There is something distinctly 'must have' about a flat-screen monitor. Talk to anyone in the IT industry and you can tell that flat screens are now high on buyers' wish lists.
You can almost imagine the podium for the CRT screen being prepared in London's Science Museum, labelled 'CRT - RIP 2003'.
The reality, of course, is somewhat different. Very few form factors or technologies die overnight; you only have to ask a postman about email to know that.
But it is evident that flat-panel monitors are girding themselves for a dramatic takeover of corporate and consumer desktops during this decade.
No one believes the mass-market CRT has a future outside the emerging economies far beyond 2005. With hundreds of thin-film transistor (TFT) monitor vendors offering several models each, we seem to have reached the infamous tipping point.
The second quarter of 2003 was the first time that TFT and CRT shipments reached parity, according to Bob Raikes, principal at Meko Research. "In the UK, flat-panel sales doubled year on year in Q1," he claims.
In addition to tracking this trend, Meko's DisplayCast market research has come up with one very interesting finding: the total amount spent on monitors hardly changes each year. That means TFTs are growing at the expense of declining CRT sales.
This goes some way to explain why manufacturing, distribution and point of sale have to 'manage' the market to ensure a painless transition to the new TFT world order.
Despite this limited growth in volume, Meko predicts a clear transition, with TFT taking 75 per cent of the European market by 2005. In the fastest-growing economies this is predicted to be as high as 95 per cent.
It's no surprise that in March, Sony stopped manufacturing CRT screens in all but 21in and 24in sizes.
Anecdotal evidence suggests that the UK shift may happen very quickly. All resellers and vendors contacted for this article reported a growing or even dramatic shift to TFT. NEC-Mitsubishi, for example, says 95 per cent of its sales are now thin-film monitors.
As one distributor put it, every new installation now buys TFT. The main driver appears to be the fall in the price differential between CRT and its newer rival.
Greg Carlow, managing director of VAR Repton, said: "We have customers happily paying £100 or £150 more to get TFT. Most of them are able to do that."
Aside from pricing, TFT screen technology is improving year on year. Speed (response rate) is getting closer to CRT rates; and resolution and contrast (the difference between black and white) specifications are edging towards CRT levels.
Meanwhile, with better design allowing more flexibility in screen use, it is easier for resellers to sell the benefits of space saving and ergonomics (see below for CRT vs TFT comparisons).
In addition, panel electronics have improved dramatically, providing intelligent automatic set-up functions that are helping to reduce the concerns over set-up that plagued earlier models.
With mass CRT production being phased out by manufacturers it is also clear that buyers are beginning to avoid a technology without a long-term future.
Unfortunately, getting hold of TFTs is not always that straightforward. In a perfect market buyers say what they want and get it. As long as the margins remain reasonable, buyer and seller are able to exist in perfect harmony.
But many resellers and distributors report having to manage expectations from TFT-hungry buyers because of a shortage of 15in screens. This shortage is partly unavoidable and partly a matter of convenience to the manufacturers.
It is unavoidable because there is a worldwide shortage of 15in TFTs; it is convenient because it is helping manufacturers to drive buyers to larger formats while allowing them to sell stock to the more lucrative phone, PDA and notebook vendors.
Some believe the Christmas demand for wide screens will also restrict supply for the monitor market, probably well into next year.
Some believe TFT manufacturers are urging distributors to 'educate' resellers to buy 17in screens as standard because of the efficiency of scale and greater margin they deliver.
"Resellers have to work on buyers to shift them up, but that is the strategy I advise. This is a good opportunity to sell 17in," says Raikes.
He believes resellers should stress to buyers that the cost per megapixel is lower with the larger screen (an outlay of an extra £80 gives nearly half a million more pixels). "That's more data and images on your screen for not much extra cost," he said.
John Turner, business manager at distributor Midwich, maintained that despite supply problems, TFT sales are accelerating rapidly.
"In the past few months they have escalated out of all proportion. It's unusual to say it, but there are resellers out there begging us to reserve stock to meet orders from important customers," he said.
Turner added that these high demand levels are having three results: increasing sales of 17in CRTs as the supply of TFTs dries up; the hardening of TFT pricing; and an increasing willingness to buy non-branded TFTs in a bid to meet customer requirements.
"It's very much a pick-and-mix market," he said. "Customers are quite happy to buy a branded PC and add on non-branded monitors, so long as they can evaluate them first.
"I am happy with the quality of the non-branded monitors that are meeting the need now as many of the larger vendors have supply problems."
Talking to the channel, there is also evidence that shortages have led to a range of compensating strategies: over-ordering by distributors and resellers to ensure a reasonable quota; buying and selling between distributors and resellers to meet specific orders; and casting the net wider to ensure a supply, regardless of brand.
In some cases prices of TFTs have actually gone up in the past three months, but there is a large amount of variation in this volatile market.
Midwich said that the main result is vendors holding very firm on pricing, even when a buyer expects a bulk discount. Meko research estimates the average price for a TFT at £215 for 15in and £260 for 17in, before VAT.
John McGraph, managing director of NEC-Mitsubishi, suggested that the pricing is in the hands of the manufacturers.
"It's beginning to be like the semiconductor market, with the panel manufacturers putting prices up depending on demand," he explained.
"I think prices of 15in and 17in TFTs could still increase, but 18in and upwards is stable. But even that could depend on demand from the TV market in the run-up to Christmas, which could affect supply to the IT industry."
