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Plasma TVs: Price Pinches Popularity

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In the cutthroat, deflationary world of consumer electronics, the debate over which flat-panel TV technology is superior is taking a backseat to price.

LCD seems poised to win out over plasma. According to the latest data from research firm DisplaySearch, shipments of cell-type LCD TV panels are forecast to increase by 30 percent in 2011, on top of the 270 million units the top manufacturers shipped this year.

Experts, however, say plasma flat-panel TVs have the superior technology.

“Most video purists prefer plasma for the best picture quality,” says Paul Gagnon, Display Search’s Director of North America TV Research.

While the two sets actually look similar at first glance—both are typically wall-mountable and feature a sleek bezel design—internally the technology is quite different.

Plasma uses a matrix of tiny gas plasma cells charged by precise electrical voltages to create a picture, whereas LCD uses a process that features layers of liquid crystal pushed in the space between two glass plates. Both produce excellent picture quality, but purists note deeper blacks with plasma, and in turn truer colors.

So how did LCD win out as the dominant HDTV format? Big box retailers—Best Buy, Wal MartCostco and Target — could be a big factor.

“Plasma doesn’t look that good on the retail show floor because of the overhead lighting in the stores,” says Greg Tarr, executive editor of the consumer electronics industry trade magazine TWICE. “The retailers should put it in a dark corner.”

This partly explains how plasma won over early adopters when it was carried by specialized retailers with optimized settings, only to lose ground as LCD arrived in the larger stores where the sets were placed side by side.

As Tarr notes, “LCD looks good in rooms with bright lights. And those stores have bright lights.”

The other factor is that LCD has been more aggressively marketed to consumers. Until just a few years ago plasma was also the only game in town for larger-screen sizes in a flat panel format.

LCD Technology was really limited to screen sizes of 37-inches or less, while plasma was also available in the larger sizes of 42-inches and above. Then LCD came on, and the game changed.

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“Plasma was very strong until 2008,” says Riddhi Patel, director of Television Systems and Retail Services for iSuppli Corporation. “There was increased price competition with LCD in 2009, and plasma lost a lot of ground. This aggressive marketing from the LCD makers really had an impact.”

Around this same time Pioneer, which had made its mark with its ultra high-quality Kuro line of plasma sets (Kuro means black in Japanese), exited the market. This was seen as a major blow to the format, and to some signaled the beginning of the end.

Pioneer is just the latest of a line of companies that have retreated from the category, and recently announced that it would license its Elite brand to Sharp for a line of LCD sets. There are now just three major players: Panasonic, LG and Samsung. (Just a decade ago , Philips, Sony and Hitachi were all pushing the mantra of thin is in with plasma sets, and companies such as Vizio entered the market out of nowhere with low-end models,

Nevertheless plasma lives on despite the often repeated online hype that the technology is dying. The truth is that the format will likely stick around for a while.

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“It isn’t really a growth category anymore, but that said, we don’t expect it to disappear anytime soon," says Gagnon, who notes plasma actually had a relatively good year in 2010

While plasma had lost ground as LCD offered more affordable options in larger screen sizes, the plasma makers—who it should be noted also all sell LCD sets as well—aggressively marketed plasma in 2010.

“It made sense,” says Gagnon. “Plasma is so much more cost efficient now for the price per inch. To that end we don’t see much more price erosion in plasma.”

For that reason the technology isn’t likely going anywhere, especially as the sets actually remain profitable for those companies still in the market.

“The cost of making a plasma will have an advantage over LCD for a while now,” says Gagnon. “The depreciation scheduled for plasma factories for these companies is done, so there is no reason to walk away from it."

Still, 2011 could be the year that 3D on LCD comes into its own, and the forecasts are that plasma will slip back in 2011.

“Plasma had an early advantage with 3D,” says Patel, “but we don’t expect to see substantial growth continue.”

She does note that there is still a market for those sets 50-inches and larger, and this could give plasma some breathing room while LCD creeps into those larger screen sizes.

“For those larger sized sets it is all about price, and at this point LCD can’t touch it.”