Let's Get Real

THE FRONT LINE

LET'S GET REAL:
What does the future look like for the projector market?

by Peter H. Putman, CTS

Last year, I had the opportunity to participate in a Projection Industry Summit Conference, coordinated by Insight Media and McLaughlin Consulting. Among the many seminars and panel discussions was a presentation by several industry analysts, among them Bill Coggshall of Pacific Media Associates, Tony Bicknell of Decision Tree Consulting, Midori Takaso of Techno Systems Research, and - myself.

This marketing panel attempted to peer into the future and forecast the growth markets for projection technology. Given the number of manufacturers now peddling LCD, DLP, and LCoS projectors, it's no wonder they are all looking past traditional Pro AV and IT distribution channels for new fields to harvest.

According to moderator Chuck McLaughlin, 80% of the 1.4 million projectors sold in 2001 wound up used for what he called "enterprise presentations" - that is, in corporations, government offices, and institutions. His question was this: Are these markets now saturated? Are there other opportunities for growth?

Two possibilities came up. The first was education, a potentially huge market that has been constrained by the price of projectors and tight budgets. The other was home theater, one of the few bright spots of this past year's economy.

According to McLaughlin's numbers, the education market is underserved, with about 10 to 20% of all 2001 purchases going into primary and secondary classrooms. Price is very much an issue here, and savvy product marketing managers have known that keeping lower-priced SVGA (800x600) models in their line is a good business decision, as they are very popular with educators.

It's a rather oddball market example. Typically, SVGA projectors are still overwhelmingly preferred for this market, even when the newest XGA projectors are introduced at prices equivalent to last year's SVGA models. It appears the only way educators will move from SVGA to XGA is to enact further price cuts and drop support for SVGA resolution entirely.

Home theater also looks promising, accounting for about 5 to 10% of all front projector sales in 2001. There's even more potential in rear-projection TVs to move away from CRTs to fixed-pixel imaging, although CRTs are still expected to have the lion's share of this market for the next few years.

All well and good. But yours truly was cast in the role of devil's advocate, and pointed out that there will be plenty of competition in the home theater space - and to a lesser degree, the education market - from flat-screen TVs and monitors. Needless to say, this made me a very popular fellow amongst all of the projector afficionados in attendance.

Well, several months have passed and I'm seeing plenty of signs that plasma and LCD monitors and TVs are up to the challenge. Prices have dropped at a breathtaking rate, even faster than I had predicted. LCD screens are now being manufactured in 40" 16x9 sizes, and 42" and even 46" panels will come to market in 2003.

Referring to an eCost.com "hot sheet" catalog from recent weeks, I can pick up Sony's PFM32C1 32" plasma for $4,799 (plus S&H), Hitachi's CMP4142HDE 42" ALiS panel for $3,999, Panasonic's brand-new TH42PWD5U 1024x768 42" panel for $3,849, and either of Sony's silver or gray PFM-42B2 ALiS panels for a dollar under $5K.

Even Pioneer's PDP-433CMX is selling for $5K and that includes the PD-5002 component/DVI video card! This same panel is sold as the PRO800HD into the home theater market for almost $4K more. I can also take my choice of NEC's now-discontinued PS50MP2 50" plasma (1365x768) for $9K, or Panasonic's TH-50PHD3U 50" glass for $8K.

In the meantime, projector prices continue to plummet with three major sub-$2K model announcements in the past two months from InFocus, Epson, and Toshiba. All are SVGA bare-bones designs that will have strong appeal to the education and non-profit market segments, and at the rate things are going, street prices will soon be under $1K for more than one model.

A look through that same eCost.com flyer shows the Hitachi CP-S225W for just $1,499. This is another member of the 800x600 LCD family that is intended to appeal to educators - it has about 800 - 1000 lumens brightness and a minimal amount of operating features, but does include a short-throw lens for close-up projection of large images and also scales 1024x768 sources down to SVGA.

