Monitoring the rise of the TFT
TFTs have completely usurped CRTs as the monitor of choice for consumers and businesses alike, but this popularity has led to problems for channel players caused by a decrease in price. Paul Bray looks at what the future holds for the market
My brother lives in Boulder, Colorado, and last year he bought a high-quality colour CRT display in a charity shop for the princely sum of $2. Apparently the shop was pleased to get rid of it: demand for CRTs is now so low that it is scarcely possible to give them away.
The only reason UK charity shops are not all selling CRTs for a pound is because of our stricter laws on second-hand electrical goods. Apart from hardcore gamers and pre-press firms, nobody wants CRTs these days. They will account for less than one per cent of the UK display market this year, according to analyst firm Meko. CRTs already account for just three per cent of displays for new PC system sales, according to Hewlett-Packard (HP).
CRTs have been almost completely usurped by TFT (or LCD – the terms are virtually interchangeable these days). A TFT will not block up half your desk or give you a hernia if you try to move it. It won’t irradiate you, make you nauseous by flickering or give you a headache from reflections or poor contrast. And because it uses less power it won’t contribute as much to global warming (or, for that matter, to overheating your office on a hot summer’s day).
Upgrading is a tempting prospect, says Tom Mainelli, senior research analyst for monitors and projectors at analyst IDC.
“People continue to be enamoured by big, widescreen LCD monitors,” he says. “As prices continue to drop, more PC owners will upgrade from their clunky old CRTs. Our research shows that an increasing number of consumers do not want to buy a new computer to get a new monitor.”
Many in the channel believe that TFTs are an ideal product for resellers.
Russell Cole, European product marketing manager for LCD monitors at vendor ViewSonic, says: “TFTs are much easier to sell than CRTs ever were. They are so light that a customer can walk out of the store with one tucked under an arm, and their small-form factor makes shipping and warehousing cheaper and simpler.”
TFTs are also more physically appealing than CRTs, especially in the sleek consumer ranges produced by a number of vendors.
However, their very simplicity has meant that TFTs have quickly become commoditised.
“One of the main issues for manufacturers and resellers is the drop in the average selling price,” says Lauren Jones, business displays category manager at HP. “Panel costs are continuing to decline as more competitors from the Far East enter the market. Together with the increase in average monitor size and the move to wide formats, we expect businesses to take advantage of getting better screens for lower prices.”
Cole says: “To make money you have to ship a lot more LCDs.”
Margins on corporate sales can be negligible, and after-sales opportunities are limited since TFTs do not require the kind of tinkering and calibration that CRTs used to need.
The most popular TFTs today are 17in and 19in models in standard (4:3 aspect ratio) format (see graph, page 28). These models typically retail for about £125 and £150, respectively. As the size increases, the price climbs more steeply: a 20in display can sell for more than £200 and a 22in for about £300. Because of their novelty and rarity, 24in TFTs can fetch £500.
So one solution for resellers to make more margin is to persuade customers to buy bigger.
Pete Gamby, research director at Meko, says: “Larger sizes [of TFTs] are becoming more popular. Although percentage margins are under pressure, these larger screens will remain relatively more expensive and so the revenue opportunity is greater.”
Lee Baker, business manager for computing, displays and home entertainment at distributor Midwich, says: “The entry-level sizes are now 17in and 19in, but we have witnessed a marked increase in sales of TFT desktop monitors in 20in-plus formats.”
A larger screen should make the user more productive and less prone to tiredness, whatever applications and operating system they use, according to Cole. His preference is for a 22in widescreen display.
Sales of widescreen TFTs really took off last year. Vendor LG Electronics says it sold nearly 15 times as many in December 2006 compared with December 2005.
“Probably the biggest and most exciting change in the TFT market is the move to widescreen,” says Mainelli. “The transition from standard aspect ratio to widescreen occurred first on notebooks, and while desktop monitors started later, the trend is picking up steam. Look for close to one third of the monitors shipping in 2007 to be widescreens.”
Meko’s UK-specific estimates are more modest, but still show widescreen sales doubling this year to about 12 per cent of the market.
“There’s evidence that resellers can still charge a small premium for wide-format monitors,” Gamby says.
Widescreen displays offer benefits for both manufacturers and users. They are more cost-effective to make because they allow a greater yield and tie in better with TV manufacturers, says Cole.
“Panel suppliers are pushing the more cost-effective sizes, aspect ratios and resolutions, and widescreen is where vendors want to go,” he says.
For the user, widescreen offers slightly higher resolution, plus the obvious advantage that it matches the human field of view more closely.
Louise Walsh, marketing executive at LG Electronics, says: “Widescreen format allows users to up their productivity with increased screen space. They have the option to work on a spreadsheet, browse the web and watch a movie, all on one screen with room to spare. In response to this growing demand, we are launching several new ranges of widescreen LCD monitors later this year.”
Although not mandatory for running Vista, widescreen is certainly desirable to get the best out of Microsoft’s new operating system, according to many in the channel. “Windows Vista is optimised for 16:10 ratio widescreen monitors,” Baker says.
Adam Jubb, display product marketing manager at Samsung, one of the first vendors to produce Vista-certified displays, says: “We predict a surge in large desktop screens in the rush to upgrade to Vista.” A 20in or 22in widescreen display is the optimum size for Vista users, he adds.
The advent of high-definition (HD) TV will give widescreen TFT sales a boost, argues Robert Sung, UK sales manager at vendor AG Neovo.
“We are talking about 32in, 42in or even 50in plasma or LCD for people to watch the programmes, and 22in or 24in LCD monitors with HDMI [High Definition Multimedia Interface] connectors for the programme makers,” he says. “Even gamers can benefit. I’m sure some game companies will design games to run in full HD resolution.”
