Dell, Hewlett-Packard to sell flat TVs, suppliers say

"When we look at these new markets to go after, often times we can move in with much lower prices. It puts great pressure on competitors to match, because they got used to very, very high margins."

Kevin Rollins, president of Dell

Dell Inc and Hewlett-Packard Co are preparing to sell flat-panel televisions, in a move that will intensify price competition for Sharp Corp, Samsung Electronics Co and other Asian makers, suppliers and analysts said.

Taiwan flat-screen TV suppliers including Lite-On Technology Corp (光寶科技) and Amtran Technology Co (瑞軒科技) said they have provided price quotations to Dell and Hewlett-Packard, the world's two biggest PC vendors. Gateway Inc is already selling flat TVs.

The US PC makers are targeting a display market that's forecast to grow 19 percent annually for the next four years as falling prices encourage consumers to switch from bulky glass tube-based TVs. Japanese and South Korean companies including Sharp, Samsung and Sony Corp dominate the market for flat-screen TVs, which typically cost five times as much as conventional sets.

Dell plans to offer its first flat-screen TVs with 26-inch and 30-inch screens next year, said Scottie Chiu, special assistant to the chairman of Amtran, which supplies flat-panel TVs to Sharp and Gateway. Sharp's suggested retail prices are US$4,499.95 for a 30-inch liquid-crystal display TV and US$2,499.95 for a 22-inch model, according to the company's Web site.

Lite-On, Taiwan's biggest maker of computer displays, has also pitched for flat-panel TV orders from Dell and Hewlett Packard, said K.C. Terng, president of a Lite-On unit.

The company, which makes PC screens for both computer makers, is already supplying 17-inch flat-screen TVs to Gateway.

"Gateway's ahead of Dell and Hewlett-Packard," Terng said.

He added that the two new entrants have already started their projects.

The market for LCD TVs will grow to US$19.7 billion by 2007 from US$1.5 billion this year as prices plunge, Austin, Texas-based market researcher DisplaySearch forecasts.

Gateway last November started selling large plasma-display TVs that were half the price of competing systems in some cases.

The company in the fourth quarter will offer thinner liquid-crystal display TVs with 30-inch screens targeted at consumers, according to Ho Heng-chun (何恆春), president of Sampo Corp (聲寶), Taiwan's largest consumer electronics manufacturer.

In the hunt

"We're always on the lookout for new opportunities," Cecilia Pang, spokeswoman for Hewlett-Packard in Asia, said in an e-mail, declining to comment further.

The US companies are betting that, as in the PC business, low-cost supplies will enable them to lower prices and increase sales and market share.

Dell, which dropped "Computer" from its name in July, has already said it's interested in entering the TV business.

"When we look at these new markets to go after, often times we can move in with much lower prices," Dell president Kevin Rollins said on an Aug. 14 conference call. "It puts great pressure on competitors to match, because they got used to very, very high margins."

Osaka-based Sharp, Japan's largest maker of liquid-crystal displays, had a 14 percent rise in fiscal first-quarter profit, helped by sales of its Aquos flat-panel TVs.

Sony, Toshiba Corp, Matsushita Electric Industrial Co and Hitachi Ltd have all introduced new flat-panel TVs in the past two weeks to meet demand ahead of the year-end shopping season.

Annual sales in the US$37.7 billion flat-panel industry, which includes screens used in PCs and other electronic products, will increase an average of 19 percent until 2007 on demand for TVs, according to DisplaySearch.

Some investors questioned how much price cuts will stimulate demand, given the price gap with conventional models.

A Sharp 20-inch liquid-crystal display TV sells for US$2,000, compared with US$200 for a same-sized Toshiba cathode ray tube model, according to the Web site of Costco Wholesale Corp.

Flat-screen models will account for about 2 percent of all TVs sold worldwide this year, rising to 16 percent by 2007, DisplaySearch forecasts.

Supply shortages may force Dell and Hewlett-Packard to delay their plans. New plants being built by Taiwanese manufacturers have yet to come into full production.

AU Optronics Corp (友達光電), the world's fourth-largest flat-panel maker, said that TV screens accounted for 1.3 percent of its sales in the second quarter.

Sales prediction

Taiwan's second-largest screen supplier, Chi Mei Optoelectronics Corp (奇美電子), said TV panels will account for about 20 percent of sales in the second half. No. 3 Chunghwa Picture Tubes Ltd (中華映管) said it has more orders than it can meet this year.

Investors said Dell and Hewlett-Packard's entry would be positive for Taiwanese manufacturers, which make many of the desktop and notebook PCs sold under the US companies' brand names.

"The Taiwanese companies have nothing to lose," said Pedro Tai, who counts shares in Taiwan flat-panel makers among the US$200 million he helps invest for ABN Amro Asset Management Taiwan.

"If Dell and Hewlett-Packard can open this new market, it would allow Taiwan's PC companies to enter the consumer-electronics business."