Taipei Times: How do you see the potential of liquid crystal display (LCD) TVs, compared to the plasma display panel (PDP) televisions?
Peter Chen (
PHOTO: GEORGE TSORNG, TAIPEI TIMES
We are basing our optimistic outlook on the facts that the supply of flat screens is stable and a further price cut in such televisions is expected. The two factors will be in a favorable situation for the LCD TV market next year.
Though PDP TVs are predominant in large-sized flat-screen televisions with 50-inch and 60-inch screens, I think the situation may reverse within the next three years, because LCD flat panel providers are able to provide bigger displays at lower prices as technologies have improved a lot over the past few years. The operation of new [more efficient] factories will also help improve the tight panel supply situation.
TT: As demand for flat-screen TVs has been taking hold during the current quarter, what's your projection about the price trend of LCD TVs?
Chen: According to our understanding, panel supply will remain stable in 2004. As panel supply is still very tight in the current quarter, I don't expect a supply glut to appear during the first or second quarter of 2004 as predicted by Hon Hai Precision Industry Co (鴻海精密) Chairman Terry Gou (郭台銘) recently.
I don't think a serious panel shortage will relapse next year, either. Some local panel manufacturers have actually strategically differentiated themselves from rivals in order to survive the steep competition. Take Chi Mei Optoelectronics Corp (
Therefore, the price trend for the sector is that the LCD TV prices will continue to drop in 2004 after a 30 percent to 40 percent plunge this year. The downward trend is unavoidable, but the pace of decline will slow down as flat-panel TV sets are still niche products. A 20 percent to 30 percent drop is foreseeable.
TT: You are a display veteran. How does that background help you lead a digital multimedia team?
Chen: I started my career at the display department of Teco Electronic & Machinery Co (
The background in the research and development sector of the display industry has enabled me to better control new product development in order to cater to consumers' needs. As an engineer, I pick up new technologies quicker. Because of the long-term negotiations with original equipment manufacturing clients, I have a better understanding of customer needs and am capable of bridging the gap between engineers and marketing people during new product design.
TT: What's your outlook for BenQ's digital multimedia business next year?
Chen: Due to soaring shipments, the digital multimedia business has generated around NT$2.56 billion in sales last quarter, accounting for 8 percent of the company's overall revenues.
We expect the figure to rise to about 15 percent during the fourth quarter and continue to rise to about 20 percent in 2004. The growth pace looks relatively slower, because the contribution is expected to be diluted due to strong growth in the LCD monitor and storage divisions, two major drivers of BenQ's revenue this year.
Shipment increase will come from the division's three major product lines including personal computers, flat-screen TVs and projectors. The shipment of joybooks will triple to 300,000 units in 2004 from 100,000 units this year. The flat-screen TV will rise to 500,000 units. And the projector shipment will double to 300,000 units.
TT: You have recently talked about the idea of rolling out a small laptop specially designed for female users. What's the rationale in doing that and when will the new computer hit the market?
Chen: Basically, what we had in mind is to differentiate BenQ's products from traditional computers. Our principle is letting people enjoy the convenience of high-technology products. Based on our market studies, female consumers are picky but they tend to possess the biggest purchase potential. Unfortunately, no computer maker has ever tried to develop a laptop exclusively for female consumers, which we see as an opportunity.
The key is to make the laptop as light and small as possible, allowing women to carry the product in their handbags. Thus far, we still haven't finalized the launch date, because our engineers are still working on software improvement.
As for our new desktop computer, we planned to showcase the computer during the annual IT-Month exhibition in December. It will not look like a traditional desktop, but will look more like a stereo with various color options.
TT: Wal-Mart Stores Inc is planning to offer custom-configured computers under the Avail brand through its Web site. Will such a business model work for retailers like Wal-Mart?
Chen: It'll be a heavy burden for Wal-Mart. I don't think Wal-Mart is capable of offering such services now. Best Buy Co's failed expansion into the electronics market is one of those examples. The immediate problem Wal-Mart will face is a possible conflict with other branded computer makers.
A similar example in Taiwan is the fight between Acer Inc and local electronics retailer Tsann Kuen Enterprise Co (燦坤實業) a couple of months ago. At that time, Tsann Kuen boycotted Acer computers because Acer's retail arm, E-Life Mall Co (全國電子), decided to sell Acer PCs at lower prices than Tsann Kuen's.
Secondly, Wal-Mart must have strong component support for it to offer custom-made computers. That will be a big task for Wal-Mart, which doesn't own any factories. Dell Inc is the only company that has been successful in providing such services, because it owns several huge factories around the world to assemble components shipped from its OEM partners, including Taiwan's Quanta Computer Inc (
TT: Both information technology companies and home appliance makers are making every effort they can to get into the promising business of flat-screen televisions. What's the major challenge BenQ is facing?
Chen: It's true that there are barriers for IT companies like BenQ to overcome when expanding to the consumer electronics market. Samsung Electronics Co is one of the few that has successfully expanded from the IT sector to the consumer electronics area. To achieve that goal, we need to develop a distributing network including after-sales service, and that is expected to take time for any progress to be made. Home appliance makers have long developed a distributing network which provides consumers with a convenient way to fix any problem they could have. For that convenience, consumers may still prefer buying TVs from home appliance brands such as Taitung (
So, what we are doing now is outsourcing the maintenance work to get faster services for our customers and to keep costs down at the same time. They are doing quite well, actually, although they are not doing the job for the name of BenQ. It [outsourcing maintenance jobs] will not be a long-term strategy as long as BenQ is focusing on its own-branded products. We'll continue to pursue a better solution to this problem.
TT: Is it difficult to change consumers' deeply-rooted buying habits?
Chen: People usually go and buy a TV set from the familiar home appliance brands' dealers in the neighborhood, rather than go to the bigger consumer electronics chain stores, or the so-called 3C [computers, communications and consumer electronics] stores. Targeting the potential elite buyers, we have our LCD TVs shelved in 3C chain stores in northern Taiwan.
I strongly believe those 3C chains -- with transparent price tags and more choices for products -- will replace the traditional distributing outlets managed by home appliance makers. Just look at what 7-Eleven convenience stores did to the traditional mom-and-pop stores. I believe the expansion of those 3C chains will outpace the demand for flat-screen TVs. Such replacement will occur within the next five years.
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