Can Panasonic save plasma?

With Pioneer and Vizio recently announcing their exits from the plasma market, there's been a lot of chatter about the technology's short and long-term viability. Some of plasma's problems are PR related. Lingering questions--justified or not--about burn-in and energy efficiency have become part of the public conscious and remain a stumbling block at point of sale. Ultimately, however, there are more simple economics at play. Far more factories are available to produce LCD displays than plasmas, which haven't been able to maintain their price advantage as margins have eroded and the performance gap between the technologies has narrowed.

But let's not dwell on how we got here. The key question is how can plasma survive? And for better or worse, the answer is really in the hands of Panasonic, the brand that has most closely linked its TV fortunes to the technology. Yes, Samsung and LG make lots of plasmas--and some good ones, too--but both are also well-committed LCD and well hedged should plasma go away (Panasonic makes some LCD TVs as well, but nothing larger than 37 inches, while plasma starts at 42). Alas, with Pioneer's departure--a sad day for those who value great TV picture quality--Panasonic is left to carry the plasma mantle largely on its own.

Can it keep plasma from perishing? Well, I hope it can, because the TV space is already commoditized enough and it would be shame if we went down to one flat-panel technology (sure, OLED is being hyped as the display technology of the future, but it's years away from mass-market adoption). However, Panasonic's got to take make some key moves to keep plasma from running out of gas. Here they are:

1. Beat prices for LCD TVs in key size classes.

Right now, the most important sizes in plasma are 42, 46, and 50 inches, and it's imperative that Panasonic maintain a price advantage in those sizes. The problem is, according to an industry source, that if all things are equal in terms of size and price, consumers are choosing LCD over plasma by an overwhelming margin.

In a few weeks, Panasonic will start releasing its 2009 TV line. Here are some sets to watch out for:

Entry-level 720p 42-inch TC-P42X1: The list price on the 2008 version of this model is $999.99, but it's selling for as low as $750 right now. Panasonic needs to have the street price for this TV hit $699.99.

Entry-level 720p 50-inch TC-P50X1: By the same logic, this TV needs to have a street price of less than $1,000.

Entry-level 1080p 50-inch TC-P50S1: This model needs to street for less than $1,500--or preferably, closer to $1,400, to compete with 46- and 52-inch 1080p LCDs.

2. Make larger plasmas with enticing price tags.

Later this year, Panasonic will bring out the 54-inch TCP54S1 to counter the new 55-inch LCD TVs that are heading into the market. Right now, the 55-inch VF550XVT Vizio LCD TV, which lists for $1,999.99 is selling for $1,700 in Costco. Later this year, Vizio will release the VF551XVT with an LED backlight for $1,999. That's serious big-screen price pressure.

It's a tall order for Panasonic to bring out a 54-incher at that price, but it has to come close--and its picture quality has to be better than the Vizio's. Not to knock Vizio (we'll be getting a review sample of the VF550XVT soon), but Panasonic will have an easier time achieving a picture quality advantage than a price advantage.

While it's less crucial, it would good if the price for Panasonic's 58-inch TH-58PZ800U model dropped to $2,000 (it's now $2,449.99 at Newegg; new 58-inch Panasonics aren't due until August). Beyond the 54-inch set, it needs something bigger to counter the impact of more 55-inch LCDs coming into the market. In this economy, however, most of the action is in the 42-to-55-inch range.

3. Launch a marketing campaign that touts plasma's advantages over LCD and negates its disadvantages.

Panasonic's new line of more energy-efficient NEO PDP panels will go a long way toward leveling the playing field with LCD in terms of energy burn rates. But Panasonic also must put the burn-in issue to rest, putting its money where its mouth is with a lifetime guarantee against burn-in. It needs to do something bold there while touting plasma's strengths. Yes, LCD performance continues to improve, but entry-level plasmas still tend to outperform their LCD counterparts and offer better off-axis viewing (if you sit off to the side, the picture doesn't degrade as it does with many LCD models).

4. Avoid putting too much weight or promotional effort behind the upcoming superthin plasmas.

Sadly, companies actually think that people really care if you make a superthin TV. It's great for a quick shot of publicity to say you have a 1-inch thick TV (the new Z1 plasma did well for Panasonic at CES), but most people aren't willing to pay a big premium to shave a few inches off the thickness of their TVs.

Fact: Most folks don't mount their TVs on a wall and are more interested in the width of the stand. In other words, the average flat-panel TV is thin enough for most consumers, who care most about the size of the TV and its price--not how deep it is.

The waiting game

What are the odds Panasonic really executes on all things I've talked about? Well, the company has to deal with some factors that are out of its control, like producing panels in Japan instead of China and dealing with currency issues involving the yen and dollar. It probably also doesn't hurt that Panasonic will get a small boost from Pioneer's departure. After all, it was a competitor; over the years plenty of CNET readers have vacillated between buying a Pioneer or Panasonic plasma. But by the same token, Pioneer and Vizio's move away from plasma has generated a lot of negative publicity for the technology and made tech columnists write headlines like, "Can Panasonic save plasma?"

All things considered, I'm giving plasma 50-50 odds at avoiding niche status. I hope it makes it. I really do. But sometimes the best technology doesn't win. Just look at HD DVD.

Anybody disagree? As always, feel free to get your 2 cents in.