Plasma TV boosts Gateway picture - (42 " HDTV flat-panel display for $3,000)

The San Diego Union Tribune ^ | December 28, 2002 | Bruce V. Bigelow

[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."

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Bruce Bigelow: (619) 293-1314;

[Dark Knight]

Personally, I think it will be the end of the CRT. They are not going to even stop at less the HDTV (full 1080i). So it will be able to be a monitor, TV, PDA etc.

As far as do you have it now, I think Pioneer put it on some of their higher end car stereos. But that is kind of an exotic toy function. They will start with the PDA market, and then computer monitor. The wall TV's will be last, but how fast does the consumer market work when it has a market?

I think that the scene from "Total Recall" may be closer than we realize. You remember, where they were having breakfast, and the wall is the TV. She kept putting back into the Window mode where it was like looking out your picture window.

DK

[savedbygrace]

For some families, that would be about 3 to 3 1/2 years.

[A Navy Vet]

LCD projected on a wall, with a $200 surround system...you call that "great" 5.1 home theater? If you're not going to go CRT, at least use a DLP projector. I won't even get into your clock-radio surround.

[savedbygrace]

Yeah, I had a 22" Apple Cinema Display (LCD panel) that developed a bad column of pixels. Fortunately, I had AppleCare, and it cost absolutely nothing to get the panel replaced.

[savedbygrace]

PS. Glad I saved you. LOL

LOL. Thanks.

[bonesmccoy]

Please check the "reply" button prior to posting. I corrected my message and noted that it was 14 FEET

[bonesmccoy]

OK swabbie...how much did you actually pay for your Bang & Olufson?

[bonesmccoy]

actually instead of calling "it" a "mess", I would call "it" a "free market" with "competition".

May the consumer decide.

[Ernest_at_the_Beach]

See this:

$3000 Plasma TV? SO What. Read this..

[goldstategop]

I'm all for the free market. Heavens rejoice!!!

[bonesmccoy]

The selection you make depends on your use. If the display is in a smaller room and would only have a few people viewing it from a couch/sofa, then the LCD is great. The plasmas were priced way to high prior to the GTW system entering the market.

[bonesmccoy]

Thanks for the info. It sounds like the plasma TV competition and sales are moving up. If the Koreans are popping out the plasma screens faster, the Chinese will need to match. GTW must be getting their screens from S. Korea or China. The Japanese aren't really manufacturing very cheap these days.

It sounds like the cost of a large plasma screen wall mount unit will fall by 50% soon. The cost already declined by 70% compared to two years ago.

[FreedomPoster]

>>"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,"

When I got a replacement TV for the den a month ago, my primary criteria for selecting a "sales associate" was "can he operate a forklift and get a 32" TV onto my pallet?"

If you want techie details on this kind of stuff, go to the Audio-Visual Science Forum. It's the best.

http://www.avsforum.com

[bonesmccoy]

My take on the innovation in display technology is that the grapple on NTSC TV and movie resolution by liberal media outfits is over.

Digital technology is democratizing. Just look at what Jim Rob did with simple text. Imagine what the next generation of freeping will be?

Kids with digital video cameras can show up to the Feinstein Campaign to shoot stock footage and make their own commentaries to match guys like ABC News.

[July 4th]

For watching DVD's while traveling, I rip them to my laptop hard drive. The battery lasts much longer that way.

With regards to the plasma displays, I think they're extremely cool, but far out of my budget right now. The one thing I can't get past, however, is picture editing. I have yet to see a non-CRT display that can display pictures at a quality useful enough for professionally editing them. For accuracy, CRTs are still the winners.

[bonesmccoy]

MSFT = Microsoft
GTW = Gateway

These are stock exchange symbols used by all financial analysts.

[FreedomPoster]

>>at least use a DLP projector

Many have problems with rainbows on DLP's. I like my LCD projector, and most who see it love it, too. We had a Xmas party, and 6-7 people were glued to LOTR / FOTR extended edition after I put it in for a "short" demo. They couldn't believe how good it was, and how relatively inexpensive the setup. Note: I don't view many black and white art films where contrast is an issue.

[fightinJAG]

Blogs will become citizen-newscasts. FReeperland will have its own web-station where freepers can send in reports for broadcast.

[dennisw]

Freepers who are into home production (like that David Dennis dude) should get into MediaCenter PC's from Gateway, HP, or Alienware.
____________________

RIGHT. I saw a very cool one from Alienware. A super enhanced tivo and much more for $1599.

[July 4th]

I thought that this had been resolved and decided.

That it has. For $150, I bought a Hauppauge HDTV tuner card for my desktop. It displays at 480i resolution, and looks -extremely- cool. Plus, in the Madison and Milwaukee areas all of the broadcasters are running digital. It's awesome.