On the brink: Flat panel monitors
09/01/1998
On the brink: Flat panel monitors
Brian Fedrow, Stanford Resources, San Jose, California
The development of flat panel displays (FPDs) in a variety of technologies has been the major focus of display industry researchers for the past 10 years. Although the first portable computers featured sub-10-in. monochrome displays, the end of the 1990s brings the promise of desktop monitor-sized color FPDs in a variety of sizes and pixel formats. In fact, impressive prototypes as large as 40-in. diagonal have been shown, a territory that until recently was the exclusive domain of cathode ray tube (CRT) monitors.
The dynamic interplay between the established CRT technology and the upstart flat panel monitor is the basis for much of the discussion surrounding growth in this market. Currently, liquid crystal displays (LCD), both thin-film-transistor (TFT-LCD) and supertwisted-nematic (STN-LCD), dominate the flat panel monitor market.
However, LCD-based desktop displays will not likely have a serious impact on the computer monitor market during the next five years. The dominance of the CRT monitor is tied to both its performance and its near-commodity status, especially in the smallest screen sizes, where pricing and distribution strategies have been perfected during the computer age. The lowest-priced CRT monitors today are often given away in desktop PC packages, leaving the LCD monitor facing a formidable challenge.
Forecasting market opportunity
In forecasting market opportunity, several factors must be considered:
Low price is preferable. Similar to the CRT monitor market, the LCD monitor market is also price driven. End-users, OEMs, and distributors would opt for a lower price versus higher quality at the same price.
Bigger is better. End-users continue to request larger screen sizes for all monitors, and with the space savings a flat panel monitor offers, this demand will only continue to grow.
CRTs are widely available and inexpensive. Although the price of LCD monitors will continue to decline at a rapid rate, the average selling price is still three to four times the price of a CRT now, and is likely to reach below two times by 2004 in most screen sizes.
Performance meets or exceeds CRT level. LCD monitors offer more aesthetic visual and physical benefits over CRT monitors to the user, but the image quality must be comparable to that of a CRT.
Production capacity. LCD panel production facilities require significant investments in time and capital. As recent shifts in production plans following the Asian financial crisis have clearly illustrated, actual future capacity figures tend to be somewhat speculative as investment plans shift with time.
CPU sales. None of these displays is truly "stand-alone" in the sense that a television is a stand-alone product. There is a close relationship between CPU sales and display sales, although additional opportunities exist for replacement displays.
With these points in mind, Stanford Resources forecasts the worldwide desktop computer CRT monitor market to be valued at more than $18 billion in 1998, while the market for flat panel monitors is expected to reach a shipment value of $12.8 billion in the year 2004. The worldwide unit market for flat panel monitors (TFT-LCD and STN-LCD) will reach 21.7 million units in 2004, from 729,000 units in 1998 (Fig. 1). The overall unit penetration rate of flat panel monitors as a percentage of the overall desktop monitor market will increase from less than 1% in 1998 to 17.3% in 2004. Stanford Resources also reports:
Over 114,000 TFT-LCD monitors were purchased in 1997; most of those were stand-alone displays. The market is projected to grow to 21.1 million units by 2004.
More than 60% of all flat panel monitor production took place in Japan in 1997. This share is expected to slip to 46.5% as production accelerates in Taiwan.
Sales of 14.x-in. LCD monitors are expected to surge in the US late in 1998 and early 1999 when several vendors introduce units priced below $1000 at the street level.
By 2004, 15.x-in. LCD monitors, with price points approaching the $500 mark, are expected to dominate the market on sales of 9.3 million units.
While financial markets in the US have gravitated heavily toward 16.x-in. and larger displays, there have been significant early sales of 15.x-in. and smaller displays into this segment in Europe.
Japan has demonstrated the highest market penetration to date, with very positive response to the 13.x-in. displays, in both corporate and home markets.
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Figure 1. Worldwide desktop flat panel monitor market.
Product evolution
The stand-alone color LCD monitor dates to the early 1990s, when a few monitor manufacturers like NEC, CTX, MicroTouch, and Computer Dynamics introduced LCD monitors based on both TFT-LCD and STN-LCD panels developed for the portable computer market. Those suppliers sold LCD monitors (sizes ranging from 8.4-in. to 10.4-in.) mostly to the industrial, financial, medical, and point-of-sale markets. In those application segments, a small niche of customers was willing to pay a higher price for the LCD monitors because of space savings and other specific needs.
Because the first LCD monitor products were more expensive and offered no performance advantages over CRT monitors, they did not penetrate corporate or home user desktops. By the beginning of 1996, suppliers including PixelVision, GEC Marconi, Dolch, Trident Microsystems, Matsushita, and Sunrise Electronics followed initial suppliers with larger sizes ranging from 12.1-in. to 20-in. Compaq also introduced an integrated computer system with a 12.1-in. color TFT-LCD for the consumer market. The number of vendors offering integrated computer systems and stand-alone LCD monitors should reach well over 100 by 2000.
