Press Release
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Shakeout Coming for Microdisplay Industry Says New Report from Insight Media and McLaughlin Consulting Group September 3, 2003 - Norwalk, CT and Menlo Park, CA - Market research firms Insight Media (www.insightmedia.info) and McLaughin Consulting Group (www.mcgweb.com) have released the sixth edition of their popular Microdisplay Forecast Report. This year's edition comes at an exciting yet troubling time for the microdisplay industry as a perfect storm of competitive and market forces could precipitate a major shakeout of the microdisplay industry over the next two years. Microdisplays are tiny flat-panel displays that power business front projectors, rear-projection TVs, home theater projectors and viewfinders in digital camcorders and cameras. The continuing worldwide business recession and the cut throat competition among display technologies, and within the microdisplay arena itself, are combining to put continued and sustained pressure on microdisplay pricing, cramping incumbent suppliers and making market entry even more difficult for new comers. And, at the finished product level, prices are coming down faster than manufacturers can reduce costs. As profitability shrinks, manufacturers must increase unit shipments to avoid slipping into the red. There are also changing channel dynamics and margin pressures that will precipitate realignments. "Other industries like DRAM, disk drives and even the PC industry have faced similar pressures in the past, which has resulted in industry consolidation," states Chuck McLaughlin, president of McLaughlin Consulting Group. "Similar forces are now at work in the microdisplay industry, which may become mature before it has barely become an adolescent industry." Such forces have led to the "Conservative" forecast detailed in the report. But other factors could play out too, which has resulted in the "Optimistic" forecast also described in the report. "Many microdisplay industry participants are counting on being saved by projection TV," observers Chris Chinnock, Sr. analyst at Insight Media. "Clearly, we are in the early stages of a revolution in big-screen display technology with both plasma and LCD big screens offering consumers a flat panel option. And the fact is that plasma and LCD flat TVs have the momentum at this time. Microdisplay-based RPTVs need to overcome this and displace CRT-RPTVs - and it is not clear that the pieces are in place to do this. Microdisplay-based RPTVs need to create significant market share in 2004 before the onslaught of LCD-TVs begins in 2005, or else the category may languish." The optimistic forecast assumes that microdisplay projection TV is competitive and branders and integrators successfully build consumer enthusiasm. Sales of projection TV are forecasted to grow from the current level of 4M units annually to 11M in 2007 (8M RPTV plus 3M front consumer projectors). Further, microdisplay technology is expected to rapidly displace CRT technology in RPTVs (65% share by 2007). In the optimistic case, sales of all big screen technologies ramp
up dramatically from 16M in 2003 to 40M in 2007. Everyone wins in
the battle of displacing CRT direct view TVs from the high end of
the market, providing huge market growth overall. The following
chart summarizes the overall market view in the optimistic forecast.
A more conservative assessment of the market is that total growth for projection TV will be moderated by the onslaught of flat panel big screens and that total RPTV unit sales will plateau at 5.5M units in 2007. In this more competitive market, microdisplay-based RPTV sets find it more difficult to displace CRT technology due to microdisplay cost and lifetime issues, resulting in microdisplay technology capturing only 40% of the smaller market in 2007. Add to that a more conservative 1.5M front home projection forecast and the total microdisplay potential shrinks to 7.0M units in the conservative case. In the business presentation segment, revenue growth has already stalled. Major IT players like HP and Dell are having an impact on prices and margins, forcing ProAV dealers to seek other services and solutions to survive. If the industry can sell its way out of the current revenue doldrums, based on sustained price reductions, unit growth of 26% could result. Then systems will increase from 1.7M in 2002 to 5.5M in 2007. Revenue will grow to $5.75B, just a bit ahead of current levels. In the conservative case, price reductions drive sales to only 4.5M units in 2007 and as a result, system revenues decrease 3% to $4.7B. In near to eye microdisplays there is only one real application today: electronic viewfinders (EVF) as other potential big applications continue to be elusive. Again, a conservative and optimistic forecast takes into account the various factors that could drive growth in embedded viewfinders and headsets. The new forecast looks at the upside and downside views and identifies the key issues in each market. It then integrates those scenarios into a comprehensive look at the competitiveness of the array of microdisplay technologies and suppliers. The 400-page report provides a forecast of the hot TV industry as well as the other established microdisplay industries in business projection, embedded viewfinders and head-mounted display systems. Included in report are comprehensive profiles on more than 30 microdisplay development/production companies including market leaders like Texas Instruments, Sony, Seiko Epson, JVC, Hitachi, Three-Five and Philips. These profiles include an assessment of the company's strengths, weaknesses and its competitive position in the marketplace. Also included are customer information, product development roadmaps, display specs and current/planned production rates. The Microdisplay Forecast Report is available as a multi-user site
license for $5,000, or in combination with an on-site consulting
visit for $7,000 (Excel workbook and pdf file). For more information
or to order,
go to:Microdisplay
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