TV Prices Expected to Fall as Industry Faces "Price War"

Strategic Insights -

The TV industry is bracing for a decline in sales and prices as companies struggle to meet consumer demand. With prices on traditional TVs already facing a 20% to 25% annual drop, the world's largest TV makers - Sony, Panasonic, Samsung, and LG - are now predicting deeper price drops in the coming quarter. As consumers remain reluctant to spend, manufacturers are being forced to lower their prices to attract shoppers.

Key Takeaways:

  • Sony has abandoned its goal to profit from TVs this fiscal year due to decreased demand.
  • Panasonic forecast a deeper price drop for this quarter, signaling a decline in the industry's ability to capitalize on the biggest sales quarter of the year.
  • Samsung Electronics predicted "severe" competition for the year-end season, echoing comments from LG Electronics.
  • Analysts predict prices to fall as much as 25% in 2010.
  • Companies from Microsoft to Intel are increasingly relying on corporate demand as consumers are hesitant to shop.
  • Manufacturers are adopting a "sell earlier and sell for less" strategy to clear inventory.
  • The average consumer is unwilling to pay a 30% premium for higher quality sets, making price drops a necessity.
  • Retailers like Target and Wal-Mart are offering discounts ahead of the holiday season to move merchandise as U.S. joblessness hovers near a 26-year high.
  • Target has lowered prices on over 1,000 toys to attract shoppers, prompting Wal-Mart to respond with its own discounts.

Statistics:

  • 20-25%: The annual decline in prices of traditional TVs.
  • 25%: The predicted price drop in TVs for 2010.
  • 30%: The premium consumers are unwilling to pay for higher quality sets.
  • 1,000: The number of toys that Target lowered prices on.
  • 26: The number of years since which U.S. joblessness has been near this level.

Sources:

  • "Sony gives up on profit from TVs this fiscal year" (no date mentioned in the source)
  • "Panasonic forecast" (no date mentioned in the source)
  • "Samsung Electronics predicts 'severe' competition for year-end" (no date mentioned in the source)
  • "LG Electronics comments" (no date mentioned in the source)
  • The Hamilton Spectator (2010)