Given that the education market is all about large group presentations under a variety of ambient light conditions, I think this is where the biggest opportunity lies for projector manufacturers. A small, bright model that is easy to set up and operate yet can be locked away safely will appeal to many primary and secondary school teachers. Such projectors will take the place of older filmstrip, slide, and movie projectors in classrooms.

Technology add-ons like 802.11b wireless will actually be useful to this group, as will PCMCIA memory cards, off-axis image correction (did you ever see a teacher set up any projector without keystoning when you were a kid?) and automatic presentation sequencing to eliminate the need for an external PC.

Far more of these portable do-it-all projectors will be sold than desktop/installation projectors, the 'bread and butter' of the Pro AV systems integration channel. That's because classrooms are put to many different purposes these days and AV equipment is what moves around - not the student. (Hey, we're back to my old " wheel that projector cart down the hall to Mrs. Marshall's English class" audiovisual crew days from high school!)

But the home theater market is a different story. I would guess that less than 10% of all home theaters now use, or will use, some sort of front projection system in the future. Many new homes are being built with media rooms, but the vast majority of TV viewing is done under normal ambient lighting - not with a screen pulled down and the lights dimmed.

Many of these new homes have big windows and soaring atriums that let in lots of light. That's not a favorable environment for front projectors, but direct-view and rear-projection TVs will do just fine. The move to pure flat screens has also resulted in some really clever product designs (look at Sharp's Aquos TV line for an example) that have far more appeal to the eye than big, bulky tube-equipped RPTVs.

There are also other factors to consider, not the least of which is we've watched self-contained video displays since broadcast TV first became available in the 1940s. It's a pretty good solution, with screen, tuner, and audio amplifier all in one box. Just turn on the power, change channels, and go.

So it stands to reason that the easiest way to sell a home theater video display to a customer is to show them a more snazzy, cool-looking version of what they have now. And that's exactly what the manufacturers of plasma and AM LCD TVs are counting on, which is why there are forecasts of over 4 million plasma TVs sold into the home by 2006.

LCD prices, while higher than plasma in the same size, are also plummeting rapidly. Sharp's 28" widescreen LCD monitor retailed for nearly $14K in early 2001. Its successor, a 30" widescreen LCD TV, now lists for $7K. Samsung's new 40" widescreen LCD monitor has a MSRP (as of Cedia Expo 2002) of just under $10K, and that will drop quickly to a more market-favorable level in 2003.

One of my local home theater dealers recently remodeled his projector showroom to feature a couple of plasma displays and some new RPTVs. When I asked why, one of the sales guys replied that they just didn't sell enough projectors these days to tie up the room and that the newer RPTVs and flat-screen LCD/plasma sets were all the rage.

Every manufacturer of home theater products has expanded its line of flat-screen offerings for 2003. Mitsubishi has several plasma monitors and two new LCDs. Runco has a much of plasma and a new 22" LCD TV. Zenith's trade show booths are dominated by plasma and LCD these days (as well as LCD-equipped RPTVs) and Samsung's booths are also loaded up with LCDs, plasma, and several DLP-engined RPTVs.

Marantz, Toshiba, Sony, Pioneer, Sharp, Fujitsu, and others are supporting several models of flat-screen plasma and LCD monitors. It's clear to them that the mainstream market wants to stay with self-contained TVs for the future. While a few of these companies also sell projection systems, it's a safe bet that RPTVs and direct-view designs will be a growing segment of their revenues in the near future.

There's no doubt that projectors are a marvelous thing, and they can do many jobs well. But to expect the same level of projector sales growth in the next two-three years that we've experienced in the past seven years is just not being realistic. Dropping the price of projectors lower and lower may stimulate more sales, but it will also convince many dealers to drop these low-priced models from their lines. There's just not enough profit to be made and still service a customer like the old days.

You flat-screen dealers shouldn't get too cocky, either. A glut of product and a sluggish economy in Japan are driving aggressive price wars, just like those we saw with projectors. Consider that a 50" plasma monitor had an MSRP of close to $20K in 1999. Now, they are selling for 27% of that price, and we still haven't hit bottom yet!

Copyright ©2003 Peter H. Putman / Primedia Business Media.
This article appears in February 2003 Video Systems.


