TV Prices Fall, Squeezing Most Makers and Sellers

The New York Times ^ | 26 Dec 2011 | Andrew Martin

[Cronos]

It’s a great time to buy a television, and Ram Lall, a television salesman, isn’t happy about it. In a basement showroom of J&R, the huge electronics store in Lower Manhattan, Mr. Lall says the days of making big money from televisions are in the past. Pointing to a top-of-the line, 55-inch Sony television, Mr. Lall said it would have sold for $6,000 a few years ago. The current price? $2,599.

“We are making less money because the company is forcing us to slash prices,” ..

Televisions have become so inexpensive that the profits have largely been squeezed out of them, a result of a huge increase in manufacturing capacity that has led to an oversupply and continued downward pressure on prices from low-cost manufacturers and online retailers....

The earnings of mainstay television manufacturers like Panasonic, Toshiba and Sony have been hammered. Sony, for instance, is overhauling its television operations because of what one executive said recently was a “grave sense of crisis that we have continued to post losses in TVs.” Even newer and more nimble competitors like Samsung and LG have struggled to make much money on TVs, if any.

..For retailers, the picture is not much better. This month, Best Buy reported a 29 percent drop in net income for the third quarter, in part because the retail chain had slashed prices on televisions and other electronics.

[Las Vegas Dave]

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[golux]

Wow! I didn’t know that 32” had come down so far.

The other day my neighbor asked me “why do you have such a crappy TV” and I couldn’t believe my ears - it’s a 32” Visio HD.

I guess I just keep stuff a long time. I just NEVER see something “newer and bigger” in a shop and say “I want that.”

Usually, when I spring for something, it’s because it’s OLDER, better quality, and easier to fix!

[mas cerveza por favor]

A larger outlet for Hollywood’s cultural marxist propaganda does not equate to a higher standard of living.

[Las Vegas Dave]

A $199 32in. HDTV is now a throw away TV for the cost of repair (after manufacturers’ warrentee or most credit cards FREE one year warrentee has expired) may be close to the price of a newer “latest and greatest” HDTV.

For example, our $1300 JVC 40in. 720P HDTV could have been replaced by a new 42/43in. 1080P HDTV for $400 to $500 range last black friday sale.

[BfloGuy]

Then companies exit, a monopoly is created and prices rise again.

No monopolies are created unless government grants special privileges to a particular manufacturer. Companies will exit the market or reduce production until profitability is re-established. At that point, others will jump in and prices will begin to fall again.

That's capitalism. It always works when it's allowed to.

[Cronos]

but TV making is a global industry and profits are now razor thin. Unless you have gigantic volume like Samsung, or come up with something fantastically new in TV’s, you would find it hard to start up and make money

[SamAdams76]

I have to get up at 5AM every morning so that I can work all day to help pay for all those on welfare to lounge around all day watching television on huge screens that they can now afford to buy. I guess I could afford one of these large screens as well but I just don’t have the time to sit around watching it - so why bother.

[JDW11235]

“or come up with something fantastically new in TV’s”

That’s the point, innovation has been stifled. I understand what you’re saying, but I think people never adequately account for the loss of freedom. We went from horse and buggy to outerspace in a few short decades. And, while we are constantly innovating, I think there is so much lost due to stagnation that it’s almost incomprehensible.

[goldstategop]

Get a LCD HDTV. Its great bang for the buck. I have 1080i and will not need to upgrade for years.

[kearnyirish2]

“I see no reason to replace my TV either. I never watch it.”

That’s the biggest problem for those who spread falsehoods; an increasing number of people don’t watch TV in the evening anymore. I also have an old TV, and would probably replace it with another old one I have in the attic when the time comes; we simply don’t live around the TV the way people used to, and I certainly wouldn’t spend any serious money on one.

I think as more people realize their $5,000 TV cost $35 to make, they’re shopping smarter.

[kearnyirish2]

“How long did this dude think that flat screen prices would stay high?”

