The LED display market is huge and it’s growing. But a glut of new manufacturers, increasing demands for green solutions and cost concerns are forcing manufacturers to work hard for their share. Anna Mitchell explores the market with some of its major players.
In 2014 the LED display market will be worth $2.1 billion (€1.8 billion), according to market research firm, iSuppli. “Outdoor digital signage and billboard applications are driving the growth,” explains Sanju Khatri, principal analyst at the company.
However, last year was a grim one for the world economy, and Khatri notes the digital signage market faced huge challenges. “Out-of-home advertising operators (Clear Channel, JC Decaux, CBS Outdoor) faced huge losses in 2009. Advertising spending by brands decreased and digital billboards require a huge capital investment,” she added.
Furthermore, the events market, particularly on the corporate side, took a hit. We’ve heard from various rental houses that in order to win contracts over the last year or so they’ve been competing largely on a cost basis.
But, again referring to iSuppli research, the LED display market was still worth $971 billion in 2009 and is expected to top the $1 billion dollar mark by the end of the year. That’s a huge increase in a prediction, set in 1995, that said it would grow to $755m in 2010.
It’s clearly a massive market but with integrators constantly under pressure to offer their clients cost-effective solutions, manufacturers who want a slice of it will have to provide appropriate price points.
“Cost is an issue,” agrees Mitsubishi’s AC ter Meulen, Netherlands Branch president and deputy product marketing director - EMEA Display Systems group. “But it’s important to understand that the real cost of an LED screen is what the screen is going to cost you over a lifetime – not the price you pay at the factory gate. Customers understand that LED screens are a major investment and to get a good return on that investment you need a system that will operate reliably for a long period of time.
“So there is a clear connection between quality and achieving a low cost of ownership. For this reason, Mitsubishi Electric has continued to focus on developing competitively priced, top quality systems designed for long lifetimes – a 25 year operating life is not unusual for our screens.”
Helen Chen, chief marketing officer of Shenzhen Retop, a Chinese LED display manufacturer, agrees: “LED display is a system, not like a TV set. LED display needs constant maintenance and service after being installed. Also, there’s much value involved in the designing, installation, service and responsibility. Just buying on cost will involve lots of potential risk after delivery.”
However, she adds that Retop focuses on the optimised total cost for the customer, which she explains: “includes manufacturing cost, designing, consulting and technical service, logistic, less worries and maintenance costs after delivery”.
“We have an ongoing process for cost evaluation / minimisation that we continually revisit to ensure we remain price competitive,” explains Jason Skillicorn, business development director of LED display panel provider, Lighthouse. “This coupled with our economies of scale and strong relationships with key suppliers, ensures we are getting the best components at the best prices, which enables us to provide high quality products at competitive prices.”
For Barco the key message right now is a “tiered product approach”. Carl Rijsbrack, director of product and solutions at the Belgian visualisation specialist, says: “You have to offer the innovative, high-quality, high-impacting technology; so the highest contrast, the best resolution, the best performance. But, at the same time offer the next best alternative, which is tailored towards cost consciousness.”
Barco is able to offer the tiered product selection following its acquisition of Element Labs earlier this year. The company has now integrated Element Labs products into its own LED display offerings, thereby creating what Rijsbrack describes as “Barco in conjunction with Barco Elements”. He continues: “I think the biggest lesson of this recession is that if you want to have your customers buying or staying loyal to you as a supplier you have to give them an option.”
Keeping customers loyal is going to become more and more key to maintaining market share in the LED display arena. ISuppli’s Khatri noted earlier that the market is big and its growing but she also points out that the market is constantly seeing new entrants, adding: “Chinese players are increasing their share in the LED video market”.
It’s hard to keep track of all the new entrants into the market and, if trade show exhibitors are anything to go by, Khatri’s comment holds true: the bulk of the newcomers are Chinese start-ups. But, in contrast, there’s one very established player who’s entering the market and is set to release products this month. NEC first showed its six millimetre and 15 millimetre LED display solutions at Amsterdam’s ISE show in February.
Jonathan Cooper of NEC Display Solutions said the company had decided to enter the LED display market at this stage largely to complete a gap in its product portfolio. “We analysed our product line-up and realised there was a gap where LED should go. This is largely driven by the digital signage market and how we serve this sector. Previously when we were working on a large project, such as a shopping centre like Westfield in London, we could provide all possible display needs apart from the LED displays. With the new products we fill that gap.”
NEC is a premium brand and presumably its LED displays will carry the premium price tag to match. While the established players are constantly fighting for their market share against new, low-cost manufacturers why would an integrator invest in an NEC product?
“We will be able to compete from the reputation we’ve built up via our other display technologies,” explains Cooper. “All of these aspects of the brand are already known. We can compete on our strong after-sales service, use our customer’s trust in our brand, offer additional services. We’ll really sell off the back of our reputation. Finally, we’ve got a great dealer channel, which we will use to sell through.”
Clemmens von Braunmühl, NEC’s product manager for displays in EMEA, says 2011 will see NEC install its first LED products into the retail market. Like Cooper, he says the whole idea behind developing an LED product was to allow NEC to become a “one stop shop” for displays. And, it’s not just for retail applications. In the corporate sphere there are plenty of applications where the light is just too bright to rely on LCD displays. Furthermore architects will often specify LED for daylight applications.