Display resolution is heavily dependent on user requirements, says Alun Williams, marketing manager at vendor NEC Display Solutions.
“Most general purpose users want an 84dpi [dots per inch] display, which offers the best compromise between resolution and user comfort,” he says. “This would mean eXtended Graphics Array [XGA] (1,024 x 768) resolution for a 15in screen going up to Wide Ultra XGA (1,920 x 1,200) for a 26in widescreen. More specialist users would want a 96dpi screen, which allows more information to be displayed. This would mean Super XGA (1,280 x 1,024) for a 17in display and Wide Super XGA+ (1,680 x 1,050) for a 24in.”
Contrast ratio is also an important component of image quality, according to Walsh. “A high contrast ratio will give users clearer, sharper images,” she says.
Many standard displays are still between 300:1 and 800:1 contrast ratio, but top-end models from vendors such as LG and Samsung are already offering ratios of 3,000:1.
The two areas in which TFT has traditionally remained inferior to CRT are refresh speed and colour range, hence CRT’s continuing popularity with gamers and pre-press firms. But the gap is closing all the time. Typical refresh speeds have fallen from 25 milliseconds (ms) to between five and 10ms, with some top-end products already offering 2ms. This could become the standard in a couple of years. This might also mean that no further improvement is necessary because it is arguable that nobody would be able to tell the difference, Jones says. The colour performance of TFTs is also improving, with wider colour gamuts now supported.
Apart from die-hard gamers and a few specialist users, there are virtually no limits to the vertical markets into which TFTs are being successfully sold. Horizontally, the technology stretches from consumers and education to multinationals, although business and education buyers are less likely to clamour for widescreen unless they can be convinced there are real benefits, according to Sung.
To cater for the needs of different user groups, vendors may produce several ranges: an entry level with single interface (usually analogue) and little or no ergonomic adjustment; a business range with bland ‘office’ styling and extra features, such as swivel, tilt and height adjustment, USB hub and dual video interface; and a ‘home’ range with slick, consumer styling and fast refresh rates for TV, games and video applications.
But as TFTs become increasingly commoditised, vendors are having to find additional ways to differentiate themselves. One recent innovation is displays with built-in iPod docking stations, launched last autumn by ViewSonic. A French reseller has already run a promotion giving away free iPods.
Cameras, microphones and USB hubs are starting to be built into TFTs. But one drawback of the slimline TFT design is that it is more difficult to find space for quality loudspeakers than with the traditional, chunky CRT casing. Therefore, multimedia TFTs tend to be ‘business quality’ only. They are adequate for videoconferencing, voicemail and the operating system’s limited sound requirements, but not the average consumer’s choice for listening to music. At least this gives the reseller a few add-ons to sell.
Touch screens are an interesting niche market, with specialist vendors such as 3M being joined by mainstream vendors such as HP.
Jason Mitchell, UK sales manager at 3M Touch Systems, says: “Applications for touch-screen TFTs are widespread, the most popular being point-of-sale, self-service, kiosk and public information access. Touch screens support development of new and niche multi-user applications. One 3M customer has installed an array of eight 19in LCD touch screens to simulate a helicopter cockpit at specialist aerospace events. Commands from each screen can be fed simultaneously into a single computer.”
Another niche market is TFTs with a protective layer of hard glass. These are designed to protect their delicate screens from pokes and prods in physically demanding environments such as schools and factories. Done badly, glass coverings may make screens too reflective or reduce image brightness and resolution. But specialist vendors such as AG Neovo use specially formulated optical glass with filters designed to enhance the image quality.
“Our VARs sell these LCD monitors into education, the public sector, the fishing, paper and security industries, TV and many more,” Sung says.
Away from the desktop, the UK has been a strong market for digital signage and other large display applications, according to Gamby.
“There are margin opportunities for resellers that are prepared to invest in understanding how to work with screen suppliers to provide total system solutions,” he says. “It’s not the hardware but the services here that can make money. Selling internet bandwidth to digital signage customers has proved to be an attractive market, for example.”
Vendors are already building networkable displays to cater for this market.
“This year will see growth in digital signage, which will become more important to retailers of all sizes, to attract and communicate with customers,” Jubb says. “Displays with an in-built PC can be connected directly to the LAN, with unique content streamed to multiple displays.”
Current manufacturing processes still do not turn out perfect product every time, but the number of panels with sub-pixel faults (at least one of the three colours in a pixel defective) has fallen from almost 100 per cent five years ago to between 20 and 50 per cent today. Some vendors are already guaranteeing that their TFTs have no full pixel defects (all three colours in a pixel defective).
At least there is not likely to be any shortage of supply in TFTs. Huge amounts of manufacturing capacity have been created to meet demand for LCD TV sets and with sales of these currently lagging behind production capability, there is plenty of spare capacity to manufacture computer displays.
Whether this spare capacity will be called upon is another matter. IDC expects the worldwide market to continue growing, although not as fast as in the past. But in the UK, Meko believes sales will fall slightly.
“Although the PC market is growing, a larger share is being taken by notebook PCs and this reduces the PC/desktop monitor bundle opportunity,” Gamby says. “However, stand-alone monitor sales – either as replacements to existing CRT monitors, as upgrades in size to LCD monitors or as new sales to notebook or games console users – continue to look very promising.”
CONTACTS:
3M Touch Systems (01344) 858 387
AG Neovo (01296) 626 030
HP (0845) 270 4142
IDC (020) 8987 7100
LG Electronics (01753) 491 500
uk.lge.com
Meko (01276) 22677
Midwich (01379) 649 200
NEC (020) 7202 6300
Samsung (01932) 455 000
ViewSonic (01293) 643 900