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Will OLED Revitalize the TV Industry?

The rumors this week that Sony and Panasonic were preparing to cooperate on OLED raise the question as to whether OLED is the solution to the woes of the industry (both panel and set). Some of the messaging from industry seems to indicate a mindset that there is a technical fix for profitability. One problem with this thinking is that too many companies may pursue the OLED TV market. If they play by the same rules as the LCD TV business then the results are likely to be the same with the new technology. But the other concern is that industry is not taking consumer behavior into account.

While OLED has the potential to offer images with high contrast and superb colors in a very thin package, much of this can already be done with LCD technology, combined with LED backlights. LED backlights offer pure primary colors, and in direct configurations, can have switchable zones offering high dynamic range – but high-performance direct backlights have failed in the market. While OLED clearly can be thinner than LCD, it is not clear whether many would pay extra for a set that was 5 mm thick instead of 20 mm – and some might even be worried about robustness in a home with children.

The painful lesson from 3D was that content and the consuming experience matter. Consumers’ purchasing behavior is driven by factors other than raw image quality.

Audio provides a worthwhile lesson. CD permitted high-quality sound at low cost compared to the intricate manufacturing and knowledge necessary for analog audio. In fact it was so good that further attempts to offer improved audio failed. While SACD gained a niche foothold, who remembers MD, DVD-Audio, XRCD, DAT, DCC, HDCD, ECD? It took 20 years to bring something new to audio, when it became possible to put an entire music library in your pocket.

Over the past few decades, the TV has often come close to becoming a monitor, and with the proliferation of sources from dedicated boxes as well as the Internet, the threat is returning rapidly. Instead of trying to climb the performance slope, the industry would be better advised to think deeply about how consumers are watching long-form video at home. This is a task for which the TV will remain the best screen. Viewing habits are shifting and consumers have rapidly-expanding options to source content beyond the antenna or Pay-TV box. There is a huge opportunity to assist with navigation and recommendation as the choices become more and more complex and will require inter-operation with the handheld devices in the home. The industry need not take billion dollar technology bets to provide better products.

  • Anonymous

    Thinness isn’t going to drive sales.   When a TV is on the wall it doesn’t really matter if it’s 5mm or 20mm as you state. 

    Consumers are probably even more hesitant to jump into the next fad after the attempted 3D cash grab. 

    People are buying TV based on price and size.  Quality matters but most know that once they are in the home and there’s not other TV to compare to the differences aren’t a big deal. 

    Smart TV haven’t done anything that a $50 -$100 small box cannot do so there’s premium to be made there. 

    Large size and 4k technology may have to be it for now and where are consumers going to get 4k content?  

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  • Anonymous

    Your analogy with audio’s transition to analog is apt, but not necessarily for the same reasons. Those failed audio formats you enumerate failed because the CD had actually already addressed what the consumer had really wanted: convenience, in the form of portability, robustness, form factor and random accessibility to content. Attempts to improve actual quality have, well, mostly fallen on deaf ears.

    However, the audio analogy can be taken another step here: thin form factors for TV displays have literally squeezed out audio quality in terms of what the depth of speakers can reproduce. This phenomenon has actually contributed to the resurgence of a CE category that was near death a few years ago — soundbars, which have bounced back nicely as thinner TVs have squashed TV audio.

  • Fletcher Perkins

    I beleive that this article la

  • Berry1066

    Your analysis lacks a few eliments that are driving the OLED market forward. 

    The tragectories of innovation in LCD and OLED are different.  LCD is a very mature technology and all incremental improvements actually increase the production costs of the display.  Direct LED’s, advanced Oxide backplanes, 4k…

    OLED on the other hand has a different innovation path before it.  Oxide backplanes offer the potential of cheaper backplanes vs. the commonly used LTPS in service today.  Ink and vapor jet printing technologies (contemplated by Panosonic) could have a meaningfull impact on production costs.  Plastic substrates and thin film encapsulation could dramatically reduce material costs and revolutionize manufacturing approaches (continuous flow vs. batch manfacturing).  With a simpler devise structure and fewer parts OLED’s have a lower bill of materials than LCD.  But they must overcome the low throughput of existing manufacturing approaches.  There are solutions to these problems.  No display manufacturer wants to be left behind and many feel that they can gain advantage through differentiated manufacturing approaches.  An example of this is LG’s white oled with color filters that they are commercializing in 55 inch TV’s, or Panosonic contemplating a inkjet printing approach.

    From a quality perspective OLED’s naturally do everything that LCD strives for: fast switching speads, high contrast, vibrant colors, thin form factor, less weight…   And they hold the promise of killer applications like unbreakable dislays and flexible form factors.

    In short, LCD continues to bump its head against a ceiling.  It is an inferior approach that has pushed the production cost efficiencies as far as they can go.  There is significantly more room for innovation in AMOLED.  Innovation drives differentiation and differentiation holds the potential for profit.  I beleive that it is short sighted to make any comparison based upon a single point in time.  Manufacturers making long run capital decisions must focus on their long-run competitive posture.  Anyone tracking the allocation of R&D and capex spending by the major display manufacturers will note that they beleive AMOLED is the better bet for the long-run.

