Value over volume for displays in 2012

The UK monitor market will gain from an increased vendor push for niche markets and high-quality products this year, suggests Lachlan Welsh

LCD monitor sales across UK distribution finished on a promising note in the closing quarter of 2011, as the commercial market remained resilient despite uninspiring results for the consumer market.

The players in this market will be looking for this positive trend to continue in 2012, with customers moving towards superior technologies and increased screen sizes. More prominent product positioning should also optimise revenue in a year where market conditions will be difficult.

Our data suggests that western Europe is seeing weakening consumer demand due to the difficult economic conditions. This contributed towards a decline of 5.5 per cent in the last quarter of 2011, compared with the previous year.

In contrast, UK unit sales rose 1.3 per cent against last year, and an even more impressive two per cent on the year-ago quarter. Our data tends to find that unit sales are highest in the first quarter, supported by the seasonality of budgets, whereas the following quarter is typically the bleakest, and the subsequent quarters build on each other to reach the first-quarter heights.

This trend appeared to continue in 2011. However, the second quarter - traditionally the time when demand is at its weakest - registered a surprising eight per cent unit growth. This increase was likely the result of a market drop in average selling prices (ASPs), spearheaded by LG dropping prices across its 21.5in and smaller range.

This sequential ASP decline reached its lowest point around June, and resulted in an expected increase in unit sales. In light of this, the indications from the December data and early 2012 were that ASPs are once again on the rise, as vendors start looking to penetrate the market with better and larger screen-size technology.

This year is set to become the time when superior technology in monitors will be the major force in vying to capture a portion of the increasingly stymied IT budget. While growing spending is still forecast for the world IT market, this looks to be offset by the phenomenon of cloud computing. Vendors such as Samsung have responded to this by bringing out a PC-over-IP range of displays that promise high specs for a lower initial acquisition cost.

The market will continue to lean towards larger display sizes this year. In the final quarter of 2011, screen sizes of more than 21.5in accounted for half of all sales through UK distribution. We expect 23in and 24in monitors to develop the most in 2012, with this segment growing to 20 to 25 per cent of the market.

Customers are beginning to favour various kinds of IPS and VA panels over the standard TN technology. In 2012, we expect to see users shift more generally towards IPS panels as they look for better colour reproduction. Most major vendors have released models with IPS panels. Context predicts that LG will be best placed to penetrate the UK market here.

TN panels will still be popular with users who need a cheaper product, and with consumers who require fast response times, such as gamers.

Vendor warfare will also intensify this year, too, as they attempt to shoehorn their various product lines into specific market niches.

Global leader Samsung will look for more market share through sleek design and competitive prices, while the low cost-low spec route and related strategies may again be employed by the likes of LG.

Overall, we expect to see vendors trying to optimise revenue through quality design targeting the commercial sector. The products carry higher prices that may impede unit growth but ultimately help the bottom line.

Lachlan Welsh is a displays analyst at Context