Dave Walsh could hardly believe his eyes when he toured this year’s Consumer Electronics Show in Las Vegas. The sheer number of vendors selling LCD products, including display monitors, was staggering.
Walsh, vice president of marketing for Ingram Micro Canada, is well aware that LCD monitors
are taking market share aware from CRTs, but he was surprised there were so many branded LCD products on the market.
“”I had no idea there were that many different brands of manufactured LCD panels,”” he said.
“”It was probably in the 100-120 range, and I could have previously named maybe three dozen — and those were the lead ones.””
Walsh spent nearly a decade as an executive at NEC Technologies, one of the world’s leading manufacturers of display monitors, so he knows that not every monitor vendor manufactures its own product.
“”Most of the brands out there are OEM’d from somebody else,”” he said. “”There are still far less manufacturing plants of technology in the world than there are brands out there.””
Walk into any big box electronics retailer and you will see plenty of different branded monitors. There are the familiar Tier 1 manufacturers such as Samsung, Dell and NEC. There is also an abundance or Tier 2 and Tier 3 vendors offering their display products on retail shelves.
“”There are a lot of monitor vendors in Canada,”” said Michelle Warren, market analyst with Evans Research. “”Some will zip in for one or two quarters and sell three, four, five six or seven skids of one monitor and disappear again. They will zip in and zip out as the market will allow,”” she said.
Despite the high number of vendors in Canada, Warren does not believe the market is overcrowded.
“”If it was overcrowded then the prices would probably be lower than they are,”” she said.
“”We do have a couple of vendors that are pulling out in front,”” she continued.
“”Samsung and Dell in particular – brands that are really popular. For vendors who come in and try to build up a presence, they’re not able to capture 10 or 20 per cent of the market share because of the stronghold of the others.””
According to Evans Research, the leaders in total unit volume for the third quarter of 2004 were Dell, Samsung, BenQ, LG Electronics and ViewSonic.
Other established vendors rounded out the top 10, including IBM, NEC-Mitsubishi, Philips, HP and Daytek.
Improved technology
According to Walsh, more companies are getting into the monitor market because advances in technology have made them much easier to manufacture.
For example, the size and quality of the mother glass – which is what the TFT panel is cut from — has improved in recent years. Consequently, production volume has increased.
The end result, said Walsh is the increased commoditization of display monitors.
However, the vendors with a rich research and development legacy are able to differentiate themselves, and as a result establish and maintain a stranglehold on the market.
“”Lead manufacturers have done a great job of differentiating their place in the marketplace — whether it’s a display specifically designed around the frequency intolerance level of medical equipment, or whether it’s ultra-low energy consuming products for sensitive mobile environments.””
Rhoda Alexander, director of monitor research for iSuppli Corp., has been analyzing the North American display market for nearly two decades.
She agrees with Walsh that monitors have reached commodity status, yet she notes that doesn’t prevent new vendors from entering the marketplace.
“”The part that amazes me about this market after 20 years in it is that there still is always someone new that’s coming on the field anticipating that there’s an opportunity for them,”” she said.
“”The monitors for many of them have already reached commodity status and it becomes very price competitive and value competitive in terms of the sweet spot – the price point you’re going to get with the display, and much more difficult for individual vendors to differentiate themselves,”” she added.
Alexander said a lot of the vendors entering the monitor market are from Asia-Pacific and end up in the Tier 3 category.
These manufacturers often establish a marketing arm in North America and are forced to compete on price because they lack a brand name presence.
This doesn’t mean, however, that vendors can’t escape the third tier, nor does it mean Tier 1 and 2 can rest on their laurels.
“”People don’t remember with some of these vendors that they weren’t as well established at previous times as they are now,”” Alexander said.
“”Some of them in the past have been Tier 2 vendors that have gone up to Tier 1 vendors, some of them been Tier 1 and come down over time.””
Market shakeup
Alexander is keeping a close eye on the shakeup currently going on in the marketplace and how it will affect resellers.
She said Dell makes monitor sales harder for VARs with its direct sales model.
Also, the recent resignation of HP CEO Carly Fiorina and the IBM-Lenovo deal have created uncertainty.
“”The resellers are facing competition from a number of different places — from the direct marketers, Internet sales and from the big box stores,”” she said.
“”The challenge from the reseller is the same frustration facing the monitor market — the ability to differentiate themselves as somebody who offers values, who’s worth using, who continues to offer good value for the customer, and a good alternative for the customer as a place to shop.””
