Lowdown On LCD Prices

John Berry, owner of Ultratech Computer Systems, a Glasgow, Ky.-based system builder, said lower prices are important to small-business customer prospects including dentists, doctors and lawyers. One of Berry's dentist customers held off replacing the CRT monitors in his office with LCD models earlier this year because of rising prices. "But just a couple of days ago, the dentist called and said to come in and discuss changing his monitors," Berry said.

LCD pricing is based on the cost of the bare LCD panels, which can account for 80 percent of a monitor's cost. Research firm DisplaySearch last week predicted average panel prices to drop by $11 next month, followed by $3 to $7 reductions each month through March 2005.

Just how far LCD monitor prices can fall is subject to debate. Some industry executives say too precipitous a drop could negatively affect VARs by increasing the competition from retail stores.

Nelson Tsay, senior director of product management at City of Industry, Calif.-based CTX Technologies, said in the short term, the price difference between 15-inch and 17-inch LCD monitors may shrink to about $40, prompting customers to upgrade to 17-inch models. However, that $40 differential is still significant to OEMs such as Hewlett-Packard and Dell, which will continue focusing on the 15-inch models for their product bundles, he said.

Jorge Vizcaino, director of sales and marketing at Fremont, Calif.-based AOC Monitors, expects the reseller price for 17-inch monitors to hit $330, a decrease of about $100 since early second quarter. He expects 15-inch models to hit a street price of $249 after rebates in retail stores, which could make it tough on the channel.

But Dave Nielsen, owner of I-40 Computers, a system builder in Albuquerque, N.M., said the falling prices should have little effect on his business.

"Many people are dead set on an LCD monitor and will buy it regardless of price," he said.

Rising LCD prices earlier this year were triggered by supply constraints, said Jeff Volpe, vice president of marketing for the Americas at Walnut, Calif.-based ViewSonic.

Other factors forcing down LCD prices include lower-than-anticipated shipments of notebook computers and LCD TVs, as well as more efficient manufacturing processes by LCD glass manufacturers, Volpe said.

"The industry will see a tapering in price reductions after September," he said. "Of course, if demand doesn't rise like forecast, the price declines could continue."