Abstract

The Dilemma Born of a Soft 2Q

With the market in the traditionally slack season and LCD monitor panel prices remaining high, monitor vendors will not find it easy to stimulate sales through lower prices. More importantly, growth in emerging markets will not positively affect LCD monitors, as LCD monitor prices are too high. Shortages of 15" LCD monitors will have a gradual mollifying effect on demand growth momentum.

Soft market demand and rising panel production have created expectations among monitor vendors of falling LCD panel prices in the second half of 2004. Such players face the difficulty of deciding between stocking up on panels to serve seasonal demand, or holding off on procurement in the hope enjoying lower prices.

Bundle Market Hinges on Price

The PC market is comprised mainly of the mid-range and value-line segments, where consumers place strong emphasis on price-performance. If monitor vendors are to expand PC bundling rates, then pricing issues are unavoidable. With LCD monitor price declines currently limited by high prices for LCD panel, 15" LCD monitors are performing betting in the PC bundle market. Though panel makers are aggressively promoting 17" and larger sizes, demand for 15" LCD monitors persists.

Shortages of 15" monitors, coupled with the aforementioned higher prices for 17" and larger monitors, should give CRT monitors space for development, especially in emerging markets. As a result, as LCD monitors carve out a larger share of the market, price competitiveness will become an even greater factor in continued market share growth.

Toward the High-End Market

Demand for LCD monitors in ordinary PC markets is showing growth due to the large scale of the market. Yet the emergence of the multimedia PC concept, coupled with the maturing of applications environments provided by large vendors like Intel and Microsoft, is driving high demand for LCD monitors for multimedia PC applications. Not only are product specifications extremely demanding, but also, to complement the diverse styles of multimedia PCs, vendors stress LCD monitor industrial design to boost added value.

In addition to PC markets, constant improvement in display technology has driven rising demand in professional markets. These have gradually become another source of strength for monitor vendors. The unique characteristic of this new market segment lies in customization, often accompanied by specialized software and hardware, stressing professional applications. From the monitor vendor's point of view, this provides an escape from the standardization and price competition of ordinary markets.

Appendix

Research Scope

The East Asian LCD monitor industry includes the global production and sales of LCD monitor by manufacturers headquartered Taiwan, Korea, and Japan. East Asian manufacturers now account for over 99% of total global LCD monitor shipment volume. Coverage includes both branded and OEM/ODM production for 10" or larger LCD monitors used with computers.

Definitions

Business Types

OEM

The OEM business model entails carrying out product manufacturing or assembly according to specifications supplied by the customer. The OEM business model emphasizes production efficiency; thus, in order to lower costs, customers outsource manufacturing to OEM providers. This cooperation forms a division of labor among design, manufacturing, and sales.

ODM

The ODM business model entails undertaking product design and manufacturing, but not direct retail sales or brand promotion. ODM providers either collaborate with customers on product specifications or independently design products according to customer specifications; the ODM provider then receives manufacturing orders upon customer approval. The ODM model links the sales capabilities of the ODM customer and the design and manufacturing capabilities of the ODM provider, developing a cooperative division of labor throughout the product's value chain.

Branded

The branded business model entails the production of the manufacturing company's own branded products. The manufacturer is involved with both design and production; retail sales and brand promotion are also managed internally.

Private label

Private label is a form of contract manufacturing wherein the manufacturer produces for channel players, and the channel player's brand is affixed for sale.

Glossary of Terms