appearance, iSuppli recently boosted its forecast of 2009 LCD-TV sales to 123 million units, up from 110 million before, as presented in Figure 2.