  • Paul Gray

    Don’t get me wrong, I’m not saying that OLED displays won’t get cheaper. However, what matters is how much consumers will pay extra. Almost all the benefits are available today with high-performance direct lit LED backlit LCD. Yet they have failed to sell. My concern is that the industry is setting itself on a course to spend billions of dollars on a technology that consumers will pay only a small premium for.
    I do agree that no display manufacturer wants to be left behind – the strategic dilemma is like mobile phone companies bidding for 3G licenses a decade ago. They overpaid dramatically as they outbid each other to stay in the business.
    But the risk of repeating the history of audio is significant. I’m not saying that OLED cannot be better, merely that LCD and HD has hit good enough for consumers and that the next major improvement step could be a (human) generation away.

  • Berry1066

    Paul,

    Thanks for the reply.

    “My concern is that the industry is setting itself on a course to spend billions of dollars on a technology that consumers will pay only a small premium for”

    How do you reconcile the profitability of Samsung Mobile Display (SMD) at a time when all other display manufacturers are loosing money?  As I’m sure you are aware SMD is Samsung’s OLED display subsidiary.  SMD acheived a first mover advantage in AMOLED for mobile displays, acheived scale through gen 5.5 manufacturing lines and now earns profits by charging a reasonable premium over LCD for their product. 

    What leads you to beleive that this model will not be replicated in the OLED TV market?

    Samsung is nearing the commercial launch of flexible OLEDs for mobile displays.  How long before the material science that drives the market for small handheld devices scales to TV size applications? 

    If the AMOLED opportunity as strictly a high cost solution for only the least price conscious of customers you are probably right that spending the requisite dollars to innovate this technology will have been wasted. 

    I contend that the immaturity of the AMOLED market leaves a great deal of room for new innovations that can result in significant productivity gains and radically lower prices.  OLED producers have a lower bill of materials relative to LCD today.  What we are talking about is gaining manufacturing efficiencies and perhaps novel applications that consumers are will to pay for.

    Consider the profit potential for the OLED producer that is able to match the fabrication costs of LCD producers yet charge a premium for its product…  This is a $100 billion annual market after all.

  • Paul Gray

    I think that this is getting off-topic. For mobile applications then OLED has a huge amount to offer. Saving 0.5mm MATTERS in mobile! Also it has the potential for applications like auto and aviation where LCD has huge problems (such as cold performance) and again where weight saving counts. OLED justifiably collects a premium.
    Smartphones and Tablets have short lives compared to TV also.

    My remarks are exclusively to TV. We can expect a time of standards stability, not least because broadcasters have only recently refitted their production flow in HD. There is no forseeable 4G or LTE equivalent coming in broadcast. NHK’s 8k pilot is planned for 2020. TV looks wedded to a 1920×1080 display that’s 4 metres away. Thinness is already close to its practicable limit, resolution is close to what the eye can perceive (unless display sizes jump over 60″ in almost all applications). I’m not sure I see a need for a flexible TV.

    One wildcard might be if a printed, plastics-based TV OLED display cost (say) $150 but only lasted a year. Swapping it would be like changing a lightbulb, and you simply glued it to a wall. That I agree would be transformative!

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  • Barry

    The problem with allowing an engineer to function as a market researcher is that the engineer is obsessed with the specs and how close in this case the LCD matches up with the OLED.  Displays must be evaluated on how the image impacts the viewer.  Put an LCD next to an OLED and the viewer sees the difference big time, regardless of what the specs say. Just read all of the technical and market evaluations of LG’s 55″ TV just released in Cannes or read the NYT evaluation of the Sony 11″ AMOLED viewed at a Best Buy. The specs need to be interpreted not just compared because a combination of specs is greater than the some of the individual specs.  How do you account for the effect of color volume or color performance at low gray scales?. However, it is the buyer that makes the choice and at least for now looking is better than counting. 

    As to costs, AMOLED components will be less than TFT LCDs, when full volume mass production is reached. Total costs should be reduced by ~20%. DisplaySearch figures show that for smartphones, the cost/m2 of AMOLED is already comparable to LTPS LCDs used in the iPhone and the OLED must carry depreciation, which have been fully amortized for the LCDs. No backlight, no color filter (I know that LG uses a color filter but Samsung does not), one lower cost polarizer vs. 2, no LC, no spacers, no rubbing, no alignment film. Metal cover at $5/m2 vs. glass at $50/sq.m.   It looks like the active matrix will be the same for OLEDs as for LCDs (IGZO or something similar). The only component costs are the substrate and the OLED material, which is less than the cost of a backlight.

    I am surprised that Paul is comparing the today costs of OLED TVs vs. LCDs.  If engineers have learned anything over the past 10-15 years, it is that volume and maturity cause the costs to come down by 10% to 20% per year.  However, it is not likely that AMOLEDs can revitalize the TV industry.  There is too much capacity chasing too little demand.  The growth is in countries with a growing middle class and they are looking for entry level flat panel TVs not 55″ 3D TVs. However, over time, OLED TVs will replace LCDs and set a new standard for imaging.

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