LCD Sales Rise, Custom Units Fade As Prices Fall

The continuing fall of LCD monitor prices has been good news for custom-system builders as they watch customers flock to the technology and away from CRT monitors. But the price drop is causing some builders to stop production of custom monitors.

Though they rose in early 2004, LCD monitor prices decreased steadily throughout most of the year, a key factor in helping solution providers increase the attach rate of LCD monitors to their custom systems.

Larry Stoddard, owner of Stoddard Enterprises, a small Pine Island, Minn.-based custom-system builder, said he sells two or three LCD monitors for every CRT monitor.

"Combined with the fact that other [component] prices are falling, LCDs don't push the price of a system out of line," he said.

But low prices for CRTs still keep them in Stoddard's offerings. "There are a lot of good bargains," he said.

LCD monitor pricing has recently been plummeting as quickly as memory pricing, said Andy Kretzer, director of sales and marketing at Bold Data Technology, a Fremont, Calif.-based custom-system builder.

Kretzer says 17-inch LCD monitors now sell for as low as $230 to $240. He is also hearing talk that prices could quickly drop to sub-$200. "End users are buying more," Kretzer said. "We rarely sell CRTs anymore."

However, falling prices have not helped Bold Data's overall monitor sales, as the company recently shut down its LCD monitor assembly operation in the face of intense competition. "It's more of a gamble to bring parts in to make our own when [prices] are plummeting this fast," he said.

Prices should continue to fall in 2005, due mainly to a 21 percent fall in the price of the LCD modules in the third quarter of 2004 and an expected fall of 19 percent in the fourth quarter, according to a report by research firm DisplaySearch.

Prices for 17-inch LCDs are falling the fastest. Those prices fell 23 percent quarter to quarter in the third quarter and should fall even faster by the end of the fourth quarter, according to DisplaySearch.

With dropping prices, customers are also opting for larger displays. Sales of 17-inch LCDs accounted for 52 percent of the market during the third quarter of 2004 and were expected to hit 55 percent by the end of 2004. Going into 2005, DisplaySearch predicts sales shifting toward 19-inch models.