Abstract

Keen Price Competition in the Growth Stage of Product Lifecycle

By analyzing the digital photo frame market forecasts, CAGRs of the volume and value of digital photo frame TFT-LCD module shipments can be gathered. Comparing the discrepancy between the two sets of figures, a simulation model can be formed to provide further provides an insight into the product lifecycle that the digital photo frame TFT-LCD module remains in or is about to enter, as well as the key issues facing this product segment.

Over the period 2007 - 2012, the 4.x" - 9.x" digital photo frame TFT-LCD module shipment will post a value CAGR of 21.6% and a volume CAGR of 42.2%. Over the same period, the 10.x" and larger digital photo frame TFT-LCD module shipment will post a value CAGR of 60.5% and a volume CAGR of 87.6%.

It can be seen that both product segments are in the growth stage of their product lifecycle and are facing keen price competition, due mainly to the fact that their shipment volume CAGRs far exceed the shipment value CAGRs. The trend also foreshadows unbalanced supply and demand in the years to come. Related companies in the industry supply chain are advised to take precautions against this situation.

Taiwanese Panel Makers' Predominant Status as TFT-LCD Module Suppliers Helps Create a Competitive Industry Cluster

Taiwanese makers are among the very first contract makers of digital photo frames worldwide. Since the TFT-LCD module account for nearly 60% of the digital photo frame production cost, contract makers which control the TFT-LCD module supply will be able to secure branded digital photo frame vendors' production orders.

With the collaborative effort of digital photo frame contract makers, and further driven by the surge in demand from the European and North American markets in the period 2006 - 2007, Taiwanese makers have become industry leaders over the formulation of specifications of TFT-LCD modules for digital photo frames. Furthermore, answering to the clients' request for cost reduction, Taiwanese makers have begun to engage in the production of key components such as driver and controller ICs.

Taiwan's digital photo frame industry supply chain has become a highly competitive industry cluster that attracts both major and minor branded vendors looking for one-stop shopping to place contract production orders with Taiwanese makers. These brands include Philips, Sony, Toshiba, ViewSonic, Kodak, HP, Ceiva Logic, Pandigital, Westinghouse, and Smartparts.

Analog Interface 7.x" and Digital Interface 7.x" and 8.x" Still Mainstream Specs for Value-line and High-end Products

Affected by weak global economy and high fuel and food prices, the consumer purchase intention for products other than living necessities has been reduced in 2008. Nevertheless, due to widespread reception of digital photo frame features in the European and North American markets and branded vendors' imminent launch of promotional sale to clear the inventory, the overall digital photo frame shipment is expected to see further growth. Over the forecast period in this research, MIC predicts that the relatively low-tagged analog interface 7.x" TFT-LCD modules with and the comparatively high-tagged digital interface 7.x" and 8.x" TFT-LCD modules will constitute the mainstream shipments of TFT-LCD modules for digital photo frames.

Judging from said shipment trend, analog interface 7.x" TFT-LCD modules will be adopted for value-line digital photo frame products priced US$100 and less. Meanwhile, for midrange and high-end products priced US$180 and above, digital interface 7.x" and 8.x" TFT-LCD modules instead will be used. Specifications of TFT-LCD modules for digital photo frame products on both ends of the spectrum have thereby been delineated.

Therefore, members of the digital photo frame industry supply chain will have to stay in tune with the development of the overall industry and maintain a clear position as to whether they are pursuing sales volume or profit margins. As the digital photo frame has entered a highly competitive stage of the product lifecycle, members of the industry supply chain will have to make the choice in order to thrive.

Appendix

Research Scope

Based on the MIC February 2008 report "Digital Photo Frame Product Development and Worldwide Market Size Forecast for 2008-2012" and drawing on information and data gathered from the market end and the panel industry, this report presents analysis and forecast of the digital photo frame TFT-LCD module market scale and value