Posted on 12/28/2002 1:23:42 PM PST by Ernest_at_the_Beach
Plasma TV boosts Gateway picture
Low-price strategy, booming sales make some analysts enthusiastic
By Bruce V. Bigelow
STAFF WRITER
December 28, 2002
When Richard Doherty learned that Gateway, the build-to-order computer maker, was introducing a 42-inch plasma television for the holidays, he thought, "Oh, that'll be a good adjunct to their stores."
When he found out the Poway company would sell the giant flat-panel display for $3,000, Doherty thought, "Oh my God. They're going to change everything."
Though precise sales numbers on the plasma TV haven't been released, it's apparent that the computer maker has scored a coup – at least with analysts like Doherty.
Perhaps more importantly, Gateway might now have a product with the potential for sales growth not seen since the mid-1990s, when runaway personal computer sales drove double-digit revenue growth for the company.
As new government standards for broadcasting digital TV signals go into effect in coming years, some analysts predict the demand for plasma TVs could grow by 70 percent a year through 2008.
"We are constantly looking at the type of new product categories that made us so successful in the PC business," said Gateway's Gui Kahl, a digital solutions manager who guided the plasma TV launch.
In terms of current sales, Kahl and other Gateway officials will say only that holiday sales of the new TV have been running "significantly ahead" of their own internal forecast, whatever that may be.
Yet market researchers like Doherty, who works for the Envisioneering Group of Seaford, N.Y., say they're impressed, and that's a yuletide blessing for Gateway, which has been struggling to shake off losses for the past two years.
"The $3,000, 42-inch plasma TV turned a lot of heads here at Aberdeen and in the marketplace," echoed Peter Kastner, who heads the Boston-based Aberdeen Group's digital consumer technology practice. "The reason is the price point, plain and simple."
With Gateway's plasma TV priced at $2,999, analysts said the company is underselling similar-sized products by 30 percent to 50 percent.
The new TV uses plasma – a mixture of gases – arrayed in tiny gas-filled cells sandwiched between two thin sheets of glass. Using advanced electronics, an electrical current stimulates each cell, or pixel, to produce light and color – creating a vivid, steady picture.
Gateway does not make the flat-panel TV – which is thin enough to hang on a wall – and some analysts believe the original supplier is Sampo of Taiwan. In any event, the timing of Gateway's entry was impeccable.
"Retailers are telling us the Gateway entry this fall has cut in half the sales of similar-sized plasma TVs on both coasts," Doherty said.
Doherty also was enthusiastic about the consistent approach Gateway takes in educating consumers about digital TV on its Web site and in the company's nationwide chain of 272 stores.
Unlike big box consumer electronics retailers, Gateway also ensures that the digital electronic products it sells will work together when consumers get home.
"The second-biggest problem for high-definition TV in America, after confusion over cable and broadcast standards, has been the horrible experiences at consumer electronics retail stores," Doherty said. "Gateway makes sure that everything plays together."
In the last three months of 2002, Doherty estimates, total sales of plasma TVs in the United States could reach 25,000 – equivalent to all previous plasma TV sales. Gateway "clearly stands a chance to get up to 20 percent of that," Doherty added.
Still, other analysts caution those are small numbers – even for a high-priced product.
"It is a 'wow' item, and as prices come down, they will become more popular," said Michelle Abraham, a multimedia analyst for In-Stat/MDR near Phoenix. "But I don't see where they ever move into the mainstream in the next 10 years. It's always going to be more expensive than a comparably sized TV."
Josh Bernoff of Boston-based Forrester Research agreed, saying, "Even at $2,999, there aren't very many people willing to buy" the product.
He also doubts that sales of plasma TVs will come anywhere close to 70 percent compounded annual growth.
Nevertheless, Bernoff conceded that Gateway's sales approach can be an advantage as consumers who want their own home theaters "get into that zone where it gets complicated to hook up."
Besides, Bernoff added, "one of the reason retailers have big, fancy expensive products is that it gets people into the store so they can see all the other neat, fancy equipment that's on sale."
In the end, Bernoff said, Gateway's tactic makes sense for a company that is heavily dependent on consumer sales.
"They're just looking for other stuff they can sell," he said. "Clearly anyone who only sells computers is going to have trouble right now, and diversification is the only solution."
Bruce Bigelow: (619) 293-1314;
And how many people are going to be able to make "home movies" as worth watching as a big-budget Hollywood film? Not many of us can hire top-notch actors, afford to film "on location", or hire the services of a special-effects house, world-class cinematographer, costume designer, etc. etc.
There's a reason you see the names of *hundreds* of people in the credits of a major movie.
Hollywood's going to be around for many years to come.
I'll pass...
Yeah, I would say Apple is doing poorly, and I have been a mac user since 1985.
Maybe if Apple gets rid of that leftist hippie bastard Steve Jobs and bring back John Sculley they will start moving again
Thanks. You just made my point, which was...you don't know what "great home theater" is. BTW, we're in agreement about room size effect on speaker performance, but you're the one who claimed to entertain 15-20 people...I can just see the crowd squinting to see your InFocus on the painted wall with the $200 sound system straining against the underpowered amp. BTW, notice you didn't debate the DLP v. LCD.
Those of you who want a really good home projector and don't have the $28,000 plus for a CRT system should take a look at the the latest generation DLP systems (Marantz and Sharp for two). Coupled with the included scaler (doubler/quadrupler), they are the closest thing to the holy grail of home theatre viewing, just barely less performance than CRT at a third the cost. Oh, and you may want an actual screen to reflect the light properly, rather than a dull painted wall. Stewart home screens are widely acclaimed.
And yes, celluloid still has the most resolution (NO pixels) and tonal balance of any of the display systems. Ever wonder why they don't make movies in digital? ... because they haven't overcome the lack of warmth inherent to the digital medium.
Now I know you're totally lost on this home theater thing. You don't even get a wide screen frame. How could you possibly claim enjoying a "great" home theater experience when you can't see the entire picture? Sheeesh, I've been wasting time with a Pan and Scan viewer.
Oops, missed that. Well, if it looks the same as film or better than great.
Also, you missed by decription of my gear above...the front main speakers have subs built into them with their own dedicated amp right in the speaker enclosure. If you want the difference between a booming base and a sub-frequency thumb in an average home room, you need to move some air...so yes, you need subs.
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