According to a report from iSuppli market research, LCD prices may be rising in the coming weeks due to limited supply and increasing demand. And while this may be big news in and of itself, some are suspect of the effect higher prices will have on the marketplace. As far as I can tell, the effect will be minimal at best.
As many are well aware, plasma HDTVs tend to offer a superior picture for sets measuring over 42 inches. For most HDTVs under 42 inches, LCDs take the day. And while there are some nice 50-inch LCDs and beautiful 30-inch plasmas, it is this dynamic that will dictate the future of this industry.
Regardless of pricing implications and the impending price hike on LCDs, there will not be a measurable effect on sales of either LCDs or plasmas. Like most other industries, the general rule is the smaller the product, the lower the price. And while this is not universal in the HDTV business, it tends to be true nonetheless. That said, HDTVs are also priced based on the name attached to the device. Whether or not a Panasonic is nicer than a Westinghouse, you will typically find that the Westinghouse will be priced much cheaper than the Panasonic. Sad as it is, quality does not dictate price.
And that is the issue facing the industry in the coming months. While LCD prices rise, the impetus for retailers to drop plasma pricing is no longer there. For the first time, a 37-inch LCD may be the same price as a 50-inch plasma of equal quality and name-recognition. And while pricing is certainly a consideration when people look for their next big purchase, it's not always the determining factor.
On any given day you can go to your nearest electronics store and watch people with a stated budget talk themselves out of a certain set they saw online because it doesn't look nearly as nice in the store. Simply put, people go to the store looking for two main components: products within their price range and the best picture on the show floor. But unfortunately, looks can be deceiving. While a 50-inch LCD may look better than a comparably priced plasma in the store, people are often times confused when the picture at home doesn't look quite the same. Looks can be deceiving, but in the store, looks are all that matter.
It's this drive for the best picture quality that has dictated buying behavior in the past and will continue to dictate it in the future. Regardless of pricing, the average consumer couldn't care less if an HDTV is a plasma or LCD as long as it looks nice in the store. Most people don't run to Best Buy and say, "I'm spending $1,800 and that's it!" Instead, the average Joe or Jane is excited to buy the new product and will specify a range: "$1,500 to $2,000." With that framework in mind, Joe or Jane runs to the HDTVs and sets out for the properly priced device. Once they find a handful of options, they compare and compare and compare. Once they decide on the best picture, the decision is made. Period. There is no mention of higher LCD prices as compared with last week and most people don't even know the difference between LCD or plasma because it simply doesn't matter. Beauty is in the eye of the beholder and "LCD" or "plasma" are nothing more than names.
So, hand me those LCD price hikes and tell me about the possible benefits of buying a plasma because they are now a fine pricing alternative and I will tell you that price hikes and "plasma" really doesn't matter much when buying an HDTV. Sorry, it just doesn't.