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The big picture

The big change in the monitor market over the last year or two has been a rapid switch from CRT to LCD displays.

Exact estimates vary, but there is general agreement that LCD now accounts for more than 60 per cent of the Australian market. Samsung is the biggest supplier by volume of LCD and CRT monitors.

About 75 per cent of its sales are now LCD, according to product manager for monitors, Joe Serra.

Managing director of BenQ Australia, Phillip Newton, agrees with the 60 per cent figure and predicts it could reach 80 per cent by the middle of 2005 as multiple vendors introduce new models with innovative features in the first half of the year.

The shift from CRT to LCD was quite rapid, but we have also seen a sudden move from 15-inch to 17-inch.

Sales of 15-inch LCDs were quite slow, commercial channel manager for Philips Consumer Electronics, Norelle Blumentals, said.

According to Serra, the industry was unable to supply 15-inch LCD panels late in 2003. This encouraged the purchase of 17-inch models in the early part of this year.

Manufacturers then overestimated demand in the northern hemisphere and, in turn, dealt with that situation by reducing prices.

"The current supply glut is helping to put some pressure on prices," senior product manager for business display products at Sony Australia, James Waldron, said.

The strengthening Australian dollar has also pushed prices down.

The result was good for buyers, but it meant uncertainty for the industry.

"A lot of the vendors are being very reactive to trade and are very reluctant to hold inventory," Serra said. Dealers are only buying to meet immediate orders rather than holding stock.

Vendors have been under pressure from the manufacturing side to achieve volume and they have foregone profit to do so, but it is hard to increase prices once you've cut them, Serra said.

The move to 19-inch LCD has already begun, Blumentals said.

"The demand we've had in the last two months has been high," she said.

Nineteen-inch wouldn't become the most popular size until the second half of next year, Blumentals said.

Business development manager for peripherals at Acer, Caroline Villien, noted the recent price drops on 19-inch models. Other Acer officials said 20-inch sales were growing quite quickly.

The LCD market has split into value and premium segments, and it looks like the difference will become increasingly clear-cut. Apart from higher performance and additional features, the premium segment usually offers more generous warranty terms.

Cost sensitive

For example, Samsung's new warranty means that a failed monitor will be replaced on the next business day with a new replacement, with on-site service that includes installation and the removal of the old device.

'Dead pixel' terms are also improving to the purchaser's benefit, which should be good news for resellers who are less likely to have to deal with an unhappy customer.

Samsung has a zero dead pixel policy on all LCD monitors for the first seven days. This continues for the entire warranty period on 19-, 21- and 24-inch displays.

According to Serra, CRT monitors are now mainly purchased by those on tight budgets, serious gamers and graphic artists.

The problem for budget conscious buyers is that a 17-inch CRT costs about $180, while even a 15-inch LCD is nearly double that at about $350.

The good news is that the budget sector will probably switch to LCD in the second half of 2005, once prices reached about $250-300 he said.

In addition, there was a significant difference between monitors being purchased as standalone items and those bundled as part of a PC package, Villien said.

Seventy per cent of standalone sales were LCD, but when system sales were included that figure fell to about 55 per cent.

The difference was largely due to education purchasers staying with CRT: "They're really sensitive to the cost," she said.

"Resellers that want to hit a low-price point still have CRTs in their offering and any customer on a budget that wants to purchase a PC with certain specifications will probably purchase a system with a CRT monitor," retail product manager at Optima, David Choi, said.

It's possible those budget-conscious buyers will be pushed into LCD by CRT supply issues.

Manufacturers are scaling back production, and supplies of southern hemisphere tubes are drying up.

"Sourcing the tubes is a major issue," Newton said.

Market development manager for transactional desktops and monitors at HP, Tavis Butler, agreed, and said that HP's 22-inch CRT monitor was now an end-of-life product with no replacement model due to the lack of tubes.

Gamers have been put off by the relatively slow response time of LCD displays, but they are getting faster.

"Despite the fact that there has been considerable improvements in this area, with many LCDs now delivering response times of 12-16ms, most serious gamers still favour the CRT," Choi said.

"Gamers always want an edge over their competitors and feel that CRTs provide them with this advantage."

Most vendors have panels with 12 millisecond (ms) response times in their ranges, and the first 8ms models are on the market. That's also important for consumers who want to watch TV or DVD on their monitors.

Colour matching

But don't expect manufacturers to stop at 8ms: 5ms panels will be available around the middle of next year, Villien said.

BenQ would provide 5 or 6ms screens if the demand is there, but 8ms is adequate even for games and animation, Newtown said.

A 12ms response time was roughly equivalent to the 75Hz refresh rate of a normal monitor, he said, and 5ms corresponded to 200 frames per second. Furthermore, the persistence of a CRT was around 12ms in order to keep the entire screen illuminated, so any faster speed smacked of 'specmanship', he said.

While some graphic designers - mainly those involved with animation and video - worried about response time, colour matching was a more important issue. A top-class CRT display was still the best for Pantone colour matching, Blumentals said.

Corporate buyers have generally moved from 19-inch CRT to 17-inch LCD displays at roughly the same price, especially for front office use where style, space and occupational health and safety (OHS) considerations are all issues.

The reduction in power consumption spilled over to a reduced load on the air conditioning system, Blumentals said, while the space-saving design could translate into reduced rent, either by allowing a move to smaller premises, or by fitting more people into the same space.

But similarly to the education market, back office applications are tending to stay with CRT.

Impact of convergence

"It's all to do with price," Serra said. Even a modest saving on a single screen added up when hundreds of computers were involved.

Blumentals said that some employers were cost sensitive but would still buy LCDs for call centres and similar large-scale operations for OHS reasons, but she pointed out that government departments were only just starting to switch to LCD.

Corporates demanded thin bezels, height adjustment and pivoting screens, Serra said: "If you don't have those, don't bother quoting."

But it's not just corporates: "A lot of people are becoming more interested in these features," Villien said.

The importance of other features seems to vary. It can be difficult to sell on detailed specifications and features according to Waldron, who claims buyers tend to be concerned mainly with size, price and warranty.

The monitor was the obvious place for a USB hub in order to reduce desktop clutter, Newton said.

Speakers and both VGA and DVI interfaces are commonplace, though far from standard.

Contrast ratio and viewing angle are also important for the entertainment market.

Another reported trend is a tendency to purchase monitors and PCs from different suppliers, but ARN found mixed support for that idea.

Manufacturers are also expecting an increase in hybrid screens that can be used as computer displays yet also feature TV tuners (including high definition), decent speakers and multiple inputs. These are sometimes described as multi-function monitors (MFMs).

"Due to the current market emphasis on convergence, there is also a growing demand for LCDs that feature TV tuners," Choi said."LCD monitors are simply no longer seen as strictly for PC use, but rather as an integral tool capable of screening numerous forms of media," product director at Ingram Australia, Matthew Sanderson, said.

"This increased tendency on digital convergence also provides a variety of opportunities for resellers, ranging from selling a variety of associated accessories, to selling products that integrate the latest LCD technology into existing digital home appliances."

BenQ's plans for 2005 included modularised tuners, webcams, speakers and, perhaps, even a DVD player/recorder and other options, which would provide greater margins for the channel, Newton said.

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