Why Ultra HD 4K TV Is Important to the Specialty Channel
PRO Group’s Workman gives his take on pricing, margin, positioningMarch 8, 2013 By Nancy Klosek
As part of Dealerscope’s annual buying group roundtable, we asked executives to share 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. Here’s what Dave Workman, executive director and COO of the PRO Group and executive vice president of ProSource, had to say about the emerging technology.
"A category like this is important because the type of dealer we represent does its best work acquiring a large share of an emerging technology. So while Ultra HD is expected to be a very small part of the TV business overall this year – depending on how manufacturers position it, and I have reason to be very optimistic about that based upon some preliminary price-point estimates – it could offer a considerable amount of upside in the television category for 2013.
"Margins are always going to be better than what we would see as normal flat-panel pricing. Even today, in the step-up portion of the market, you’re lucky to get maybe 30 or 31 points out of the very best product currently available. I would expect Ultra HD margins would be a small premium to that, but not 40 points. I just think, because of the cost of manufacturing, even though it’s a premium price point that we are not going to see the types of margins we saw when the original high-definition products were introduced.
"Will margins hold up as long as HD ones did? I think the fact that the industry has adopted all of these UPP policies is probably the only reason for us to believe that the margins will hold upbetter with this. Without UPP, I think we would have seen new technology introduced and quickly become the same margin as the commodities out there.Without some guidance from the vendor community in their policies, the prospect of this new technology would have become very quickly what we are currentlyfighting against.
"Now, I will say that’s the positive. The negative that I see, and the concern I have right now, is that, with the influence of the Chinese manufacturers, I think the market is going to see, at inception with Ultra HD, some very low-priced commodity-type product. And it’s always dangerous when you have products intended for mass-market appeal when the product is not yet mass market, because I think it will confuse the consumer with very low entry-level pricing where the market hasn’t yet developed an appetite for the product.