Year of doldrums

As the new generation LCD or TFT (thin-film transistor) technology took
center stage replacing the CRT technology-the shift seemed almost complete in
India. According to IDC, a total of 6.6 mn monitors were shipped in India during
2008. The contribution of LCD monitors was more than 70 percent (4.8 mn units),
thus recording a growth of 29 percent over FY '08. The key reason was the
reduced price gap (around Rs 1,200) between CRTs and LCDs, especially during H2
'09.

While price of CRT monitors remained stable, price of LCDs have dropped
significantly over the past one year fueling the demand further. The increase in
adoption of LCDs is also visible from the increase in demand for standalone or
non-bundled LCD monitors. The ratio of LCD and CRT stood at 70:30 last year in
favor of LCDs. And with price of LCDs coming down, the market in India this year
is expected to grow further taking the share of LCD screens to 95 percent
compared to only five percent of CRTs.

Thin is In

FY '09 would always be remembered as the year when Armageddon struck CRT
technology. Most of the leading monitor vendors in India including Samsung, AOC,
and LG retrenched their CRT monitor production. As the volume and production
efficiency of LCD screens increased over the years it was sensible for display
majors to promote the new technology over the older one to offer users with the
latest features and benefits. Consumer education has been a key focus area for
most of the companies as they introduced fresh ideas on end user marketing
campaigns. A clear exam­ple was set by LG with the launch of its maiden
television commercial on LCD monitors featuring microscopic picture clarity. The
action resulted in tremendous brand recall among end users and helped LG to
increase its market share. Same was the case for TPV Technologies which
successfully turned AOC into a brand to reckon with.

LCD displays have come a long way and manufacturers have now started to look
beyond aesthetics to packing their products with value added technologies and
features. The latest industry trends include-16:9 wide viewing angles, 50,000:1
or higher dynamic contrast ratios, resolutions supporting full-HD view, display
interfaces such as HDMI, DVI, inbuilt webcams, speakers, faster response times
(2 minutes) and wide viewing angles (170° plus). There has also been a shift to
2 lamp technology with even lower power consumption compared to the traditional
4 lamp. Refresh rates were also re-engineered and went up to 120 Hz, at which
the monitors can support 3D view.

Another significant change that was visible in LCDs last year was the gradual
phase-out of 15 or 16 inch screen size as the standard or entry level monitor.
17 inch was in high demand even though popularity of 19 inch and other bigger
screens increased rapidly. In fact, as wide screens went on to become more
prevalent, the newer trend in this segment started shifting towards odd sizes
such as 15.6 inch and 18.5 inch and higher.

The year was also marked with some new launches by most of the display makers
in the TFT category. Samsung launched 20 inch and 22 inch format LCD monitors
and new ranges-T Monitor and Myst Plus series-to address the home and SOHO
customer segments. Viewsonic came up with 24 inch 16:9 wide screen full HD 1080p
monitor-VX2433wm-that prima­rily targeted gamers, multimedia enthusiasts, and
graphic professionals. As the concept of big and wide caught up with last year's
monitor trend, AOC also introduced its 24 inch screen model-Angelo.

A Roller-coaster Ride

The total monitor market stood at Rs 4,503 crore in FY '09. The overall
contribution from LCD displays at the end of Q4 was Rs 3,914 crore, at 87
percent of the total market share of LCDs. Out of this, the non-bundled or
standalone monitor segment contributed Rs 2,432 crore and captured a market
share of 54 percent.

While Samsung completely phased out its CRT production by the end of Q3 '09,
companies like LG, AOC, Acer, and Viewsonic continued to ship-in CRTs albeit in
limited quantities. The move helped these companies to cater to smaller yet
existing segments and generate some additional bucks. Whereas, Samsung's total
exit from CRT proved to be fatal for the company as its revenues were badly hit;
particularly its Q3 sales were severely impacted and dragged down its average
market share of 28 percent (recorded in the previous two quarters) to 20
percent. Samsung's loss has been a gain for its competitors like AOC and Acer
who were jointly responsible for around 30 percent share in the overall monitor
market during the same period.

On the other hand, FY '09 proved to be one of the most satisfying years for
LG as it consolidated its position as the leader for display products in the
Indian market. Its market share in monitor segment grew by nine percent (from 11
percent to 20 percent). What was more significant was LG's increased growth from
19 to 30 percent, in non-bundled monitor segment.

Acer too witnessed tremendous growth over the last one year. According to
IDC, it topped the overall LCD monitor market in India with a market share of 15
percent in Q3 '08. It had grown almost 35 percent y-o-y from Q3 '07, when its
market share stood at 15 percent.

However, globally, FY '09 proved to be one of the most unfortunate years for
the IT hardware industry and the monitor segment was no exception. Business was
impacted for most of the principals, and Q3 was the worst in terms of
performance. The fiscal started decently for most players with all of them
recording a fair growth in Q1 compared to the previous quarter. The performance
was carried through Q2. However, the blow came during Q3. Revenues came down
drastically as the market shrunk like never before. The combined revenue earned
during Q3 came down to Rs 446 crore from Rs 787 crore, indicating a sharp drop
of 43 percent. While LG's business dropped by 23 percent, AOC's dropped by 44
percent. Acer's revenue declined by 47 percent and Viewsonic's by 45 percent.
The worst affected was Samsung with a major downfall of 57 percent.

The key reason that could be attributed to this catastrophe is undoubtedly
the economic slowdown which affected IT hardware sales globally. The shortage in
supply of LCD panels across the world and reduction in price of LCD monitors at
the same time, fueled the crisis. While LG managed to stay afloat amidst the
debacle, thanks to its aggressive marketing policies, others could not hold on
and bore heavy losses. The worst hit among all leading players in the monitor
segment was clearly Samsung. Besides slowdown woes, internal restructuring at a
time of economic meltdown seemed to have paralyzed the company further with the
exit of Sanjay Sharma (ex VP, IT). While most of the other players could
overcome the blow by Q4 '09, Samsung continued to be in troubled waters. The
opportunity was fully utilized by the likes of AOC and Acer as they ate up the
market share left vacant by Samsung.

Similar was the case with the players addressing the bundled monitor market.
The overall revenue generated by the bundled monitor market recorded a slump of
39 percent, coming down to Rs 394 crore in Q3 from Rs 643 crore in Q2. While HP
still maintained its market lead followed by HCL and Dell, none of these players
could evade the inevitable crisis. While HP's business declined by 46 percent,
HCL's revenue dropped by 44 percent and that of Lenovo's by 40 percent. Dell
emerged to be the most steady player as it recorded the lowest fall of 33
percent compared to its competitors.

Q4 brought in little hope as the world economy seemed to be back on a
recovery track. The IT display majors are also gearing up fully to make up for
the loss incurred during the last fiscal. Meanwhile, as the technology
revolution has gained ground, the current financial year promises to be a new
battleground for the leaders to maintain their position and the wannabes to vie
for maximum market share.

Piyali Guha

Source: DQ