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Commentary: LCD prices fall, but not enough to make a holiday hit

The big premium of LCD monitors over the CRT and competition from other devices will help to dampen demand from holiday shoppers this year.

By Mostafa Maarouf, Gartner Analyst

Recently the price and performance gap between cathode ray tube (CRT) and liquid crystal display (LCD) monitors has slowed penetration of LCDs into the monitor market. The key change is the increase in the supply of LCD panels, which has lowered the cost for monitor manufacturers.

Lower costs combined with manufacturers'

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willingness to accept lower margins to capture market share has resulted in a big price drop for LCD monitors in 2000, and it will likely continue through 2001. Prices for 15-inch monitors are heading toward $599, with another 10 percent drop expected through 2001.

There remains a big premium for LCD over CRT monitors, however. Even at $599, a 15-inch LCD costs two to three times as much as a 15-inch CRT.

Monitor vendors also have to compete with growing demand for handheld computers and laptops for a (still) limited supply of LCD panels. Hence continued growth in demand for LCD applications other than monitors puts a floor under LCD monitor prices.

LCD's big premium over the CRT and competition from other devices will help to dampen demand from holiday shoppers this year. As a result, the home market will not achieve a high penetration rate this holiday season, even with the price drops.

The professional market, however, will likely accept this premium to save desk space. As the price and performance gap between LCDs and CRTs narrows even more, the big wave of buyers for LCDs in the short term will be businesses, with the home market coming next.

Overall, the number of LCD monitors sold will at least double in 2001, with most of the growth coming in the professional market. For notebooks, price drops resulting from greater LCD glass capacity will not be as great as we have seen with monitors because in notebooks, LCDs will merely substitute for other LCDs. Notebook sales will continue strong without any price cuts.

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Entire contents, Copyright © 2000 Gartner Group, Inc. All rights reserved. The information contained herein represents Gartner's initial commentary and analysis and has been obtained from sources believed to be reliable. Positions taken are subject to change as more information becomes available and further analysis is undertaken. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of the information. Gartner shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof.