display space in 2015 - 20100203
TRANSCRIPT
© Copyright 2010 by BizWitz, LLC ¡ Confidential ¡ all rights reserved ¡
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Display Space 2015:Five Scenarios You Should Consider
Presented at the 9th Annual Flexible Electronics and Displays Conference— by David Barnes, BizWitz LLC
Disclosure—
n Neither BizWitz nor myself invest in technology companies or recommend their securities.
n BizWitz and its analysts have provided and seek to provide confidential assessments of business value, technology value, strategic threats and opportunities.n Project valuation and due diligencen Cross-border ventures or acquisitionsn Public offerings (IPO) or syndicated loansn Debt restructure or company reorganizationn Competitive assessment for regulators (government agencies)
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[email protected] http://www.bizwItz.com
Scenarios—Stories we tell ourselves about the futuren Companies seeking capital may tell one kind of story.n Companies providing capital may prefer a different story.n “If you don’t test your strategy, your competitor will.”n Five stories about the future you should consider…
n LCD Legacy — display prices in 2015 will be 71% lessn Blurry Edges — market segments will convergen No Goods — hardware value will depend on servicesn Bottom Down — growth will be greatest at the bottomn Brand News — OEM/ODM will become brands in your market
n “So, what’s my budget?”
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LCD Legacy—New AMLCD makers use old technology
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Transfer of AMLCD know-how to China perpetuates the historical rate of price development. Areal price declines of 19% a year continue. Per unit prices remain misleading .By 2015, a typical panel may sell for 29% of what it did in 2009.What does that imply for your cost target? How might that affect your stakeholders?
Large AMLCD Price Trends
Source: BizWitz analysis of DisplaySearch data
$0
$100
$200
$300
$400
2001 2002 2003 2004 2005 2006 2007 2008 2009
Price/unit –8%Price/ft² –19%
Blurry Edges—Market segments converge; niches disappear
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Distinct market segments we see today blur together.Convergence continues. Single purpose products such as eBooks fade away much like PDA did.What if smart phone chips make all devices alike?What if PC tablets and netbooks morph into large hand sets?How will your products be differentiated?
Millions of Square Meters of Handheld Display
Source: BizWitz analysis of DisplaySearch data
0.0
0.5
1.0
1.5
2.0
2.5
2001 2002 2003 2004 2005 2006 2007 2008 2009
PDA Area Mobile Phone Area
No Goods—Great hardware isn’t good enough anymore
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Services affect consumer experience as much as electronics do, already. Cloud computing will make hardware goods differentiation more difficult, which will accelerate the shift from goods to commodities.What services will create value for your goods?Who will subsidize your hardware with services or with subscription sales?
Best Buy Sales Contributions
Source: BizWitz analysis BBY disclosures for quarters ending in November
41%
34%
6% 8%
0%
10%
20%
30%
40%
50%
Q3'FY08 Q3'FY10
Consumer Electronics Services
iPhone LCD Cost: 9% Subsidized, 5% UnlockediPad LCD Cost: 8% Unlocked
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IC$76
LCD$25
Electro-mech$20
Camera$11
ProCap$11
Battery$5
Other$26
IC$66
LCD$61
Electro-mech$25
Camera$14
ProCap$39
Battery$15
Other$66
Source: BizWiz analysis, iSupply via the Economist Source: BizWiz analysis, BroadPoint AmTech via ComputerWorld
Smartphone BOM: $173 iPad BOM: $287
Bottom Down—Poor countries provide poor profit potential
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Races for market share will take brands to poor markets and force cost reductions. More activities will be outsourced to ODM/EMS with global reach. The importance of trade barriers will decline.Who will be your direct customer?How will demand in rich countries support your product plan?
Millions of LCD TV Sets
BizWitz analysis
0%
10%
20%
30%
40%
0
50
100
150
200
2007 2008 2009 2010e
Global AP x-Japan AP Share
Brand News—Offshore assemblers to onshore competitors
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Today’s supplier will become tomorrow’s competitor. Regional brands will become global brands. If you can’t beat’em, join’em: joint ventures might reduce risk of IP loss.How will this affect your supply chain?Where will discounters change the ground rules?What will happen to your value proposition?
From Assemblers to Competitors
BizWitz analysis
Closing Thoughts–“So, what’s my budget?”n $50B more may be invested in AMLCD by 2015.
n Aim at where the cost-price will be, not at where it was.n Enable distinct, recognizable service-based value propositions .
n R2R processing implies demand for lots of surface area.n Much of product cost is unit driven, however.n Sheet-fed plastic may be a viable alternative.
n Less dependency, more flexibilityn More cost effective in moderate volumes
n Compare past stories to histories and test your assumptions.
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