As part of Dealerscope’s annual buying group roundtable, group directors shared their views on the potential profits and overall importance Ultra HD 4K TV will have on the independent CE retailer channel. Follow Dealerscope.com for more outtakes from the interviews.
DEALERSCOPE: A variety of Ultra HD screen sizes and price-points were announced at CES. When will UHD eventually replace regular HD as the main resolution on TVs? What will the average profit be in 2014?
Dave Workman, PRO Group’s executive director/COO and executive vice president of ProSource: I’d say probably Ultra HD wouldn’t supplant normal HD for five or six or 10 years. I don’t know what that number is but it’s a long way out.
Bob Hana, managing director of HTSA: Most new technologies replace the prior solution once the price-to-value equation nears the approximate cost of the prior technology. We expect Ultra HD to follow a similar adoption curve to HD. Of course, key drivers will affect this and the main one is content. When the convergence of available content for UHD intersects the price/value variable, replacement will occur. In other words, when there is enough content available so consumers can watch most of what they want in UHD, and the cost of the new display is about 10 to 15 percent more than the cost of a HD display, the perceived value of the UHD purchase will be much higher, and it will become the replacement.
Hickman: In terms of worldwide projections, I think it’s going to be maybe late 2015 before it displaces regular HD. If there are seven million units sold in 2015, I’d consider that highly mainstream. The total TV business is about 30 million units, so if Ultra HD is seven million that’s a big piece of it. It’s too soon to project average profit. It will have to do with how it’s managed by channel and who has it, because in our business it only takes one person to start the dominoes falling. It depends on how much R&D these guys have to recoup. There are a lot of factors. I expect it will be much more profitable than anything we have today. It’s in everybody’s best interest, if you look at what’s happening with the P&Ls of electronics manufacturers, to try to hang onto this as a profit sector for as long as we can.
