LCD Prices: How Low Can They Go?

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. "Doctors and lawyers have tons of money but are the hardest to get to part with it," Berry said.

One of Berry's dentist clients was planning to replace its CRT monitors with LCD models earlier this year; rising prices at that time put those plans on hold. "But just a couple days ago, the dentist called and said to come in and discuss changing his monitors," he said.

Nelson Tsay, senior director of product management at City of Industry, Calif.-based CTX Technologies, predicted price reductions of 3 percent in September followed by another 2 percent to 3 percent by October.

Tsay said in the short term, the price difference between 15-inch and 17-inch monitors may shrink to approximately $40 or so, causing some customers to move to 17-inch models. However, that $40 differential is still significant enough that OEMs such as Hewlett-Packard and Dell will continue focusing bundles on 15-inch models, he said.

Just how far LCD monitor prices can fall is subject to debate. Some industry executives say too precipitous a drop could negatively affect VARs because they will face more competition from retail stores.

Jorge Vizcaino, director of sales and marketing at Fremont, Calif.-based AOC Monitors, said he expects prices of 15-inch and 17-inch LCD monitors to drop by 10 percent to 15 percent in September.

By September, Vizcaino 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 in retail stores, after rebates, this year. "It could make it tough on the channel," he said.

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

Customers have in mind a price they are willing to pay for a PC, regardless of which type of monitor or its size, Nielsen said. "Many people are dead set on an LCD monitor and will buy it regardless of price," he said.

While LCD prices rose earlier due to supply constraints, those constraints have become oversupplies in the past couple of months, triggered by those higher prices, said Jeff Volpe, vice president of marketing for the Americas at Walnut, Calif.-based ViewSonic.

Other factors negatively impacting LCD prices are lower-than-anticipated shipments of notebook computers and LCD TVs, as well as more efficient manufacturing regimes from LCD glass manufacturers, Volpe said.

Looking ahead, the crystal ball gets cloudy, he added. "The industry will see a tapering in price reductions after September. Of course, if demand doesn't rise like forecast, the price declines could continue," Volpe said.