						THE FRONT LINE
					LET'S GET REAL: What does the future look like for the projector market?


					by Peter H. Putman, CTS Last year, I had the opportunity to participate in a Projection Industry Summit Conference, coordinated by Insight Media and McLaughlin Consulting. Among the many seminars and panel discussions was a presentation by several industry analysts, among them Bill Coggshall of Pacific Media Associates, Tony Bicknell of Decision Tree Consulting, Midori Takaso of Techno Systems Research, and - myself. This marketing panel attempted to peer into the future and forecast the growth markets for projection technology. Given the number of manufacturers now peddling LCD, DLP, and LCoS projectors, it's no wonder they are all looking past traditional Pro AV and IT distribution channels for new fields to harvest. According to moderator Chuck McLaughlin, 80% of the 1.4 million projectors sold in 2001 wound up used for what he called "enterprise presentations" - that is, in corporations, government offices, and institutions. His question was this: Are these markets now saturated? Are there other opportunities for growth? Two possibilities came up. The first was education, a potentially huge market that has been constrained by the price of projectors and tight budgets. The other was home theater, one of the few bright spots of this past year's economy. According to McLaughlin's numbers, the education market is underserved, with about 10 to 20% of all 2001 purchases going into primary and secondary classrooms. Price is very much an issue here, and savvy product marketing managers have known that keeping lower-priced SVGA (800x600) models in their line is a good business decision, as they are very popular with educators. It's a rather oddball market example. Typically, SVGA projectors are still overwhelmingly preferred for this market, even when the newest XGA projectors are introduced at prices equivalent to last year's SVGA models. It appears the only way educators will move from SVGA to XGA is to enact further price cuts and drop support for SVGA resolution entirely. Home theater also looks promising, accounting for about 5 to 10% of all front projector sales in 2001. There's even more potential in rear-projection TVs to move away from CRTs to fixed-pixel imaging, although CRTs are still expected to have the lion's share of this market for the next few years. All well and good. But yours truly was cast in the role of devil's advocate, and pointed out that there will be plenty of competition in the home theater space - and to a lesser degree, the education market - from flat-screen TVs and monitors. Needless to say, this made me a very popular fellow amongst all of the projector afficionados in attendance. Well, several months have passed and I'm seeing plenty of signs that plasma and LCD monitors and TVs are up to the challenge. Prices have dropped at a breathtaking rate, even faster than I had predicted. LCD screens are now being manufactured in 40" 16x9 sizes, and 42" and even 46" panels will come to market in 2003. Referring to an eCost.com "hot sheet" catalog from recent weeks, I can pick up Sony's PFM32C1 32" plasma for $4,799 (plus S&H), Hitachi's CMP4142HDE 42" ALiS panel for $3,999, Panasonic's brand-new TH42PWD5U 1024x768 42" panel for $3,849, and either of Sony's silver or gray PFM-42B2 ALiS panels for a dollar under $5K. Even Pioneer's PDP-433CMX is selling for $5K and that includes the PD-5002 component/DVI video card! This same panel is sold as the PRO800HD into the home theater market for almost $4K more. I can also take my choice of NEC's now-discontinued PS50MP2 50" plasma (1365x768) for $9K, or Panasonic's TH-50PHD3U 50" glass for $8K. In the meantime, projector prices continue to plummet with three major sub-$2K model announcements in the past two months from InFocus, Epson, and Toshiba. All are SVGA bare-bones designs that will have strong appeal to the education and non-profit market segments, and at the rate things are going, street prices will soon be under $1K for more than one model. A look through that same eCost.com flyer shows the Hitachi CP-S225W for just $1,499. This is another member of the 800x600 LCD family that is intended to appeal to educators - it has about 800 - 1000 lumens brightness and a minimal amount of operating features, but does include a short-throw lens for close-up projection of large images and also scales 1024x768 sources down to SVGA. Given that the education market is all about large group presentations under a variety of ambient light conditions, I think this is where the biggest opportunity lies for projector manufacturers. A small, bright model that is easy to set up and operate yet can be locked away safely will appeal to