Just when LCD monitors were beginning to gain popularity in the first quarter of 2003, came the worldwide shortage, putting CRT monitors back to a stronger position. The LCD shortage began sometime in March 2003, putting a halt to their sliding prices. Since then, the price of LCD monitors has remained steady or has risen just a little.

However, the growing demand for LCD monitors never put the CRT market in a weaker position given the size and diversity of the Indian market. The price advantage of CRT monitors will also ensure that their demand will continue for some more time to come. Even though LCD monitor prices have been moving downward, LCDs still sell over two-three times the price of CRTs.

Despite the price differences, verticals like BPO continued to buy LCD monitors and drive growth. According to estimates, the unit share of LCDs has been steadily increasing. For instance, 98% of Samsung's India units sales came from CRT and 2% came from LCD in 2002. In 2003, 96% of its sales came from CRT and 4% from LCD. In 2004, Samsung expects 90% of its sales to come from CRT and 10% from LCD. Going by Samsung's statistics, the LCD business appears quite promising.

Trend Setters
Though the total replacement of CRT with LCD monitors may be a distant dream in India, worldwide trends show that LCD monitor sales have surpassed the CRT monitor sales in many developed and developing countries. This, along with an increased use of LCD panels in many other applications, found LCD manufacturers being unable to match the demand.

iSuppli/Stanford Resources, in a recent research, found that the shortage for LCDs is caused due to simultaneous surges in demand from the laptop, television and desktop PC monitor markets. For the vendors, the LCD business has fatter margins compared to the CRT business, which has now become increasingly commoditized and, hence, margins are at bare minimum levels. Some industry experts also attribute the shortage to a financial crisis in Asia, which has restricted the supply of money that is needed to add new LCD manufacturing capability. According to analysts, Taiwan is the primary source of supply for flat panels, which means that the growth of the market will continue to be suppressed if demand remains consistent.

The LCD shortage in the Indian market remained until the first quarter. There will be some respite only after the new production facilities, that are expected to come up in South Asia from some major LCD panel manufacturers, come up. But prices may not dip immediately, because most vendors, starting July 2004, would be fulfilling orders placed earlier. And, come Christmas season, demand is expected to pick up again.

LCD Potential
The market has a lot of potential for LCD monitors and many corporates have already started looking for these monitors. But it is yet to gather steam. The total replacement of CRT with LCD monitors will happen only in the distant future and shall be restricted to a few segments that benefit significantly from using LCD monitors.

Today, LCD monitors are being increasingly adopted by medical professionals, banks, financial institutions, the aviation industry, stockbrokers and hotels, among others. The SOHO segment holds tremendous potential as prices of the LCD monitor have come within the sub-Rs 20,000 category. In the LCD range, the 15-inch monitor is definitely the most popular, simply because of the value it offers at the price it commands. Over the years, the LCD monitor has definitely become more affordable. It is now possible to buy a 15-inch LCD monitor at about Rs 20,000. A year ago, the same model would have cost around Rs 10,000 more.

Holding its Own
The demand for 17-inch CRT monitors continued to heat up as monitor and system integrators worked hard to push them on the basis of the thin price differential over 15-inch monitors.

However, despite industry predictions that 15-inch monitors would soon fade away, they were far from dead. 15-inch monitors still contribute a major part of the entire monitor business. Channel partners claim that it's here for another couple of years. The potential for the range of CRT monitors is in the home and the SOHO segment. The buying trend today is focused on the 17-inch flat monitors. Over the years, the CRT monitor market has moved from 14-inch to 15-inch. It is now graduating from 15-inch to 17-inch and flat models. With the difference between the 15-inch CRT and 17-inch CRT being only about Rs 2,000, users don't mind opting for the 17-inch model.

Focus on Regions
More and more vendors are looking at B-, C- and D-class cities as the new opportunity area. Samsung claims to have made its presence felt in 85 cities with 238 Star Elite partners. It feels that its presence is fairly strong in all the cities it is present in. With five distributors, the company now plans to expand further into some B-and C-class cities.

Similarly, LG has established a strong presence in Rajasthan, Madhya Pradesh, Gujarat and Andhra Pradesh. But despite 460 regional distributors in the country, the company still feels that it has some way to go. It is now planning to increase its presence in some parts of the up-country market in the coming fiscal.

Philips boasts of a strong presence in MP, Bangalore, Lucknow, Kerala and Kolkata, where they were placed either No.2 or No.3 in the OND quarter of 2003. The strong presence of the two monitor giants in the metros have forced, brands like Philips, HCL, Microtek and others to focus only in certain regions.

Partners Eye Growth
Most resellers feel that the growth in CRTs and LCDs has been good in the last year. The trend shows that metros are more inclined towards buying LCDs rather than CRTs and after the reduction of prices in the LCDs, it is seen that most of the metros favor LCDs. The growth for most of the resellers in CRTs and LCDs were between 20% to 25% on a QoQ basis. Since the margins are less in CRT monitors, channel partners find marketing LCDs a promising business as it commands higher margins. On brand leadership, the general market sentiment is mixed, swaying towards both Samsung and LG.

Nelson Johny in Mumbai with inputs from Atanu Kumar Das in New Delhi A DQ Channels India analysis