When Will This End? Australian PC Monitor Sales Continue Their Downward Trend
NORTH SYDNEY – FEBRUARY 15, 2002 – IDC releases the Australian PC Monitor Market results for the 4th calendar quarter (October-December) of 2001, which indicates that monitor sales have taken another beating.
Although LCD sales increased for both the Branded (formerly Open) and OEM (formerly closed) markets, this increase was insufficient to offset the fall in CRT sales. The close correlation between sales of PCs and monitors means that this decline also parallels the year on year fall in PC sales (desktops, notebooks and Intel based servers), which was 5 percent lower than the previous year.
Monitor channels remained cautious following their excess inventory during the first half of 2001, and careful procurement throughout the second half of the year meant that vendors had to pull miracles in order to achieve reasonable buying on the part of the channel. A growing grey market compounds the headache of the mainstream monitor vendors, fighting for share in a saturated market which does not need more players.
Reuben Tan, IDC's Market Analyst said, The total monitor shipments in the fourth quarter of 2001 was 359,295 units, a decline of 7.4 percent over the previous quarter, and exhibiting an un-abating 23.3 percent year-on-year downturn. The bright spark of the LCD phenomenon has been dimmed somewhat by escalating panel prices stemming from supply shortages. All-in-one PC form factors by global PC OEMs (IBM and Apple, for example), as well as an uptake of LCD bundling by these vendors have spurred OEM market sales of LCDs, but as a consequence have also put pressure on manufacturers which are struggling to increase production.
The branded market, having stuffed the channel in the earlier part of the year, was the main culprit for the decline in sales, falling 12.7 percent over the previous quarter. The OEM market on the other hand kept sales alive, and the small 1.1 percent fall in OEM sales was similarly indicative of a stockpile of monitors, albeit to a lesser extent. Sales of PCs from most global vendors was up over Q3 2001, although not as high as Q4s of previous years. The Federal Election was called early and was over early enough in the quarter not to have any significant impact on PC and monitor sales; similarly the absence of any local political controversies during this period augured well for the confidence of the economy.
IDC believes that vendors were pressured to lower prices yet again in an increasingly commoditised and price-competitive market. However many vendors did not have room to move in the LCD space, given the increase in panel prices- and hence continued the price war in the razor-slim margin CRT arena. This move, led by price leader LG Electronics, gave the Korean vendors their much needed volume and market share, but again profits suffered and for once certain Japanese and Taiwanese vendors decided not to follow in their footsteps, subsequently suffering losses in market share but maintaining a level of decency in margin.
The large screen CRT has been a neglected area as many monitor vendors now focus on the more glamorous LCD form factor. Given the increase in manufacturing cost of LCDs, vendors will do well by not losing sight of the highly profitable larger CRT market. NEC and Mitsubishi, for example, with their newly launched aperture grill CRT range, have been enjoying high margins on each sale of such models, despite the relatively low volumes being moved.
IDC anticipates that the traditionally slow start to the year for PC and monitor sales will not change in 2002, and it will not be till the second quarter of this year before the tender business starts picking up again (due to Wireless roll-outs in the corporate sector, for example). On the supply side, channels should be starting to run low on monitor inventory around the same period, and although any price drops throughout 2002 will be simply due to competitive pressures- not fall in manufacturing costs- channels will be forced to stock up in order to fulfil demand. Price points of smaller (17 inch and below) LCDs have risen early 2002, for example, as vendors are no longer able to absorb increases in production cost.
Vendor-wise, there was a slight reshuffling of the top three positions, with Samsung coming in on top of the branded market by a mere 491 units, edging LG Electronics into second spot, and with Mitsubishi in third. Philips was a distant fourth, and Viewsonic at fifth, as both vendors either didn?t want to focus on the numbers game, or simply couldn?t afford to continue the battle. Samsung captured 16.2 percent of the branded market, LG Electronics took home 16.0 percent, Mitsubishi had 14.7 per cent, Philips with 9.1 percent and Viewsonic with took just 6.3 percent. The top five vendors together accounted for 62.3 percent of the total branded market for the final quarter of 2001.
In the CRT branded market, LG Electronics was the top selling vendor to the channel, with a 16.4 percent market share reflecting their price aggressiveness. Samsung was in second position (15.8 percent) and Mitsubishi in third (15.2 percent). The Korean vendors, especially Samsung, have also pulled ahead in market share for the now popular LCD form factor; Samsung, with a remarkable 20.4 percent of the LCD branded market, maintains its lead, whilst LG with 11.8 percent has edged out Japanese vendors NEC and Mitsubishi for the quarter.
IDC is the foremost global market intelligence and advisory firm helping clients gain insight into technology and eBusiness trends to develop sound business strategies. Using a combination of rigorous primary research, in-depth analysis, and client interaction, IDC forecasts local and worldwide markets and trends to deliver dependable service and client advice. More than 700 analysts in 43 countries provide global research with local content. IDC's customers comprise the world's leading IT suppliers, IT organisations, eBusiness companies and the financial community. Additional information can be found at www.idc.com.au