Rear projection TVs owned this segment until plasmas came along. But now it's turned into a three-way party, in which rear projection TVs and plasma TVs are also competing against LCD TVs. Rear projection TVs are losing big time. Microdisplay rear projection TVs' unit share fell to 22%. Sony (NYSE:SNE) holds 59% of the 40" to 44" microdisplay rear projection TV market segment, and Samsung 28%. Sony and Samsung will continue to share the shrinking spoils of the MD RPTV market.
The biggest loser of the shift to LCD TVs away from rear projection TVs in this crucial 40" to 44" segment is arguably Texas Instruments (NASDAQ:TXN), whose DLP chip sits inside most non-Sony MD RPTVs.
In the 50" to 54" market segment, MD RPTV lost share (down to 51% from 58% in May). The combination of Sony's dominance of MD RPTV and MD RPTV weakness also indicates disappointing results for Texas Instruments' DLP chip business.
More important is the fact that LCDs won 23% share of the 40" to 44" market segment, up from about 1% twelve months ago. It's true that most of these LCD sets were 40" units from Samsung and Sony, and that they're smaller than the plasmas (which are generally 42") and the MD RPTVs populating this segment. But given that the average price for 42" LCD ($2,547) is actually lower than the average price for 40" LCD ($2,561), and the price gap with 42" HD Plasma TVs is just a little more than $300, LCD TVs are just about ready for a showdown with plasma TVs in the segment of the market where plasma sold 66% of its unit volume in Q1 this year in North America.
In the medium term, this could bode well for the pure play LCD manufacturers, especially LG.Philips LCD (NYSE:LPL) and AU Optronics (NYSE:AUO); it's also positive for Sharp (OTCPK:SHCAY). All are investing in advanced generation fabs to be able to compete in this market.
In the short run, however, all these firms are grappling with excess capacity. And until the >40" segments exceed 20% of the market (currently they're at less than 13%), the volumes will be too low to really consume the capacity of the new fabs.
Simon Lewis has been VP Marketing at a number of Israeli technology companies. He spent the last 4 years at Genoa Color Technologies, a start-up supplying innovative color technology to the display and consumer electronics industries. His contributions to Seeking Alpha draw on the perspective he generated during interactions with leading players throughout the display and consumer electronics supply chains. Simon is available to consult to companies and advise hedge funds in these areas, and can be reached at sl306333 [at] gmail [dot com].