Perhaps the biggest selling point of TFTs is the space they save. An average 70 per cent reduction in size is helping to reduce costs and liberate acres of desk space, and it is also pleasing for an industry that spends millions of pounds each year stocking monitors and paying huge haulage costs.
With such clear advantages, the barrier to a sale is simply the fact that existing monitors are amortising, and the case for replacement has to be justified.
Even the industry is acutely aware of this. As one reseller, who chose to remain anonymous, puts it: "I think it's about time that we started using them ourselves, bearing in mind how good we think they are."
Some even believe that the TFT is a good way of stimulating something of a spring clean. David Watts, general manager PC and peripherals at Computer 2000, said: "It's rather like selling them a new carpet. Once the TFT screens go in, everything else looks a bit shabby and they start to look at other upgrade needs."
So what does this shift towards TFTs actually mean? First, it means a decline in CRT sales, although most observers predict a slow decline rather than a sudden end.
"This doesn't mean the death of CRT," said McGraph. "It's just that 15in and 17in are under attack."
Meko's research also shows that sales of CRT in Russia and the former eastern bloc are very healthy because of the growing appeal of the low prices on offer.
Jason Howe, product manager for monitors at Hewlett-Packard (HP), indicated that the reduced price of CRTs will remain attractive for some time.
"In some cases it will always be a requirement to get the cheapest technology, and CRT will deliver that with about a 50 per cent saving on TFT," he said.
Meanwhile, leading vendors such as HP and Dell are hoping to lead the innovation toward new form factors by mounting the computer on the back of the flat screen.
This all-in-one approach will help vendors maintain the complete sale, but so far it has received a mixed response from buyers and the channel. "I think companies still want to pick and mix," said Turner.
But despite this, HP and others are clearly prepared to take the risk to create new form factors that enable users to make the most of wireless networks and the growing need to hotdesk (HP calls it "wireless desktopping").
What is clear is that the pricing and supply of TFTs over the next six to 12 months is very hard to predict. The TFT panel industry - based exclusively in the Far East - is in the throes of converting to what is referred to as "fifth-generation manufacture".
This will allow it to make larger sheets of TFT at greater speed. The first of these plants comes on stream early next year but few expect prices to decline in less than a year.
Meanwhile, in late September Sony and Samsung announced they were in talks about forming a joint venture to produce TFT panels. Sony is the world's largest maker of CRTs for TVs and Samsung is the second-largest maker of TFTs. Currently Sony relies on Hitachi and LG Philips for supply.
Sony has stated its intention of grabbing 30 per cent of the global market.
Meanwhile, manufacturers and vendors seem likely to continue encouraging the channel to up-sell eager buyers onto 17in and 18in TFTs to ensure reasonable margins and volumes, while resellers look set to spend long hours searching websites and intranets to find the best deals on volume and availability.
There seems little doubt that flat screens will become standard fare as new installations and upgrades take place.
The question is how pricing will fluctuate over the next few months, and to what extent the CRT market will be sustained by buyers on tight budgets or using graphics and games applications.
Monitoring monitor growth
Meko Research reports that during the second quarter of 2003 European monitor shipments grew by seven per cent year on year - lower than expectations, because of a significant drop in CRT sales. For the first time TFT monitors represented half of all sales.
The analyst predicts the "significant" shortage of 15in monitors will result in a slowdown in the rate of growth, but that by the beginning of 2005 TFT monitors will account for three-quarters of the market, assuming that panel makers successfully roll out fifth-generation fab plants according to plan.
TFT shipments rose by seven per cent quarter on quarter for the period up to the end of June. That represents 20 million units and a 25 per cent increase year on year.
IDC predicts that worldwide flat-panel monitor revenue will be around £12.7bn, compared with £7.6bn for CRT monitors. It predicts the volumes will be equal sometime next year, but that revenues will be greater for TFT because of higher pricing.
It reports that flat-panel monitor shipments have been doubling yearly since 2000, and predicts that 17in flat screens will be the norm in 2005.
The pros and cons of monitor technology
Cheap. Starting as low as £60 or bundled at near cost.
Better for graphics applications.
Up to 16 million colours.
Better refresh for games and graphics users.
Costs are steadily declining and discounts are available.
Offers a wider range of viewing angles.
Bulky to deliver, move and store.
Can cause eyestrain unless very high quality.
Security risk - screen scraping is a threat.
15in actually means 14in.
Energy usage, typically 85W.
Not very portable.
THIN FILM TRANSISTOR
Space-saving and stylish.
Energy-saving, typically using 30W.
Brighter and flicker free, reducing eyestrain.
Longer lasting - some say twice as long.
Recover from standby mode faster.
Easier to store and move.
Screen size is accurate.
No need to focus.
Not affected by EMF interference.
Flexibility of use. Some allow video input.
Flexible viewing angles - many offer height, tilt and swivel adjustments.
Swivel may allow vertical 'portrait' mode use.
Does not emit harmful radiation.
More costly, for now at least.
Few or no discounts due to shortages and high demand.
Slow response time can cause 'ghosting'.
Loathed by games users and those needing high-end graphics.
Colour purity - a measly 64,000 colours maximum.
Sometimes not very bright.
Meko Research (01276) 226 77
NEC-Mitsubishi (0870) 120 1160
Repton (020) 8894 9000
Midwich (01379) 649 295
Computer 2000 (0870) 060 7998
HP (0845) 270 4114
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