Competition in Plasma TV market gets tighter

Rudijanto Contributor Jakarta

Technologically sophisticated Plasma TVs are exclusive, expensive and prestigious products aimed at the few who are on top of the social pyramid.

Still expensive even by European and North American standards, Plasma TV has slowly penetrated Indonesia's corporate and household market sectors.

Compared with the bulky conventional TV sets, Plasma TVs have a noticeably far thinner monitor. As thin as 7.8 centimeters, Plasma TV monitors can simply be attached to the wall or even the ceiling. This revolution in TV monitor technology has led to changes in how rooms are designed.

Aside from households, Plasma TVs are created to fit in modern meeting rooms, convention halls and even large public places such as shopping malls and airports. The uniquely thin monitors of these TVs contrast with the broad size of the monitors, which range in size between 40 inches and 70 inches.

Another sophisticated feature is that two, four or even nine monitors can be attached together to form a broader monitor for large audiences, such as those found in stadiums or open spaces.

No wonder that Plasma TV manufacturers are looking at corporations as potential customers. In fact, LG Electronics Indonesia (LGEI) said 60 percent of its Plasma TV customers were from the corporate sector, with the remaining 40 percent private households.

Seemingly, the corporate sector is the most receptive market for Plasma TVs in Indonesia, at least for the moment. This is probably so because, aside from having the funds to purchase the TVs, corporations are more technologically well-informed and tend to procure the latest products.

Airports, advertising companies and stock markets are among those that are more likely to grab up this new audiovisual technology. Hotels also are potential customers, but they have not been as quick to buy Plasma TVs.

"Some star-rated hotels have installed Plasma TVs in their presidential suites and this certainly boosts the image of the hotel," says Sung Khiun, LGEI's national sales and marketing manager.

Another Plasma TV market player, PT Philips Electronics Indonesia, said offices and hotels still made up a share of its Plasma TV customers, though individuals accounted for an equal share. Without the corporate sector, the Plasma TV market would certainly be much smaller since not many households can afford to buy this product.

"Plasma TVs are still distributed evenly among offices, hotels and individual households. But now we are increasing our effort to target individuals by presenting Plasma TV for home entertainment," says Didi Rahardja, Philips' product marketing manager.

With a price range of between US$6,000, or about Rp 51 million, and US$9,500, depending on the size of the monitor, Plasma TVs have their own special market segment.

The Plasma TV market accounts for only about 1 percent of the total TV market, which is estimated to reach 3 million units a year.

"Among 50 million households in Indonesia, there is a sufficient number of very rich ones that still remain untapped," says Sung.

Rahardja said total Plasma TV sales were projected to reach 1,000 units for all brands this year in Indonesia. As of this year's second quarter, he estimates that the market had absorbed about 600 Plasma TV units.

Dwarfed as it is by the size of the conventional TV market, the tiny Plasma TV market segment is sought after by major international producers such as LG, Toshiba, Philips, Pioneer, Fujitsu, Samsung, Panasonic and Sony. Other players include Chinese-made Plasma TVs allegedly imported by unofficial representatives.

"Who says that Chinese Plasma TVs are not in the Indonesian market? I have found unknown brands from China in the market and they are sold at far cheaper prices," says Timotius Andy, supervisor of TV product marketing at Samsung Electronics.

With the market full of major players, and some unknown Chinese ones, the competition in this niche market has become very tough. The stronger, more well-known brands will certainly find themselves in a strong position in the competition.

European-based producers such as Philips feel secure in positioning their products in the higher levels. That is why the company is confident quoting relatively higher prices for its products. Japanese producers have the same advantage in positioning their products. However, fast growing Korean producers are no less confident.

"LG Plasma TVs are not sold for lower prices than other Plasma TVs because we know that our Plasma TV products have features that are technologically more advanced than others. Thus, we sell our products at reasonable prices," says Sung.

Another Korean producer of Plasma TVs also denied that Korean manufacturers were using a lower pricing strategy to win the competition.

"It is not true that Samsung Plasma TVs are sold at the lowest price. I can mention another product that is sold for less than ours," says Andy of Samsung.

Competition is indeed tough, but most of the players believe that price does not constitute the main factor in influencing would-be buyers of Plasma TVs.

"The market segment for Plasma TVs is mostly those in the upper segment of the market, therefore I don't think that price is the determining factor for buyers. They are more likely to seek a good brand than a lower price," says Andy.

The Plasma TV market is indeed very challenging. Though the market is small now, Adijaya of LGEI said it was expected to grow by 10 percent next year and that the prices of Plasma TVs were expected to drop by over 50 percent over the next two years.

Sooner or later, Plasma TVs will lose their exclusivity and become more affordable. This seems to be an irreversible trend in the TV market. What Plasma TV players should do now is simply to educate the market.