With end users across the globe pinching pennies or their equivalent currencies, it is hard to find a business sector that has not been impacted by the downturn. For LCD monitor vendors in the general desktop markets, the global recession is particularly ill timed, coinciding as it has with the rapid shift in user preferences from desktop to notebook computers.
Not surprisingly, a number of these vendors are looking to specialty or niche markets that have higher price points in an effort to offset the revenue hardships of the general markets. Accounting for 3.5 million unit sales in 2008, specialty monitor opportunities—including medical, film, graphics, CAD/CAM/CAE, and air-traffi c control— represent only 2.1 percent of the monitor unit opportunity. Their revenue share, in contrast, was 11.2 percent and the combination of performance requirements and unit growth is likely to boost that revenue share in the coming years.
However, a careful look beyond the siren song of the seductively higher average price points shows that the niche markets have not been insulated from the global downturn and specialty participants are facing their own signifi cant challenges in 2009. Credit availability, or the lack thereof, is playing a key role in specialty monitor purchases at present.
The diagnostic Picture Archive Communications Systems (PACS) market, one of the highest revenue opportunities in the medical display market, has been hit particularly hard. Market demand in the fourth quarter of 2008 and the first quarter of 2009 fell far short of vendor expectations.
While the medical market has experienced some of the most visible impacts, the business cutbacks have inhibited demand for the high-performance color products for portions of the graphics, CAD/CAM/CAE and film markets as well. Display investment costs in these markets can be high, whether purchasing a 30-inch, 4-megapixel product for film editing or a 20-inch grayscale monitor for PACS diagnostics. Finding available cash or credit to fund the purchases is difficult at present for institutions and individual users.
Pricing in these markets has held up better than in the general markets but the slow demand has forced changes for vendors and channel participants alike, with cuts in staff, travel and trade show participation. Despite the current challenges, the long-term outlook for the specialty monitor markets remains rosy, with the 2008/2009 slowdown feeding a growing number of postponed purchases that will fuel strong growth in 2010 and 2011. In contrast to the slowdown in actual sales, most of the vendors and channel participants report strong pipeline activity, much of it representing need-based projects that have been temporarily delayed. The difficulty for participants is in correctly anticipating when customers will pull the trigger on those purchases, which is largely contingent upon returning health in the credit markets and an upturn in the economy.
Stimulus funds, particularly in the United States and China, are poised to benefit some of the specialty markets in 2009 and beyond. Medical, air-traffic control, and CAD/CAM/CAE are poised to reap the largest benefits from these funds in the United States, beneficiaries of dollars targeting digital health records and transportation. Most of the health investment is likely to go to software, infrastructure, support services, and basic hardware, but some of it likely will trickle through to high-performance displays in the PACS environment.
The Chinese film industry is flourishing, benefitting from a huge infusion of public and private capital in recent months, offsetting slowdowns in this market in other regions. The Chinese government is investing vast sums in business and infrastructure, with significant investment targeted at air-traffic control systems. Germany, Japan and other governments around the globe are also pumping money into national industries. In many of these regions, much of that funding has yet to trickle through with most of the impact likely to happen after the markets turn toward recovery.
Just as fortunes turned in the second half of 2008 with a sharp slowdown in demand, vendors are likely to find an equally sharp turn in the second half of 2009 as the economy begins to recover and assorted stimulus funds trickle through. That is likely to bring its own set of difficulties as panel supply is expected to tighten in the third quarter. That, however, is a familiar problem and a price participants are willing to pay for a return to healthy market demand.
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