Flat-Panel Frenzy

[Gregg Lengling]

By David English  
 
 Sometimes a technology is poised to take a great leap. That's the case with large flat-panel displays. Not only are plasma and LCD screens rapidly changing; they're beginning to overlap in size and price. That will lead to more competition, which will drive down prices even further. Add in an expected boom in consumer sales from people searching for the ultimate home-theater experience—with the resulting economies of scale slopping over into the commercial sector—and you have the makings of a product category that's about to shift into overdrive.

Does either plasma or LCD have a big sales advantage over the other? "They'll co-exist for a long time," says Bob O'Donnell, director of personal technology at the research firm IDC, based in Framingham, Massachusetts. "Each will play off of its competitive strengths and push the other's competitive weaknesses. The 40-inch size is where the real battle is going to be. Most people will go with plasma for 50+ inches. And under 40 inches is probably going to be LCD. But 40 inches, which is the mainstream size for a lot of people, is where the real fight will be."



O'Donnell points out that plasma is likely to have a price advantage for at least a couple of years in the business market but especially in the consumer market. "We're already seeing 42-inch plasmas in the $3,000 range," he explains. "I've heard predictions for prices as low as $2,000 by this Christmas season. We'll see if that happens, but it was major mainstream vendors who said that." He notes that 42-inch LCD screens were selling for $10,000. "Now they're down to $7,000, but you're still talking a huge gap. The lower-cost 42-inch plasmas are lower resolution. They're wide-VGA, whereas most of the big LCDs—the 40-inches or so size—are wide-XGA. The wide-XGA plasmas are still expensive."

Panel Discussion
Apart from the size and resolution issues, there are a host of advantages and disadvantages that differentiate plasma and LCD screens. Plasmas generally have more accurate colors, a broader contrast ratio and wider viewing angles, but they can suffer from image burn-in, weigh more and consume more electricity. LCDs can't burn in, but their less accurate color reproduction and slower response time make them less suited for fast-moving video. "The LCD guys are working on the viewing angles, color accuracy and response time issues," says O'Donnell. "They're now giving the plasma guys a real kick in the rear. And the plasma guys are supposedly working on the burn-in. There's nothing like having a competitor running down your back to get these things to happen quickly. I think we'll see dramatic improvements in both as a result."

To understand the relative costs of the two types of displays, it's useful to delve into their manufacturing efficiencies. "LCDs are very expensive right now, for the large sizes particularly, because with the current manufacturing infrastructure, you can't get a lot of large panels on the substrate," says Paul Semenza, vice president for iSupply/Stanford Resources, Inc., a research firm based in San Jose, California. "With anything but a very high yield, you tend to lose a lot of panels." For example, if you can get only two large panels on a substrate, and your process control isn't perfect, you may have to throw away 50 percent of your panels. "As the substrate sizes go up with advanced generation manufacturing, that situation will definitely improve," says Semenza. "There will be more panels, more large panels per substrate and—in general—just better production technology." Plasma manufacturing has its own set of challenges and issues. "It's a cruder process more akin to screen printing, or even ceramic manufacturing," he explains.

You might assume that LCD has the long-term advantage on price because it involves a photolithography process similar to the one that's used in the production of microprocessors. The similarity only goes so far. "Moore's Law works really well if you have a fairly small area that you're depositing onto," says Semenza. "What you're doing with processors is getting finer and finer geometries and then improving your yield, whereas LCDs keep getting bigger and bigger. As you get bigger, you introduce a larger area for contaminants to fall on." And no one wants an LCD screen with five bad pixels clustered together.

Semenza tracks the relative manufacturing costs of plasma and LCD screens. "It's very dependent on assumptions, but it looks like the plasma manufacturing costs in some cases could be very competitive with LCD," he says. "On the other hand, we also know how aggressive the TFT LCD makers have been in driving those costs down." He says LCD makers are banking on the fact that they can leverage the tens of millions of units they're already producing for notebook and desktop computers to help drive down costs. Similarly, plasma makers are focusing on the home theater market to increase their economies of scale, since they haven't established a base in the PC market.

Cost vs. Quality
"The big question is: Can LCD do a good enough job improving the areas where it's weak relative to plasma, at the same time it drives down costs so it can effectively take over plasma?" asks Semenza. "Or does plasma stay a distinctive technology that can meet certain requirements that can't be met by LCD?"

iSupply/Stanford Resources projects that in the public display category (essentially all large-screen corporate use, except for conference rooms and boardrooms), worldwide plasma sales will grow from 172,000 units in 2002 to just over 1,000,000 units in 2008, while worldwide LCD sales in the public display category will grow from just under 2,500 units in 2002 to 300,000 units in 2008.

In another recent report, released in March, Pacific Media Associates in Menlo Park, California projected that small- and medium-sized businesses (those with two to 499 employees) will buy 26 percent of all professional plasma displays sold during 2003. That figure is up from about 23 percent in 2001. "In the early days of plasma displays, most of the organizational purchases were either by specialty companies for public display applications or by very large companies using them to create an image or achieve visual effects not otherwise possible," says William Coggshall, PMA's president. "But now prices have come down, products have improved and installation knowledge has increased to the point that smaller organizations can make cost-effective use of them."

Whichever type of display ultimately comes out ahead—or even wins the race entirely—this is sure to be a growth market for many years to come.

Source: AVVMMP