Look at the recent debacle where Apple gave rebates to some of the first customers to buy one of its latest gadgets (was it the iPhone?); the price fell so quickly that rather than have these people expose the hoax Apple gave them some of their money back. A lot of them were probably the losers that slept on a sidewalk for three days waiting to give their money to someone who shipped cheap Red Chinese junk here for pennies to sell it for hundreds of dollars.

[aruanan]

If the profit is razor thin, then maybe we got too many manufacturers for tv, so those industries need to die to free up resources for other sectors where profit are high

...free up resources... ha ha ha ha ha ...for other sectors... ha ha ha ha ha.

You sound like Lyndon LaRouche. These are all things that best happen by themselves in response to increased or decreased demand by consumers as manifested through sales.

The very high prices for TVs reminds me of what has happened to DVD prices over the last 5 years. It used to be a new DVD was $14-16. Now they're $19 or more. There is no way in the world that manufacturing costs have increased by that much, especially since it was over a very short period of time that the prices shot up. I wonder if the entertainment corporations are trying to squeeze the last little bit they can out of a soon-to-be dead format. They're contributing to its demise. Perhaps they're trying to hasten it.

[Justa]

Yeah, boo-hoo for the manufacturers. I was ‘squeezed’ by Samsung in 2007 when I bought a 46” LCD for over $4000. I’m looking forward to squeezing them back.

I’m eying their 46” 240Hz 2D/3D model. It’s at 1600 now, I’m waiting to get it for 1000.

[HChampagne]

The key to revenue is CONTENT. Until the manufacturers figure a way to bundle killer content with their physical sets they will continue to be the losers. Bill Gates figured that out in the 80’s.

[DH]

“We are making less money because the company is forcing us to slash prices,”

---

First of all, in business the rule is supply and demand. In manufacturing the price is based upon the TOTAL cost of making the product and all expenses incurred. The Gross Profit Margin (GPM) can be set at the highest level that can be sustained but the Net Profit Margin (NPM) is much, much lower.

If the individual mentioned in this article thinks the company is forcing him to sell lower, he is clueless in how business works or he is in a franchise agreement with the manufacturer...which is not really an independent business.

The point of all of this is that the market is saturated and it’s simply the cause and affect of supply and demand. In this case, the demand is lower than the supply.

The salesman was “raping” customers before and now he cries because the playing field has been leveled by nothing more than competition.

[Redleg Duke]

It is interesting, having a modern, flat-panel, HD TV and mostly watch old movies!

[RayChuang88]

Here's the problem: there was a GIGANTIC spike in HDTV sales in the second half of the 2000's as every broadcaster started HDTV broadcasts, and even more so when analog broadcasts were turned off, which forced even more people to buy new sets anyway.

But now that the spike is over, sales have dropped off dramatically. Indeed, I have no plans to replace my 40" LCD in the family room and 26" LCD in the kitchen anytime soon.

[RegulatorCountry]

I’ve got a small, cabinet under-mount flip down LCD tv in my kitchen that I use to view the local morning news and weather. I guess I should be embarassed to admit, the other two are still CRT models. I don’t use them all that much anymore, the programming isn’t very compelling and much of it strikes me now as being propaganda, quite frankly.

I shut off cable tv in 2008, literally hundreds of channels with nothing on. It’s just not that big a part of my life, once was, no more. I do have an Apple laptop and an iPad, as well as an older Apple tower with a large LCD Cinema Display. Those occupy my interests now.

With convergence the paradigm of “tv” as a discrete medium doesn’t really fit into my life with the exception of the old habit of viewing the morning news and weather every workday. I really could do that without the kitchen LCD, truthfully, but it’s there so I use it.

[6SJ7]

Ironic, the very common situation being on food stamps and having a huge hulking home theater TV in the living room.

I think we've arrived at the world of "Idiocracy".

[wbill]

I’m just not that in to TV the last 5 years or so

Me either. My theory is because 99% of what's on is junk.

Long ago, when there was such a thing as "production values" and "scripts", TV shows were still junk, but you could occasionally find a nugget within. Now, I think that they just hand cameras to random people, tell them to go and film other random people doing random things, and throw it up on the screen. In general, and with a few specific exceptions.....I pass. :-)

Frankly, it's nice. I have so much more time in the evenings, now.