Abstract

A Changing Industry Landscape

PDP panel technology is heavily concentrated in two countries: Japan and Korea. Having experienced for themselves how the transfer of LCD TV panel technology led to a rapid increase in the number of competing manufacturers and caused the price of LCD TV panel to fall dramatically, Japan's MEI and Hitachi -- which believe that the future of flat-panel displays lies in self-luminous technology -- are determined to retain control over key PDP panel technologies. As a result, the rapid increase in production capacity and reduction in cost that was seen in the LCD panel industry after Taiwanese companies began to move into the LCD panel business -- and which caused the average price of LCD TVs to fall substantially -- has not been seen in the PDP segment of the market. However, the lack of new entrants has also made it difficult to grow the market. PDP panel costs have remained high, and PDP TVs are still unable to compete with LCD TVs in the FHD (Full High Definition) segment in terms of price.

Faced with the intense competition from LCD TVs, PDP TV vendors in Japan and Korea have begun to form alliances with other vendors. This shift away from competition towards collaboration marks the beginning of a new era in which cost-down ability and breakthroughs in key technology will be the keys to survival.

The formation of alliances between TV vendors helps to spread the cost of R&D, while also enabling the individual companies involved in this process of horizontal integration to leverage their own particular strengths. More importantly, these alliances will help to extend the product lifecycle of the PDP TV by facilitating collaborative promotion and marketing. The creation of PDP TV industry alliances also helps to convince manufacturers in other countries such as China that PDP TV still has an important role to play in the future of the flat-panel display industry.

In the future, breakthroughs in luminescence technology will usher in a new era in which enhanced picture quality is combined with improved energy-saving performance.

More Aggressive Promotion and Introduction of Niche Products are the Keys to Growth

One of the main reasons why the scale of PDP panel production has grown so slowly is that PDP panel is basically only used for TV, unlike LCD panel which can also be used in monitor and notebook PC products. The number of PDP panel makers is relatively small, making it harder to increase production capacity. This in turn has created a situation where relatively few vendors are producing PDP TVs; as a result, relatively little is being done to promote PDP TVs and spread awareness of their advantages among consumers. If the concentration ratio in an industry is too high, it becomes more difficult for consumers to appreciate the changes and growth that are taking place. Both PDP panel makers and PDP TV vendors need to make more effort to promote the PDP TV, so that consumers can acquire a better understanding of how PDP TVs compare to LCD TVs.

With larger-sized LCD TV models beginning to erode their market share, it remains to be seen whether the PDP TV vendors can succeed in expanding downwards into the smaller TV sizes. Vendors may be concerned that the profit margins on smaller TVs will be too low; nevertheless, LG has achieved impressive sales performance with the special 32-inch models that it developed in order to make effective use of spare production capacity. PDP TV vendors should be working actively to combat the competitive threat from the LCD TV by grabbing market share during those periods when the LCD TV manufacturers are engaged in adjusting their production capacity.

Another area on which the PDP TV industry could be focusing is the development of a wider range of product applications for PDP panel. Public display devices ?demand for which is gradually increasing ?offer one potential application; these displays also have the potential to evolve into "TV walls" for home use, or for use in education or by travel agencies. Developing new potential applications of this type could be a focus area of companies in the industry.

Appendix

Research Scope

This report analyses the strategies adopted by the PDP TV industry in response to the increasingly fierce competition in the flat-panel display industry. It includes an overview of the industry as a whole, and an examination of the current state of technology and product development and major vendors' strategies. The scope of the research covers the entire PDP TV supply chain, from upstream panel manufacturing through system assembly to TV brands.