Liquid-crystal displays (LCDs), also known as flat-panel monitors, started their price plunge before the winter holidays, making 15-inch flat panels one the of the hottest-selling peripherals of the season.
Since then, prices have dipped to the $499 range for many 15-inch displays, though the newest 15-inch models still sell for an average of $750.
Now larger 17-inch and 18-inch displays are free-falling too, with some selling for $899--about 60 percent lower than last summer.
"I don't think the prices have anywhere near hit bottom," IDC analyst Eric Haruki said Wednesday. "I don't see any price stabilization until at least summer."
By summer, Haruki predicts, bargain-basement 15-inch displays will fall below $350, and "the name-brand guys will definitely plummet into the $400 range." He predicted that 17-inch and 18-inch flat-panel displays could dip as low as $700.
Once again, swelling inventories are to blame for the fire sales, which benefit consumers but hurt manufacturers. Analysts have traced last year's price plunge to an increase in manufacturing capacity. A shortage of LCD glass, partly driven by growing demand for notebooks and handheld devices in the late 1990s, prompted manufacturers to invest in glass plants in Taiwan and Korea in 1998 and 1999. Those factories turned a shortage into a glut in late 2000.
But the slowing economy and weak PC sales have exacerbated a serious oversupply, leading some LCD monitor makers to cut their losses by slashing prices.
"The manufacturers don't want the panels sitting around a (wholesaler's) warehouse," Haruki said. "It's like a car not being used, slowly depreciating sitting there."
Herb Berkwits, monitor maker Viewsonic's senior product manager, said the supply situation has led to some overly aggressive and downright cutthroat pricing.
"If you have a lot of inventory at the old price, a lot of manufacturers will just dump it out on the market at whatever price they can get for it," he said.
Because of ongoing stock pileups, some manufacturers are tightening inventories and offering dealers incentives to move product more quickly. Some may also begin selling some products directly, cutting dealers out of the equation, said distribution sources.
"Prices are coming down so rapidly, it's very difficult to buy large stock and expect (it) to be priced right two or three months (after sitting) in inventory, so everybody is playing very, very lean," Berkwits said. "Anybody that doesn't is making a big mistake."
Market researcher Stanford Resources predicts that 2001 will witness LCD monitors' first hard push into the mainstream. With prices falling rapidly, sales are surging. This year, manufacturers are expected to ship 12.2 million flat-panel monitors, worth $6.6 billion and bringing the segment to 9.4 percent of the worldwide monitor market.
NEC-Mitsubishi Electronics Display ranked No. 1 in LCD monitor production last year, shipping 1.1 million units, or nearly 9 percent of the worldwide output.
Gartner analyst Mostafa Maarouf says LCD price drops are undoubtedly springing from excess manufacturing
capacity, combined with a much weaker than anticipated 2001 demand for
Manufacturers and analysts say that despite rapidly falling prices, LCD displays simply still cost too much to overtake CRT models. The breakthrough point is expected to be about two times the cost of a comparable CRT display. Many 17-inch CRT displays, which offer viewing space comparable to 15-inch LCD models, sell for below $200. That works out to be $300 less than the cheapest flat-panel displays.
"If you're just trying to justify it on sex appeal alone, it's still a little bit expensive," Berkwits said. Despite the price difference between LCDs and CRTs, there are still good reasons to consider flat-panel monitors. "Total cost of ownership, how long they'll last, and how much easier they are on the eyes are important factors," he said.
Brett Faulk, Compaq Computer's director of retail desktop product marketing, agreed that two times the price is the magic number, but said that is a long way off. And more important, he emphasized, is that recent technological advances for CRTs, such as flat-screen designs, are breathing new life into sales.
"The most eye-opening new development is flat-screen monitors," he said. "You're really going to see those take off. We're having great success with them."
Flat-screen monitors use a flat tube, instead of the round tube in typical CRT displays. The approach reduces the size of the display, but nowhere near that of svelte LCD monitors.
Until late last year, LCD monitors were beyond the reach of most consumers, particularly given the even lower prices of CRT monitors. But LCD prices have steadily declined since the monitors first reached the mass market in 1997.
Compaq was one of the first PC makers offering a branded LCD display. In June 1997, the company introduced its first commercial flat-panel display, the 15.1-inch TFT500, for $3,799. Eleven months later, Compaq had reduced the price to $1,599. Now the Houston-based company sells consumer and commercial LCDs for as low as $699.
Until recently, prices of larger displays remained fairly hefty. When Compaq introduced its 18.1-inch TFT8020 monitor about a year ago, the flat-panel display sold for $3,399. Although that monitor still sells for $2,499, Compaq offers a streamlined 17-inch version, the TFT7010, for $1,000 less.
Other PC makers have been even more aggressive in LCD display pricing. Gateway, for example, cut the price of its 18.1-inch LCD monitor by $500 in mid-February to around $1,400.
"Overall, flat panels have come down for the last seven to nine months," said David Schmook, a Dell Computer marketing director. "You're seeing the large screens come down faster in price."
Right now, Dell sells a 17-inch flat panel for $999 and a 15-inch model for $699. A month ago, the 17-inch model sold for around $1,249 to $1,299, while the 15-inch sold for $799 to $899.
Dell is one of the cheaper vendors. A check of online retailers shows that most manufacturers' 17-inch LCDs still sell in the $1,200 range, while many 15-inch panels go for $726 to $750.
But monitor makers have taken a more aggressive tack, particularly in slashing 17-inch and 18-inch display prices.
Online retailer PC Mall sells Acer's 18.1-inch LCD for $999 and Samsung's SyncMaster 770TFT for $999 new or $899 refurbished. Rival PC Connection offers comparable prices, with the Princeton Graphics LCD17 selling for $929.
Haruki said Costco carries the Princeton model for $899, while the name-brand 18.1-inch Acer and IBM T85A can be found elsewhere for as little as $999. Second-tier manufacturers such as Xenon will likely be priced lowest, while Samsung, LG Electronics and Viewsonic typically run $100 to $200 higher on both 15-inch and 17-inch LCDs.
"NEC-Mitsubishi is typically late with price reductions, because they think their brands are strong enough to sustain fairly high selling prices," he said. "Even they are being forced to reconsider that notion and, for example, sell their new 18-inch monitor for $1,599 with a $300 mail-in rebate for a month or two."
How low the prices will ultimately go is uncertain, but PC Connection spokesman Matt Cookson said the estimate of $700 17-inch flat panels by summer could be overly conservative.
"For the last 12 months, we've seen a 32 percent month-over-month increase in our sales of flat-panels. (And) over the last 12 months, we've seen a total 32 percent decrease in average sales prices of 17-inch LCD displays," he said. "If that trend continues, you could easily see prices falling to $600 by summer."
CNET News.com's Michael Kanellos contributed to this report.