LCD shortage keeps CRT ahead

Just when LCD monitors were beginning to gain popularity in the first quarter
of 2003, came the worl-dwide shortage, putting CRT monitors back to a stronger
position. The LCD shortage began sometime in March 2003, putting a halt to their
sliding prices. Since then, the price of LCD monitors has remained steady or has
risen just a little.

However, the growing dem-and for LCD monitors never put the CRT market in a
weaker pos-ition given the size and diver-sity of the Indian market. The price
advantage of CRT moni-tors will also ensure that their demand will continue for
some more time to come. Even tho-ugh LCD monitor prices have been moving
downward, LCDs still sell over two-three times the price of CRTs.

Trend Setters

Though the total replace-ment of CRT with LCD monitors may be a distant
dream in India, worldwide trends show that LCD monitor sales have surpa-ssed the
CRT monitor sales in many developed and develop-ing countries. This, along with
an increased use of LCD panels in many other applications, fo-und LCD
manufacturers being unable to match the demand.

iSuppli/Stanford Resources, in a recent research, found that the shortage for
LCDs is caused due to simultaneous surges in demand from the laptop, tele-vision
and desktop PC monitor markets. For the vendors, the LCD business has fatter
margins compared to the CRT business, which has now become incre-asingly
commoditized and, hence, margins are at bare minimum levels. Some industry
experts also attribute the shor-tage to a financial crisis in Asia, which has
restricted the supply of money that is needed to add new LCD manufacturing
capa-bility. According to analysts, Taiwan is the primary source of supply for
flat panels, which means that the growth of the market will continue to be
suppressed if demand remains consistent.

LCD Potential

The market has a lot of pote-ntial for LCD monitors and many corporates have
already started looking for these moni-tors. But it is yet to gather steam. The
total replacement of CRT with LCD monitors will happen only in the distant
future and shall be restricted to a few segments that benefit sig-nificantly
from using LCD monitors.

Today, LCD monitors are being increasingly adopted by medical professionals,
banks, financial institutions, the aviation industry, stockbrokers and hotels,
among others. The SOHO segment holds tremen-dous potential as prices of the LCD
monitor have come within the sub-Rs 20,000 category. In the LCD range, the
15-inch monitor is definitely the most popular, simply beca-use of the value it
offers at the price it commands.

Holding its Own

The demand for 17-inch CRT monitors continued to heat up as monitor and
system integra-tors worked hard to push them on the basis of the thin price
differential over 15-inch monitors.

However, despite industry predictions that 15-inch monitors would soon fade
away, they were far from dead. 15-inch monitors still contribute a ma-jor part
of the entire monitor business. Channel partners claim that it's here for
another couple of years. The potential for the range of CRT monitors is in the
home and the SOHO seg-ment. The buying trend to-day is focused on the 17-inch
flat monitors. Over the years, the CRT monitor market has moved from 14-inch to
15-inch. It is now graduating from 15-inch to 17-inch and flat models.

Focus on Regions

More and more vendors are looking at B-, C- and D-class cities as the new
opportunity area. Samsung claims to have made its presence felt in 85 cities
with 238 Star Elite partners.

Similarly, LG has established a strong presence in Rajasthan, Madhya Pradesh,
Gujarat and Andhra Pradesh. But despite 460 regional distributors in the
country, the company still feels that it has some way to go.

Philips boasts of a strong presence in MP, Bangalore, Lucknow, Kerala and
Kolkata, where they were placed either No.2 or No.3 in the OND quar-ter of 2003.

Partners Eye Growth

Most resellers feel that the growth in CRTs and LCDs has been good in the
last year. The trend shows that metros are more inclined towards buying LCDs
rather than CRTs and after the reduction of prices in the LCDs, it is seen that
most of the metros favor LCDs. The growth for most of the resellers in CRTs and
LCDs were between 20% to 25 percent on a QoQ basis. Since the margins are less
in CRT monitors, channel partners find marketing LCDs a promi-sing business as
it commands higher margins.

Nelson Johny with inputs from
Atanu Kumar Das