many primary and secondary school teachers. Such projectors will take the place of older filmstrip, slide, and movie projectors in classrooms. Technology add-ons like 802.11b wireless will actually be useful to this group, as will PCMCIA memory cards, off-axis image correction (did you ever see a teacher set up any projector without keystoning when you were a kid?) and automatic presentation sequencing to eliminate the need for an external PC. Far more of these portable do-it-all projectors will be sold than desktop/installation projectors, the 'bread and butter' of the Pro AV systems integration channel. That's because classrooms are put to many different purposes these days and AV equipment is what moves around - not the student. (Hey, we're back to my old " wheel that projector cart down the hall to Mrs. Marshall's English class" audiovisual crew days from high school!) But the home theater market is a different story. I would guess that less than 10% of all home theaters now use, or will use, some sort of front projection system in the future. Many new homes are being built with media rooms, but the vast majority of TV viewing is done under normal ambient lighting - not with a screen pulled down and the lights dimmed. Many of these new homes have big windows and soaring atriums that let in lots of light. That's not a favorable environment for front projectors, but direct-view and rear-projection TVs will do just fine. The move to pure flat screens has also resulted in some really clever product designs (look at Sharp's Aquos TV line for an example) that have far more appeal to the eye than big, bulky tube-equipped RPTVs. There are also other factors to consider, not the least of which is we've watched self-contained video displays since broadcast TV first became available in the 1940s. It's a pretty good solution, with screen, tuner, and audio amplifier all in one box. Just turn on the power, change channels, and go. So it stands to reason that the easiest way to sell a home theater video display to a customer is to show them a more snazzy, cool-looking version of what they have now. And that's exactly what the manufacturers of plasma and AM LCD TVs are counting on, which is why there are forecasts of over 4 million plasma TVs sold into the home by 2006. LCD prices, while higher than plasma in the same size, are also plummeting rapidly. Sharp's 28" widescreen LCD monitor retailed for nearly $14K in early 2001. Its successor, a 30" widescreen LCD TV, now lists for $7K. Samsung's new 40" widescreen LCD monitor has a MSRP (as of Cedia Expo 2002) of just under $10K, and that will drop quickly to a more market-favorable level in 2003. One of my local home theater dealers recently remodeled his projector showroom to feature a couple of plasma displays and some new RPTVs. When I asked why, one of the sales guys replied that they just didn't sell enough projectors these days to tie up the room and that the newer RPTVs and flat-screen LCD/plasma sets were all the rage. Every manufacturer of home theater products has expanded its line of flat-screen offerings for 2003. Mitsubishi has several plasma monitors and two new LCDs. Runco has a much of plasma and a new 22" LCD TV. Zenith's trade show booths are dominated by plasma and LCD these days (as well as LCD-equipped RPTVs) and Samsung's booths are also loaded up with LCDs, plasma, and several DLP-engined RPTVs. Marantz, Toshiba, Sony, Pioneer, Sharp, Fujitsu, and others are supporting several models of flat-screen plasma and LCD monitors. It's clear to them that the mainstream market wants to stay with self-contained TVs for the future. While a few of these companies also sell projection systems, it's a safe bet that RPTVs and direct-view designs will be a growing segment of their revenues in the near future. There's no doubt that projectors are a marvelous thing, and they can do many jobs well. But to expect the same level of projector sales growth in the next two-three years that we've experienced in the past seven years is just not being realistic. Dropping the price of projectors lower and lower may stimulate more sales, but it will also convince many dealers to drop these low-priced models from their lines. There's just not enough profit to be made and still service a customer like the old days. You flat-screen dealers shouldn't get too cocky, either. A glut of product and a sluggish economy in Japan are driving aggressive price wars, just like those we saw with projectors. Consider that a 50" plasma monitor had an MSRP of close to $20K in 1999. Now, they are selling for 27% of that price, and we still haven't hit bottom yet! Copyright ©2003 Peter H. Putman / Primedia Business Media. This article appears in February 2003 Video Systems.