It was just a few years ago that liquid crystal display televisions were bought only by technology buffs with money to burn.
At the time, the decision by Santa Fe Springs-based Westinghouse Digital Electronics LLC to move into LCD screens seemed risky. But with the ultra-clear, thin televisions now going mainstream, Westinghouse is having a last word, becoming one of the segment’s key players.
In the fourth quarter of 2005, the company became the fifth biggest seller of LCD televisions, behind heavyweight brands Sharp, Philips, Sony and Samsung, according to iSuppli Corp., a research firm in El Segundo. That’s up from eighth in the same quarter a year ago.
“(When Westinghouse began) back in 2003, LCD was very niche and very small,” said Rey Roque, a vice president at the privately-held company. “The success had a lot to do with the timing, seizing the opportunity and knowing that LCD was going large in mass.”
In the past year, the company has grown more than 600 percent, a faster clip than the North American LCD market. Westinghouse products sell in about 3,000 stores, including stores owned by electronics powerhouse Best Buy Inc. In total, iSuppli estimates that retail market has increased 190 percent to $8 billion in 2005 from $2.75 billion the prior year.
Riddhi Patel, a principal analyst at iSuppli, said Westinghouse has become an established brand. She explained it attracted consumers by entering the market with lower-priced products than the more well-known brands.
“In the LCD market, we have seen a brand explosion. Westinghouse’s strategy was to be the leader of the value brands,” said Patel.
Unlike the more well-known brands, Roque said Westinghouse’s LCD focus allowed it to keep prices down. Other brands had to compete with their own plasma televisions in the marketplace and keep LCD prices artificially higher to drive plasma sales.
In addition, Roque said Westinghouse’s supply chain, dedicated to LCDs alone, was speedier at getting products out to the market. Therefore, lower-priced Westinghouse LCD televisions were available in the store before other brands could sell their latest, cheapest models.
“We are faster to the price point that they eventually get to. To the consumer, we are definitely cheaper,” Roque said. At one point in 2004, Douglas Woo, Westinghouse’s president, told the publication Reed Electronics Business, “We were lowering our prices every 30 days.”
Close ties
Westinghouse has benefited from a close relationship with Taiwanese company Chi Mei Optoelectronics Corp., one of the world’s leading producers of LCD panels. Westinghouse gets its panels from Chi Mei, where Richard Houng, Westinghouse’s chief executive, began his career in 1992. The company licenses the Westinghouse name from Viacom Inc.
Overall, the price of LCD televisions in the market has dropped an average 20 percent in the last year. The price of large-sized LCD televisions has dropped even more, about 28 percent to 37 percent from 2004 to 2005, according to iSuppli.
When LCDs became more affordable, the market accelerated quickly. A year ago, Patel said a regular cathode ray tube television might have cost $700, while a LCD television would have cost $3,000. Today, the traditional set costs $600, and the LCD is more often in the $1,000 to $2,000 range.
“The price difference is much lower, and some consumers are willing to pay a little premium for getting a new technology with high-definition capabilities,” Patel said.
The price decreases have come as more and more brands, many with ties to Asian panel manufacturers, pour into the market. But by building brand awareness early, Westinghouse has continued to build sales even with the fierce competition in the sector.
As the brand matures, Patel said that Westinghouse is aiming to edge out its rivals by competing on more than simply price. The aim now? To create a premium brand. “They have made substantial investments in terms of R & D;,” she said. “They are trying to break away from that value brand image.”
