I was not all that amazed today when I read that leaders in the TV industry felt dropping price is the only way to hit targets this year.
As the US economy suffers, Unemployment sticking at 9.6%, do we really think PRICE is going to increase sales enough, when people are simply putting off a new TV purchase. The size the current one is OK and it works just fine? Yes it may not be 3D, it may not have IPTV, it may not be a new LED slim form factor with some minimal power savings. Interesting enough, we all seem to be missing the fact that the US consumer has woken up from the punch drunk days of spending when the economy was so good.
What do I mean by this? It is rather simple, people are spending on what they NEED more than what they WANT. Even more of an impact is that they have learned to even adjust the amount that they WANT. What they want is not as feature reach as it has been in the past. Goals for achieving new items have been reset to a new level. (The one who dies with the most toys WIN - and it doesn't have to bee the fanciest toys anymore)
I have coined this as the "It's good enough" point of view. If I currently own a perfectly good working 8.0 mega pixel camera, why would I toss it and buy a 10.0 - 12.0 mega pixel camera. I am not taking the time to learn about the other technology of smile ,eye, face recognition that is in the new camera, or the new lens, or light sensor and so on, so based on the basics of ANY item what I have is GOOD ENOUGH.
The day of moving a TV to another room before it dies as the excuse to put another (previously driven more by size than feature anyway) large and more featured set in the home are seeing it's days numbers. First my IT'S GOOD ENOUGH point of view. Next the current housing situation, and the downsizing their homes. Average home sizes have been reduced, not increasing, offsetting the ability for the industry's to belief there will be more TVs per home and larger TVs per home. TVs per home have increase from 2.1 to 2.7 TVs, but I do not expect that to continue, and would not be surprised if it goes in reverse.
What do most people want from their TV. Great picture at a reasonable price. The TV alone without content does NOTHING. 3DTV lacks content, and people still fear the quality, as well as the need to wear glasses. It is one thing when a person decides to go to the movies and watch for about 2 hrs. No multitasking is intended. You are there to watch the movie, you want to see it in 3D, and your willing to pay for it. At home you may want the big screen, everyone has seemed to abandon caring about the sound, and you like to multitask when you watch movies , sports , news , shows. (popularity of DVR and ability to pause live TV). This puts 3DTV in the back seat at your house. Putting on glasses at home is not about how it LOOKS, but what you can or can not do at home while watching TV is impacted.
IPTV has an incredible laundry list of challenges in front of it. Speed, connectivity, content, interface and usability. In the US we don't have the speed due to a non-existent Broadband program in the US. Our speeds are incredibly slow. (We still have people using DIAL UP!). If you have Broadband it could still be on Wireless A or B or G, as there has not been any reason to go to N and N wasn't a solid choice until recently. Wired? Well same issue with all these flat panels sitting on some sort of shelving vs hanging. The power and other connection are not located up on the wall. Cost of that installation is preventing the majority of people placing / moving this on the wall. Same issue exists with Internet. Most people have installed the HARD wire connection of the Internet in the office or loft where the computer is, not where any other Consumer Electronics are. (TV, DVD, and such). Wireless - not fast enough / Wired - to costly to move. New homes help, but as we all know new housing will not rebound for some time, and would only be a SMALL slice of people purchasing new TVs.
LED - Thin TVs - as mentioned above - if you are not hanging it on the wall - WHO CARES?!?!
Feel green, great, get an LED, but similar to the Automotive industry, how much are you willing to pay to be green? Just like the CAR you will NOT save enough in energy to justify the price increase at current markup for LED today.
So what do we see in the market, an overall soft TV market for the majority of the year in the US. We don't have a switch from Analog to HDTV a valid reason to upgrade a TV. We are not moving from HUGE crts or rear projection TVs to FLAT, another significant change the people where willing to spend money for. Now we are moving back into Evolutionary changes vs. Revolutionary changes.
To make all of this worse the industry sets targets (based on sales AND PROFIT) and when they do not look like they will achieve the targets for units and market share they chase the SALES and throw away any PROFIT.
Why continue to develop new product to lose money?!?!?! Bit of a death spiral for most companies trying to survive. If all of these companies had to survive on the Profit or Loss of just the Electronics category alone, I would argue that most would be gone.
We are not developing (for the most part) technology that customers WANT. This is a broad statement and is pointed more at TVs. Companies are struggling to cram another way to make money vs. off the item itself to offset the self inflicted pain of selling cheap when units do not sell up to expectation (IPTV). The industry has put the cart in front of the horse in this attempt, ignoring the fact that the quality / connectability / content are all severely lacking. 3DTV is severely lacking in Content, ignore the concern on glasses, I can't get a decent movie if I wanted to. (Hollywood is still trying to solve the issue with Blu-Ray and why it isn't selling and can't spend time money on 3D movies for the home yet).
Some success in the industry is coming from companies that are taking the time to find ways to bring customers items that make their life more enjoyable and improve the way they do things. Simplifying MUSIC, making it easy to have your entire music collection in your hand. Making it easy to access more content and get that content easily. A company that has taken the PC and put it in a portable format that has a proven interface that people enjoy using. Putting application on a portable device that makes it easy to interact socially and connect with others. Take pictures and send over the cellular network. Take video and send. All through nice devices with touch screens, easy for must of us to understand without ever reading a manual (true sign of a well built device - If you need to put a sign of PUSH or PULL on a door you didn't design it very well).
What would sell more TVs? More Technology? Devices that are EASIER to use, to connect, to share with others. There has been little change or improvement on the way we interact with a TV (remote control).
The biggest issue is we do not properly inform customers of all the great STUFF that is in the technology. Since they can not understand the benefits of what they could buy, they can not apply a VALUE. If I don't know what GOOD something will bring to my life I will not be able to decide how MUCH I am willing to pay for it.
The result - when it is cheap enough - sure I'll buy it. It may have 20 things in it that I won't use, but it's OK because I didn't pay a premium for it. (as some Tier 1 TV vendors have stated recently about the expectation that they will need to drop prices to sell - 3DTV, IPTV, LED)
The industry needs to take a serious look at the vicious cycle we are in that is driving down profit, and ability to take that profit and reinvest in new technology.
JZ
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