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issue: November 2006 APPLIANCE Magazine

New Delhi Report
The World is Flat


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by Adite Chatterjee, India Correspondent

Indian consumers cannot go without their daily dose of TV viewing.

Not surprisingly, political parties in India’s southern state of Tamil Nadu are giving away free color TVs (as well as free rice) to woo poor voters in upcoming state elections. This exercise is estimated to cost the state government Rs 10.6 billion (approx. U.S. $230 million), and could result in 5.3 million of the poorest households in the state acquiring a free TV set. Whether or not such freebies will help boost the political parties’ fortunes, electronics companies are not complaining about the state government’s largesse.
Clearly, TVs as a product category has the potential to be lucrative for manufacturers. Indian consumer products company Godrej & Boyce, which has traditionally manufactured home appliances such as washing machines, refrigerators, microwave ovens, and air-conditioners, as well as some entertainment electronics like DVD players, now plans a foray into the TV segment. It’s likely Godrej’s strategy will be to enter the lower-end segment before it gets into manufacturing and marketing high-end models.
Sales of TVs are once again on the upswing among middle class consumers, thanks largely to changing technology. LCD (liquid crystal display) and plasma TVs are among the fastest growing segments in the CTV market. However, conventional cathode ray tube (CRT) TVs are expected to dominate the market in the medium term. Most TV OEMs are of the opinion that CRTs will be replaced by LCD and plasma as prices for these flat panel technologies plummet.
The LCD/plasma TV market was last estimated at 120,000 to 140,000 units within India’s 10-million-unit color TV market. TV makers hope to increase that to about 300,000 LCD/plasma TVs by the end of 2006, but it will still make up just about 3 percent of total TV sales. Still, urban Indian consumers have shown a preference for high-end and technology-led products, and marketers are confident that the LCD market will double in the next 2 to 3 years.
To keep pace with the growing demand for high-end TVs, manufacturers are gearing up their production facilities. Samsung India, for instance, started manufacturing LCD TVs at its Noida plant near New Delhi. This is in step with the company’s claims that it currently has the biggest share of the LCD and plasma TV market, with shares of 47 percent and 36 percent each. Samsung said sales of its LCD TVs grew 1,100 percent in just 6 months.
What is likely to give the LCD and plasma TV segment continued growth momentum is the reduction in prices. During the last year, LCD TV prices fell almost 35 percent. As a result, LG Electronics and Hitachi, the other two international players, are also stepping up their plans for this segment. LG plans to start importing components for LCD and plasma from South Korea and assembling the TVs in India. The company’s facility in Gumi, South Korea has a production capacity of about 345,000 units per month, of which nearly 85 percent is currently exported. Hitachi launched its 42-inch plasma TV in India in June, and the swivel-stand, remote operated unit has a hefty price tag of Rs 200,000 (approx. $4,350). The company budgeted Rs 120 million (approx. $2.6 million) to advertise and promote its LCD and plasma TVs.
All the players are expecting prices of LCD players to decline further in the coming months, by as much as 25 percent, which they feel will give consumers enough reason to purchase these high-end TVs.
Despite the optimism of manufacturers, the high-priced models will likely contribute a small percentage to their total sales volumes for the time being. However, as technology trickles down from the urban to rural markets, it is inevitable that the world of TV will eventually go flat.

 

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