Are TV Prices Rising or Falling in 2011?

Could the Future Hold Inflation?

By Robert Wiley
08/20/2011
Updated April 2012

Conventional wisdom is usually right – until its completely wrong. House prices from 2003 - 2006 for example. Technology stocks in 1999 and early 2000 for example. Ask anyone if TV prices are going up or down and they will almost always reply with, "Down of course, they are dropping."

You might be surprised to know that this mass sentiment is no longer true.

For example, plasma TV pricing stabilized in 2011 - especially in the 50" and lower size ranges. For 2012 we see the same thing occurring. The Samsung PN59D8000 top of the line plasma cost $2249 at Best Buy in summer of 2011. The replacement for this TV - the PN59E8000 - is now $2597 in April of 2012. Sure there are a few extra features, but that's an increase of $350. A Panasonic TC-P50ST30 cost $917 at Best Buy in November 2011. Now, the replacement TV (TC-P50ST50) costs $1257. Call me crazy, but that looks like a definite price increase.

We see prices in LED falling slightly in 2012. However, in looking at a few examples we're not finding much of a decrease. The Sharp LC-60LE831U (60" LED) could be had a Best buy in October of 2011 for $1600. The replacement model LC-60LE847U is currently $2199. Again, yes there are a few new features - but not a lot. The Samsung UN55D6000 series LED 55" was $1097 from Best Buy in November of 2011. Current pricing on the UN55EH6000 replacement is $1397. Again in these two examples prices are increasing.

A Samsung PN50B650 plasma TV purchased in November of 2009 cost $1140 from Sears. That was one of the higher end lines of plasma at that time. Though a direct replacement is not available a good comparable set for that TV would be the Samsung PN51D6500. This newer plasma does have 3D capability but an otherwise similar picture quality level and it costs - $1300 from authorized Internet retailers like Sears. Wow, that's actually a $160 increase in price over a nearly 2 year period! A Samsung PN50B530 plasma was $897 in December of 2009. The comparable PN51D550 series plasma is $999 today.

Recent information from data collection sources backs up this information. Prices on LCD Televisions (including LED backlit LCD TVs) actually increased for 3 months in a row from April – June of 2011. While the increases were not significant and do somewhat reflect new 3D TVs coming onto the market – they are present.

Pundits claim that the increases are the result of new higher priced active shutter 3D technology but there has always been significant technological advancement in TVs since flat panel TVs entered the market in 2000. Despite significant advancements every single year, prices routinely dropped 20 to 30% year over year in comparable sized plasma and LCD TVs. That is just no longer true.

Some LED TVs are still coming down in price due to the stiff competition they face with plasma technology, but as we see above some are not. In mature sizes such as 32" LCD TVs and 50" Plasma TVs is a real firming in price. Even in the 55" range we see prices stabilizing.

Growth Minded Blobheads and Money Printers

But why? Why would prices suddenly be leveling or even increasing. I can offer several explanations. For one, the industry manufacturers have been stuck on high growth ambitions for years seeking 20% year over year growth in units. Growth numbers are nearly always stated in units rather than dollars. Once it occurs to these TV market sages that a maturing market may fetch even or higher prices for a few more technological advancements, they may raise prices.

Money printing by the US Federal Reserve and other central banks around the world is also an issue. The Fed states outright that it seeks inflation. This printing of money will result in higher labor costs abroad in Asia (where parts are manufactured) and Mexico (where TVs are assembled due to NAFTA). The materials and parts costs that go into producing TVs will also rise, just as industrial metals have been rising.

Slow demand might occasionally cause prices to decrease temporarily. But when inflation hits, watch out. Demand could increase due to inflation. Prices could rise 10% a year. This is what the Fed is hoping anyway....it's happened in other places in the world that debase their currency. Why cant it happen here?