How long can the price plunge go on?
Peter Wilson
Sun
Way back in the misty depths of time — in 2004 to be exact — if you wanted to leap into the world of big-screen televisions, you would have needed plenty of extra jingle in your jeans.
At that time, a Panasonic 42-inch plasma flat-screen would have set you back a breathtaking $7,000 (well, $6,999, if that would have made you feel any better about it). Today, thanks to technology improvements and a strong Canadian dollar, a similar Panasonic model, with a far better picture, is a mere $3,500.
And, London Drugs president Wynne Powell said in an interview, if you wait until Christmas it might just be down to $3,000, especially if our dollar stays where it is.
The same price plunge has been happening with LCD TVs.
Powell also pointed out that when digital cameras first made their way into general consciousness, in 2001, you could have bought a 2.1-megapixel Digital Elph with a two-inch LCD screen for $800.
Now Canon’s Elph, at six-megapixels and with a three-inch screen and plenty of other extra features, is $500.
Even more startling, a four-megapixel Olympus in 2001 was $1,300. Currently, at six-megapixels, the equivalent is $300. Now, if you were to pay anywhere near $1,300, it would be for an Olympus digital SLR with two extra lenses.
Why?
Two reasons, said Powell. The first is that as technology improves, prices go down, generally, and the features go up.
“Number two, we’re benefiting from the increased value of the Canadian dollar,” said Powell. “So these factors are going hand-in-hand.”
And the evidence of this is across the board. All-in-one printers — with the capability of scanning, copying and faxing — were in the $200 to $300 range in 2002. Now you can get solid performers for under $100.
And Apple’s five-gigabyte iPod sold for $479 in 2002, with the 10-gigabyte model at $629 and the 20-gigabyte at $799. Head to the store today and you can pick up a 30-gigabyte iPod, with video capability, for $350, and the 60-gigabyte model at $460, while the four-gigabyte nano is $300.
In the PDA space, a Palm Tungsten was $800 in 2002, and now sells for about $400.
In the computer field, according to Statistics Canada, the average prices paid in 2006 by consumers for laptops are now nearly a quarter of what they were in 2001. Basic models these days are in the $800 range.
On the surface of it, the main lesson of these dropping prices seems to be: Leap in early and just a couple of years later you have a doorstop or a paperweight. But Powell disagrees. He believes that there’s a tipping point where the improvements in technology have reduced the price to a point where any further drops are going to be much smaller.
And this, he says, is where the market is with high-definition TV sets. A $500 drop in the next six months may look big, but not compared with the $3,000 plunge in the last two years.
“Yes, you’ll see the prices fall in the future, but it’s not going to be the same kind of erosion because there’s not that much left to erode.”
So this could just be the year that expectation meets pricing for television, he believes.
“There’s another thing that’s happening as well: High-definition satellite and cable availability have dramatically fuelled the customers’ desire for these products,” said Powell.
And, he added, new high-definition DVD players — in two formats, HD-TV and Blu-ray — are arriving. That means that the viewing experience of those who buy and rent movies will be even better than before, although they may pay anything from $700 or more for them (and these prices are also sure to drop).
“When these come out, we think that’s even going to fuel up more,” said Powell, who points to industry projections of an 18-per-cent increase in sales this year and 22 per cent in 2007.
Even with competing formats available, he still sees this as the time when people decide to grab a new television set.
“It’s a constantly dynamic market, so what I advise people when they’re thinking about it is that if they’re comfortable with the price point today and if they like the product they see, they should buy it and enjoy it.
“Something better will always come along, but you’ll never have it, because you’ll always be waiting.”
© The Vancouver Sun 2006
