HolidayBuyer's Guide

Flat-panel TVs can't topple tubes--just yet

Desire for status is pushing many consumers toward pricey flat panels. But old-fashioned tube TVs still produce better pictures. Photo: CRTs getting skinnier

Consumers scrambling for sexy new flat-panel televisions may want to tune in to this less-publicized feature of the trendy boxes: They don't deliver pictures as clearly as traditional tube TVs do.

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What's new:
Flat-panel monitors are topping many wish lists this holiday season, but old-fashioned tube TVs still produce better pictures.

Bottom line:
It looks like chunky CRTs will hold the attention of many viewers for years to come.

More stories on CRTs

Retailers expect flat-screen televisions to be highly popular this season--and recent price drops are only expected to boost sales.

But for all the hype around next-generation televisions, flat panels have a way to go before they rival their cheaper CRT (cathode ray tube) counterparts in performance--or cost.

"Consumers think they're buying the best in technology (with flat-panel televisions), but it's more of an emotional purchase," said Bob O'Donnell, an analyst with researcher IDC. "It's part status and part wanting to be on the cutting edge."

The technologies behind flat-panel televisions--plasma and liquid crystal display--let manufacturers create larger, thinner and lighter sets. Flat panels are getting as big as 60 inches but weigh only a fraction of the largest CRT sets, the consumer versions of which are limited to about 42 inches. The comparatively petite cases of flat screens also allow them to be hung from walls, although this is rarely done because it makes sets difficult to move or adjust. Still, neither plasma nor LCD technology quite measures up to CRT when it comes to picture quality.

LCDs are great as desktop PC monitors because they don't have to refresh pictures rapidly--more LCD desktop monitors were shipped in 2004 than those using CRT technology, according to researcher iSuppli--but they don't work as well when used as televisions. Plasmas tend to lose brightness over time and don't offer images as sharp as those served up by CRTs. Manufacturers are working to improve these shortcomings.

However, from the manufacturers' point of view, the CRT business has run its course, with profits being wrung out after some 50 years of significantly boosting companies' bottom line. Though CRTs make up about 90 percent of the global television market, growth rates have been stable for some time. Shipments for flat televisions, meanwhile, are up modestly, accounting for 5 percent of the market. But their hefty profit margins are driving manufacturer interest.

Prices will continue to decline in coming years as the market consolidates, growth flattens and manufacturers are forced to compete more aggressively on price, according to Siegfried Trinker, director of corporate strategy at LG.Philips Displays International. So far, the average price of CRT televisions in 2004 is $304, according to iSuppli. Trinker sees a budget television market made up mostly of CRTs that open with average prices of $250. With such low price tags, many consumers will find it hard to justify any other television technology.

"What they want is one thing, and what they buy is another," Trinker said.

Analysts seem to agree. iSuppli forecasts that the CRT market will still account for about 70 percent of the television market by 2008.

"CRTs are still the most cost-effective technology on the market," said Jim Sanduski, marketing vice president of displays at Samsung Electronics of America.

Where there's a dominating market share, there's an opportunity, and that's why Samsung and LG.Philips Displays are looking to improve on staid CRT technology with slim-model CRTs. The new tubes will initially allow for sets 30 percent slimmer than current CRT sets, and they'll continue to get thinner as companies improve the technology.

The first run of these slimmer CRT sets will be coming to the United States in mid- to late-2005--with some as early as the first quarter in Asia--in 30-inch sizes. They'll initially cost more than regular CRTs but will gradually sell for similar prices.


Still, big-name television makers including Matsushita, Sharp Electronics and Toshiba are considering or have already started pulling back production of CRT sets in search of more profitable pursuits. Sony stopped producing CRTs in Japan but continues to make sets for the U.S. market.

"CRTs are still a very vital part of our TV business and we're doing very well with them," said Michael Fidler, senior vice president of the home products division at Sony Electronics.

As the list of companies making tube sets dwindles, the roster of those in the flat-screen business is growing. The average price of plasma-screen televisions this year was $3,342 while LCD TVs sold for an average of $1,591, according to iSuppli. Profit margins for flat-screen sets are in the mid-to-high-teens percentage range, depending on screen size. This has convinced nontraditional players such as Dell, Gateway, Hewlett-Packard and Polaroid to enter the television biz.

These new players hope to reignite the $13.6 billion television industry, something that should be helped along by the programming transition from analog to digital.

Flat-panel sets and digital programming go hand in hand. The screens on flat-panel sets can better accommodate the high-resolution picture offered by HDTV, so combining the level of detail that comes with a digital signal with the large, thin screens of flat panels means an enhanced viewing experience.

"The two together make for a powerful one-two punch," said O'Donnell of IDC.

Whether pictures are received via cable, satellite or over the air, digital programming has the potential to produce much clearer pictures than older analog. High-definition television is the digital TV that offers the highest resolution available, above standard-definition and enhanced-definition TV.

DTV and HDTV have been stalled in the wings for years. They're now gaining momentum, thanks to a confluence of forces, including a long-standing federal mandate to shift over-the-air television broadcasts from analog to digital signals; improvements and lower prices in display and digital storage technologies; heated competition between satellite and cable television providers; and Hollywood's growing acceptance of the inevitability of the digital evolution.

However, it will likely be a number of years before digital programming outweighs analog, making buying decisions somewhat confusing for consumers.

"There will be an awkward transition period for the next few years," O'Donnell said.

So although consumers will gradually turn on to flat-panels sets, it looks like the old-school tube will hold the attention of viewers for years to come.

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