In keeping with its tradition of power efficiency NEC has worked to keep the power consumption of its new products as low as possible, claiming it has tested the products and found them to consume less than products form its main rivals.
Skillicorn also believes his company’s offering is enough to keep off lower-priced rivals. “As an established Tier 1 manufacturer, [Lighthouse is] always alert to the changing market dynamics. As with any industry, there is a segment that will be always served by the lowest cost provider, however, Lighthouse is comfortable in its model and expects growth to continue. We offer reliable products, customisation and have a guaranteed and strong after-sales support. Furthermore, we compete in other elements like product performance.”
Ter Meulen argues that it is all about the application. “It is important to differentiate between the different applications for LED,” he says. “Clearly it is going to be difficult for the big producers to compete at the lower end of the market; such as shop signage, traffic signs etc. But for the more prestigious projects, a proven track record is vital. And that’s somewhere the new entrants will continue to struggle. For an example, it is interesting to note that the main LED screens used at the Beijing Olympics were actually Japanese and not domestically produced.
“There is a market for low-cost LED screens and there are plenty of products available to fulfil this need. But it is unfortunately true in life, you get what you pay for. The difference in price between a low-cost LED screen from a small producer and one from a major manufacturer like Mitsubishi is accounted for by the quality of its design, construction and the components used. For installations like stadiums, where the requirement is for a long operational life, this quality becomes and overriding concern. There is also the issue of long-term product support. You might ask yourself how many of these smaller producers will still be here in ten years time.
“I think we have to accept that we will always be undercut by someone. But that shouldn’t worry us because like the other major manufacturers, we are not in a race to the bottom. It’s far more important to stay competitive within our own market and to that end we are hoping to announce some significant additions to our Diamond Vision range later this year.”
Barco’s Rijsbrack thinks it’s natural to be concerned about new manufacturers entering the market. “I think if somebody says he’s not concerned we have to buy him a pair of glasses to view the world. I think the moment people are competing into a market every business manager should be concerned. The question is how do you handle that concern and I believe from the Barco perspective the reaction clearly was expressed in the Barco Elements strategy.
“We as a company not only provide an innovative high quality product but also a choice based on price performance. It’s still a Barco product, it still has Barco branding in terms of quality serviceability, all these features that are key. Our motto is to keep on innovating and to push the bar and keep on bringing that innovative factor to the market. Everybody will increase and will become better and better. This is human nature, we will learn from each other.”
But the established players will have to work very hard to stay ahead of the game or in Rijsbrack’s words, “continue to raise the bar”. Talking to integrators and rental houses it’s apparent that there’s still a great deal of reluctance to use products from newer, low-cost manufacturers but the established players may not be able to rely on that forever.
Chen from Shenzehn Retop points out that her company is well established, having operated in the world market for 13 years, but adds that some Chinese manufacturers do have some “catching up to do”. She pinpoints: “quality control, integrated sales and marketing, global and maintenance networks” as areas they need to address to seriously enter the market.
Furthermore, energy efficiency is set to take centre stage again after taking a back seat during the recession and, with customers clamouring for “green” solutions, integrators need manufacturers to prove their credentials.
“Energy efficiency is something where companies such as Barco have to work and we believe that this aspect is key,” agrees Rijsbrack. “This is a constant burden during product development right now. It’s in power, it’s in software, it’s in mechanics, it’s in lightweight materials – all these things makes it more energy efficient. Energy efficiency comes into things like compactness because you need less truck space, you need less power, you need less energy to rig it. Power consumption is part of our specifications and in our communications to customers. It’s more and more asked for and it’s brought in as one of the initial discussions now.”
Again the issue seems to be taken seriously by Mitsubishi. “There are two parts to this story,” explains ter Meulen. “Firstly, the energy efficiency of the screen itself is of course important to operators. Again, good design is important here. Mitsubishi screens are designed to be efficient in operation and we also include features such as intelligent fan control and automatic brightness sensors to help make sure the screen is always running at peak efficiency.”
For Lighthouse efficiency is largely about the components. “Lighthouse has been a major player in the full colour video screen market for over ten years,” says Skillicorn. “This has enabled us to get close to key component suppliers. The ongoing working relationships we have established will continue to allow us to utilise the latest technologies and get the highest efficiency from our LEDs.”
And for Shenzehn Retop energy efficiency takes centre stage. Chen: “Retop is now promoting our ‘Green’ display product line, which will save energy up to 30 per cent compared with the regular LED display. We’re doing this through three ways: first, using ultra-brightness Retop LED lamp; secondly, re-design the panel to make sure there will be no power waste due to the different power input between blue, green and red; thirdly using the power supply which is more efficient.”
Manufacturers are rising to and meeting the challenges imposed by the LED market, which is still largely dominated by the established companies. However, the really interesting trend to watch will be how the low-cost start-ups mature and if the old boys can retain their hold. One UK integrator commented that they would buy lower cost kit if one of the large rental houses invested and proved the product reliability. With a high cost product like LED displays then robustness and reliability are key, which is currently playing into the hands of the established players. But, the new guys will certainly keep them on their toes.