Television prices have fallen so much that a typical set will soon cost less than an Apple Inc. iPad that’s less than a tenth the size.
The CHART OF THE DAY shows average prices of 42-inch liquid-crystal-display TVs in the U.S. will probably fall 10 percent to $599 this quarter from a year earlier, and slip to $578 by the end of the year, according to Santa Clara, California-based research firm DisplaySearch. IPad tablet computers are sold for $499 to $829 in the U.S., with Apple offering the Wi-Fi only, 32-gigabyte version for $599.
The price drop illustrates why none of the industry’s five-largest producers, including Samsung Electronics Co. and Sony Corp., have managed to generate even a nickel of profit for every dollar in sales from their TV divisions since last year. Falling prices will likely continue pressuring earnings, said Jeff Loff, a Tokyo-based analyst at Macquarie Group Ltd.
“The value consumers ascribe to a TV set is lower than most manufacturers’ costs,” Loff said in a phone interview. “Even incremental features like 3-D, Internet connectivity and enhanced motion processing do not generate enough of a price lift to turn TV sets profitable.”
In the U.S., the first color RCA-brand TV with 12-inch screen was offered at $1,000 in 1954. Suwon, South Korea-based Samsung, now the largest TV maker, began offering 40-inch LCD sets for about $8,000 in 2002. Sharp Corp., Japan’s largest LCD maker, retailed the company’s first 45-inch sets in 2004 at 997,500 yen ($13,000).
Apple, whose co-founder Steve Jobs resigned last week as chief executive officer, has kept iPad prices unchanged since it introduced the first model in January 2010.