Today, as LCD monitors increase in size and begin to challenge the CRT on the desktop, LCD monitor manufacturers tout the viewable area as an advantage over CRT monitors. For example, a 17-in. CRT used in a desktop monitor has a viewable diagonal area of about 15.7-in. due to packaging limitations. The LCD monitor does not face these limitations, so often a 15.x-in. LCD monitor is compared to a 17-in. CRT monitor. The table shows the screen sizes often compared when discussing the advantages of LCD monitors over CRT monitors. However, for the largest segments of the market, prices remain a key consideration. Figure 2 shows the pricing pressure faced by LCD monitors attempting to displace the 17-in. CRT monitor.
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Figure 2. Average selling price comparisons.
Technology considerations
LCD monitors are based on both TFT-LCD and STN-LCD panels. TFT-LCD monitors have advantages over STN-LCD monitors in terms of brightness, viewing angle, and overall performance level. However, the cost to produce a TFT-LCD monitor in 1997 was 100% higher than for an equivalent STN-LCD monitor, and the panels were in short supply, especially in the first half of the year.
In the short run, lower prices and higher availability have enabled STN-LCD monitors to gain some share of the desktop flat panel monitor market. However, as TFT-LCD panel costs fall, the STN-LCD monitor will lose its advantage, and TFT-LCD based desktop monitors will eventually dominate the LCD monitor market.
Why will users pay more in the early stages of this developing market? Consider the CRT monitor market as a historical model. Monochrome monitors gained some importance in the initial phase of market development because of lower price. But as the market developed and the cost of color CRT monitors decreased, monochrome monitors lost market share, even when end-users still paid as much as a 50% premium for color displays. Performance issues outweighed the additional cost.
Likewise, STN-LCD based notebook computers gained significant market share in 1993 and 1994, while TFT-LCD manufacturers ironed out component cost and yield issues. Beginning in 1995, TFT-LCD prices went through a dramatic reduction; STN-LCD panels lost their advantage; and TFT-LCD notebook computers became dominant.
This ebb and flow relationship with the notebook computer market will continue to have a serious effect on future desktop LCD monitor markets, as LCD manufacturers balance the "sure thing" (notebook computer demand) with the "future opportunity" (LCD monitors). Due to the evolution of TFT-LCD panels, most notebook computer suppliers favor these models over comparable STN-LCDs. As notebooks shift to larger sizes and higher pixel formats, a temporary supply shortage will likely develop, increasing prices.
The interface dilemma
It is also important to analyze the differences between digital and analog interfaces and their performance. From the standpoint of performance, a digital interface is preferable in LCD monitors. Typically, the image quality of an LCD monitor suffers from some degradation due to pixel noise as the signal is switched from digital to analog and back to digital again. The wide variety of installed graphic cards on the market contribute to this problem and make it extremely difficult to resolve. Also, an installed base of roughly a billion CPUs incorporate analog adapter cards.
Early experiments with LCD monitors, requiring proprietary digital cards, were largely unsuccessful in the marketplace. Users, leery of commitments to proprietary technology and unwilling to deal with the manpower expense of swapping cards of installed equipment, especially if that card was limited to a single manufacturer`s display, sought more flexible alternatives.
NEC, which built its reputation in the CRT monitor market on its Multisync technology and is expected to sell close to 100,000 LCD monitors in 1998, was quick to respond, introducing the first LCD monitor featuring an analog interface. Despite the increased cost associated with this adaptation and the measurable degradation in performance compared to a digital interface, users showed a marked preference for the familiar analog alternative over proprietary digital offerings.
VESA`s recent ratification of the new plug and display standard, which specifies a single video connector for digital (and analog) CRT and LCD monitors and projectors, may offer future guidance for both users and manufacturers. However, computers with the new standard will probably not appear on the market until late 1998 or early 1999, if ever, due to lack of market leadership in adopting the standard. Recently proposed alternatives to the VESAstandard have increased the level of uncertainty. LCD monitor providers and users will still need to deal with the installed base of existing equipment that contains older cards.
Although analog interfaces are a de facto market requirement in the LCD monitor industry for all but bundled CPU/monitor sales, pressure to lower the pricing of LCD monitors and performance concerns will inevitably shift the market back to digital interfaces. Manufacturers and monitor vendors report varying costs attributable to the analog interface, but generally calculate a savings of $250-$300 in manufacturing costs for shifting to a digital interface.
As LCD monitors become more prevalent in the corporate marketplace and IT managers come to understand the relative value of each of the interface approaches, card and LCD monitor manufacturers are expected to move toward the digital interface. Leading LCD manufacturers are expected to introduce their initial offerings in late 1998 or early 1999. Although manufacturers will probably offer both interfaces for several years, the substantial cost savings of the digital solution, combined with the performance improvements, should eventually eliminate analog interfaces from all but niche markets.
Conclusion
The flat panel monitor will begin to develop into a major market force during the next five years. Recent TFT-LCD price drops have stimulated even more interest in this developing segment. The Asian economic crisis of 1998, however, has slowed some manufacturer`s plans for expansion of TFT-LCD capacity and left some doubt about short-term growth. By 2004, don`t be surprised to see a large screen flat panel monitor on one out of every five desktops around the world.