May 13, 2003

Not Moore's Law

Not Moore's Law, but still very impressive:

WSJ.com - Looking Good: ...point where you don't need a six-digit income to afford one anymore. The average price for a 15-inch flat screen last year fell to $297 from $700 in 2001.

"It's a momentous transition that's going on in the monitor marketplace at the moment," says Jennifer Gallo, an analyst with market-research firm International Data Corp. "Not only are consumers buying more flat-panel screens, but we're seeing price wars."...

Driving the price decline for flat screens is a glut in liquid-crystal display panels, or LCDs. Flat-panel makers in Asia, where production is concentrated, have invested billions in new LCD factories in recent years. A typical LCD factory, or "fab," costs about $1 billion to build, which the manufacturer tries to recoup quickly by keeping prices high....

Flat-panel sales nearly doubled in 2002 to 29.1 million units. In Japan last year, LCDs accounted for 75% of the 6.8 million new monitors sold, a figure Mr. Semenza predicts will jump to 85% this year. He expects Europe to hit the 50% mark this year, up from 32%, or 10.6 million units, in 2002. In North America, the adoption rate hasn't been as rapid and is expected to linger in the lower 40% range this year. Last year, flat panels accounted for about 28% of the 40.1 million monitors sold in North America...

Posted by DeLong at May 13, 2003 03:50 PM | TrackBack

Comments

No, this IS Moore's law, at least as I've been told. The new displays are controlled by large numbers of transistors that determines price and resolution.

Posted by: Mats on May 13, 2003 11:44 PM

The monitor was the last vacuum tube. It was a relatively mature technology, since TVs had been around for decades before the PC. So monitor prices did not drop as steeply as the prices of the rest of the components, though they did drop.

Now that the vacuum tube count is finally zero, maybe we'll see some real action. I predict the Class of 2010 will decorate their dorm walls with full-motion interactive posters.

Posted by: Bob Hawkins on May 14, 2003 07:59 AM

Mats,

Moore's law was that the number of transistors on an IC would double every 12-months or so. My insider understanding however is that Intel R&D actually doubled it at a much faster rate than this but Intel delayed manufacturing the faster processors to maximize the cash flow from each iteration.

On the price deflation, thank god for Asia and their complete disregard for margins or ROI. I've never seen a business textbook from Asia but does anyone know why they are teaching managers there to expand capex spending on money losing operations?

Posted by: Brian in NYC on May 14, 2003 11:12 AM

Brian, thats my point, flatscreens nowadays are essentially a pack of transistors so they should follow More's law. Sad to say goodbye to good old vaccum tube, maybe there will be some hi-fi analougue amplifiers left for them to work in?

Posted by: Mats on May 14, 2003 11:50 AM

"On the price deflation, thank god for Asia and their complete disregard for margins or ROI. I've never seen a business textbook from Asia but does anyone know why they are teaching managers there to expand capex spending on money losing operations?"

An interesting book related to this question, is "Head to Head," by Lester Thurow.

It's been quite a while since I read it (at least 2 years), but my recollection is that his basic conclusion was that the Japanese method (ignore profits, go for capacity) was superior to the U.S. method (forget everything *but* profits) and the European method (collective decisions by labor and management).

http://www.twbookmark.com/books/1/0446394971/

That book was written circa the middle 1990s, as I recall. I guess chasing market share, while ignoring profits, really isn't such a great way to do business, after all (at least, judging from Nikkei performance over the last decade).

P.S. Oh, I see I never answered your question. As I recall, the theory is that, after a company has built up market share to a dominant position, it can finally jack up prices, to make a profit.

P.P.S. Paul Krugman wrote an interesting book, related to Thurow's book, called "Pop Internationalism." Dr. Krugman is actually pretty disparaging of Dr. Thurow.
http://www.amazon.co.uk/exec/obidos/ASIN/0262611333/ref%3Dpd%5Fsim%5Fb%5Fdp/202-6613742-7429460

Posted by: Mark Bahner on May 14, 2003 02:32 PM
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