OLED Delays

Down in the south of France, the Cannes film festival has just finished. The annual event always attracts a lot of media attention and LG decided that it would use the event to ‘launch’ its OLED TV.

However, the announcement was something of a ‘damp squib’ (for our overseas readers, that phrase means a firework that doesn’t work!). Despite the comments by an LG executive that he has urged engineers to bring forward the production of OLED TVs by the company, it looks as though the sets will not be available until the very end of the year. I suspect that the date may even slip from that.

On the one hand, OLED could excite consumers, especially some early adoptors, to head back into retailers to think about upgrading their TVs. The demos at CES from Samsung and LG were genuinely compelling. The slimness, contrast and colour performance of the sets shown were very good and I have been saying to our clients that it is my view that the OLED sets will really stand out for buyers in retail stores – and that is something new for the flat panel TV industry. For a long time, the front of screen performance of most LCD TVs has been close and that has meant that the focus for buyers and therefore for retailers has been on features such as S3D or Smart TV or set design. However, we know that consumers care about image quality.

So that’s the good news. However, there is a real danger that if Samsung and LG talk too much about the coming OLED sets without shipping them, there is a danger that they could actually stall the upper end of the current market.

Most TV buyers are making a ‘distress purchase’ – that is to say that they are either replacing an old or broken set or getting a set for a new home. These buyers will buy the best that is available when they need to. The OLEDs, on the other hand, are likely to be sold to those ‘innovators’ in the market that are looking for ‘the latest thing’. These buyers use discretion about when they buy. There is a danger that these buyers could be dissuaded from upgrading their current sets, stalling the upper end of the market because they would like OLED, but may not be able to buy them because of price or production. We saw a similar effect in the Eastern Europe when buyers didn’t want to buy CRTs any more, but could not afford LCDs.

(For readers as old as me, the ‘Osborne effect’ is well known. In the early 1980s, Adam Osborne, a microcomputer pioneer announced a new version of his computer without being able to deliver it. The orders for his current product stalled as buyers decided to wait for the new one and his company never recovered.)

I think that the TV market is big enough and the price of the OLED TVs has been set at a high enough level that this won’t happen. There is a risk, of course, that the early buyers will be disappointed when the prices come down as volume follows, but many of the buyers in that market previously bought Sony and Apple products and both of those companies have followed a similar pricing strategy in the past. Apple buyers understand that being an early buyer means paying a premium.

Anyway, that the OLED TV business is struggling to produce volume is no surprise. As I have said in my editorials from a couple of years ago onwards, I believe that Samsung is pursuing OLEDs for TV precisely because it is a very difficult thing to do. LG has to compete and even its simpler approach is fraught with potential production traps. Large OLED making has proved difficult at every step – just ask Sanyo, Kodak and Sony and it remains a big step to go from very small displays to 55″ in one go. (For readers not familiar with large display making, the key problem is yield. If a G5.5 fab makes dozens of small displays and a couple have to be thrown away because of manufacturing defects, that’s a shame. If the same G5.5 makes only two TV panels, two defects could mean no finished panels at all and that is a disaster).

We wish Samsung and LG luck and the companies have a lot of great engineers and Samsung makes a lot of small OLEDs, so should know what it is doing. But there remains a lot of technology risk.

I suspect that the topic of making a lot of large OLEDs will be a big one at the forthcoming SID Display Week. I’m already looking forward to it!