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LCD TVs: Quality Rising, Prices Falling

Westinghouse officials talk with CEN about new products, lively marketplace for LCD TVs By Charlie White

In this exclusive interview for Consumer Electronics Net, Douglas Woo, President of Westinghouse Digital Electronics, and John Araki, Director of Product Marketing for that company, talk with CEN’s Charlie White about perhaps the biggest story of this year’s Consumer Electronics Show—LCD TVs and their ongoing and precipitous price drop. Not only are their prices in freefall, but the quality of LCD displays and the sizes of their screens are increasing exponentially. Find out why prices are dropping so quickly while resolution is on the rise, and take a look into the future of LCD television with these two industry experts.

CEN: What’s the big story for Westinghouse here at CES 2005?

Woo: We have multiple releases here at CES. I think from a product standpoint, what we’re releasing is a line of 1080p displays – 1920x1080 resolution, 2 million pixels. The sizes start at a 37 inch panel, then there’s a 42, and then a 47-inch. We’re showing the 37-inch here in the booth. They will be aggressively priced and highly spec-ed. What we are showing is the continued evolution of the LCD industry – larger sizes, much, much better resolution, much better products, and the continued enhanced value proposition, so consumers can actually get really big TV sizes with great performance at reasonable prices. The MSRP for the 37-inch model is $2499. It will launch in March – that’s only a couple of months away.

CEN: That’s one of the big stories right now: The prices of LCDs coming down significantly. It seems like about a year ago you would have paid double that, wouldn’t you?

Woo: A year ago that particular television didn’t exist, first of all. A year ago our  27-inch TV in the January CES was $2499. Now you see it regularly at the sub-$1000 level. That’s a 55% to 60% price compression in a year. Now the 37-inch is being launched at $2499.

CEN: So now you get 10 more inches for free.

Woo: And a higher resolution. 10 more inches, and also about a million more pixels.

CEN: That’s a big deal, too. You’re now talking about 1920x1080p, which is well beyond anything you can receive over a broadcast.

Woo: That’s true, but 1080i content looks great on a 1080p TV. We have some 1080p content here from Showtime and Viacom (keep in mind, Westinghouse is a branch of Viacom). 

CEN: You mentioned that these prices are a lot lower than those of your competitors. Is that the big story here, that you offer the same quality or better at lower prices?

Woo: I think that’s one of the stories. I think, certainly for the main TV line, the 27, 30, 32, that’s been true the whole year. We’ve been aggressive with the price compression in the industry. We’ve brought the price down in a consistent fashion through our very good channel partners. This company was built on a business model that allows any cost reductive measures to go immediately to the streets. So we take costs from Asia and take them to the street – I believe faster than anybody in industry. That’s why you see the prices of our 27-inch, 30-inch TVs really aggressively come down quickly. If you go through the releases over the past year, you’ll see that we’re pretty much on the front edge. Most of the other LCD companies—that are playing at all—have had to deal with our pricing; they’ve had to either adjust their pricing reasonably close to us, or simply give up their market share, and many of them have essentially given up their market share. From nothing at the last CES, just starting, just launching, now we’re the sixth largest brand. So we’re behind Sharp, Sony, Panasonic, Samsung, and Philips. And now Westinghouse. We’re right behind them, within a year. So I think the strategy works.

CEN: So you launched a year ago today?

Woo: It was in December, 2003 -- it was about 14 months ago.

CEN: This is a different company from the Westinghouse that makes refrigerators and things like that, isn’t it? That was a long time ago. Can you please give us a short synopsis of the evolution of this brand?

Woo: This is the same brand. This is the Westinghouse brand that is a 100 year old brand. The brand is owned by Viacom, which is a strategic partner for this business. Viacom, of course, is a big media company. Westinghouse and Viacom merged when they were doing the CBS transaction a while ago. And so the brand is managed by the Viacom people. The other strategic partner in this business is Chi Mei Optoelectronics, CMO, which is the third- or fourth-largest LCD panel maker the world. It’s the second largest LCD TV panel maker in the world, and it’s nipping at the heels of Sharp on that score. I think those are two very powerful partners involved in driving this business, and that’s why we’ve been able to go from zero to number six in the marketplace that quickly—it gives us tremendous credibility with the channel, and we’ve also built from zero to 1100 stores in the year, including Best Buy. And the volume numbers show it. I think our volume is not so much of product stealing market share from other companies, what we’ve done is, the market is new. So what we’ve had to do is bring people to our products, and do that by having the products in stores where they buy and shop all the time, at prices that they think they now can afford. If we can do that, then we will build the market, and the market share is what it is. That’s what’s happened—we’ve actually built the market for it. This $2499 price for this 1080p monitor is one part of that issue, and that’s true of all commodity-type things. It’s showing a more textured, sophisticated approach that we’re bringing to the LCD category. We are bringing to market basically the most incredible, best products with specifications that are superior to Sharp’s products. The Sharp 37-inch LCD panel, for example—what is its resolution? It’s 1366x768. So we offer a million more pixels in our 37-inch TV than Sharp.

Araki: Overall, too, it’s not just a difference in the prices. On the technical side, we’ve worked over the past year on a thing called standard form factor. That’s what’s behind the monitor, in the electronics inside. If you really look at our new line of 27 and 32-inch monitors, all the way to the 37-inch, where the actual electronics are placed is developing into a standard form factor. Every single TV that we design, we’re not having to say, “Let’s start all over again.” What we’re doing is, we’re taking what we know with our 27 and 32-inch line, and expanding it to our 37-inch and also to our 42 and 47-inch models. So there’s not a lot of wasted time from an engineering standpoint to start from scratch, erase the board and say, “Now let’s build a 37-inch TV.” What you’ll see in the 37-inch TV line will also migrate into the 43 and 47-inch line. That’s why you’ll see that each one of those products has a standard form factor in the back. 

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Related Keywords:interview, Consumer Electronics Net, Douglas Woo, President, Westinghouse Digital Electronics, John Araki, Charlie White, Consumer Electronics Show, LCD TVs, LCD displays, LCD television, industry experts

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