Cellphone giant plays catch-up with consumer electronics makers

CHICAGO: Motorola wants to leap into the flat-screen TV market with guns blazing, but with so many players moving in the high-margin area, the world's second-largest cell-phone maker might find it tough to stake a claim.

"Let's call it the wild, wild West of the flat-screen TV market, where literally just about anything is going to go for a while," said Bob O'Donnell, a director at technology research firm IDC.

Motorola, unveiling its flat-screen TVs last week at the Consumer Electronics Show in Las Vegas, is attracted by the market's high profits and heady growth, and by the belief TVs will mesh with its cable set-top box products.

Liquid crystal display (LCD) flat-screen TVs are much thinner, and boast wider screens and higher image resolution than traditional cathode ray tube (CRT) models.

Their popularity have soared as prices have fallen.

However, it's unclear whether Motorola and other new players, such as Hewlett-Packard Co and Japan's Seiko Epson Corp, can gain much ground against established consumer players like Japan's Sony Corp, Sharp Corp and Matsushita Electric Industrial Co Ltd, as well as Gateway Inc and South Korea's Samsung Electronics Co Ltd and LG Electronics Ltd.

Demand for LCD TVs is growing fast.

They made up 2.4 per cent of last year's overall global TV sales, but are expected to hit 4.5 per cent this year and 8.3 per cent in 2005, IDC said.

As sales surge, prices and profit margins will drop, analysts said.

O'Donnell expects the average price for LCD screens in the 30- to 39-inch range to fall to about US$1,250 by 2006, from between US$3,000 and $3,500 now.

Ultimately, price, design and marketing will determine winners, but, with the market still in its infancy, there is time for newer players to establish themselves, he said.

Starting in China

Motorola, which used to make TVs under such brands as Quasar before selling the business almost 30 years ago, is initially selling flat-screen TVs in the Chinese market, where its brand name is strong.

From there, it will expand distribution of the TVs, which are built by its Hong Kong-listed partner Proview International Holdings Ltd.

"It's very realistic to say we think North America is the next entry point," John Burke, general manager of Motorola's cable unit's consumer business, said recently.

Some analysts believe it could enter the US market this year.

At last week's consumer show, Motorola displayed numerous LCD TVs, in screen sizes ranging from 15 to 46 inches.

However, the Schaumburg, Illinois, company, which gets the bulk of its sales from cellphones, has its sceptics.

"Motorola is playing an enormous catch-up game," said Charter Equity Research analyst Edward Snyder, who has a "market-perform" rating on the stock.

"They're very smart guys, but they have no history in it."

Burke remains "paranoid about the competition," but believes Motorola's experience in the cable sector, where it's the leading provider of set-top boxes, will allow it to thrive as consumers demand more high-speed Internet connections at home.

HP, which said last month it planned to show a flat-screen TV at the consumer show, aims to sell more consumer electronics products as sales of PCs mature.

Epson, best known for printers, will show 47- and 57-inch high-definition LCD projection TVs with built in memory-card readers and photo printers.

They also will come bundled with external CD burners and the ability to connect to a range of devices.

Agencies via Xinhua

(Business Weekly 01/13/2004 page1)