That said, FPD International is still the largest FPD show in the world, and for most the most part, the show has been quite crowded. Many people have been taking pictures of innovative demonstrations, such as AUO’s 32” full HD AMOLED TV panel with oxide TFT backplane, Samsung’s ultra-slim bezel LCD TV panel, Asahi’s Gen 8 0.5 mm glass substrate made using float processes, LG Display’s low-power 47” LCD TV panel, Toshiba’s 498 ppi mobile panel, and a glasses-free 3D panel from Chimei Innolux.

After spending the day walking around the show and talking with industry people, I found four categories that have emerged as hot topics: 3D, high resolution, in-cell touch, and transparent LCDs.

3D

• AUO: 46” and 55” 3D LCD TVs and 65” 240 Hz 3D for commercial usage; AUO demonstrated both scanning and pattern retarder technologies
• Chimei Innolux: 3D/2D switchable barrier glasses-free LCD
• Toshiba: 3.0” wide-QXGA glasses-free field sequential 3D panel with OCB technology
• Samsung: Full line-up of 3D LCD TVs dubbed “Smart 3D TV,” including 46”, 55”, and 75”
• Hitachi: LCL (liquid crystal lens) glasses-free IPS 3D panel
• LG Display: Full line of FPR 3D TV panels and a high resolution AH-IPS mobile panel
• Toshiba: Integrated imaging 3D display with nine parallax images projected through a lenticular sheet

High Resolution

• Sharp: 85” 8K×4K LCD TV showing NHK content
• Hitachi: Series of high density medical displays
• AUO: 4.3” 960 × 540 qHD AMOLED (257 ppi) and 4.46” 1280 × 720 AHVA panel (330 ppi)
• Toshiba: 6.1” 2560 × 1600 (498 ppi), targeted at tablet PCs, smart phones, and other high pixel density displays, including 292, 310, 317, and 403 ppi
• Philips: 4K×2K (3840 × 2160) panel, showing glasses-free 3D with 15 viewing points

In-Cell Touch

• Chimei Innolux: IPS LCD with in-cell touch sensor, supporting multi-touch (10 points)
• AUO: 27” full HD panel with integrated OGS (one glass solution) supporting multi-touch (10 points), and targeting all-in-one PCs and monitors. AUO claims this is the largest OGS touch panel.

Transparent LCDs

• LG Display: 26” C-Thru (see-through) LCD panel
• AUO: 65” transparent LCD, installed in a slot machine showing a video overlay, and 19” “hollow display” on a Pachinko slot game machine
• Samsung: 22” transparent portable LCD TV with stylish design

Figure 1: AUO’s 65” Transparent LCD Installed on a Vending Machine

In addition to these demonstrations, there were other interesting products and technologies on display, such as e-paper, MEMS, flexible AMOLED, and narrow-bezel mobile phone panels. Many component makers, such as glass substrate manufacturers, optical film producers, photomask producers, and equipment companies, also exhibited.

These technologies and products provide clues for short- and long-term development of the FPD industry. We will be providing more details, in several upcoming reports.

What the industry was left with was inexpensive small notebooks, not internet access devices, but “net” books. Many research firms, including DisplaySearch, took to calling netbooks “mini-notes” because they were recognized as miniature notebooks. Research firms took a lot of heat from PC brands, component makers, and others who were worried that if these inexpensive mini-notes were thought of as notebooks, they would lead to lower average selling prices of notebooks. That is what ended up happening. Now the mini-note category is shrinking as brands move away from the modest margins of mini-notes to tablet PCs, while the need and opportunity for devices specialized for internet access remains.

Enter the Chromebook, a clamshell device whose main objective is to access the internet, with some versions coming in at mini-note prices; a case in point is the Acer AC700-1099, selling for $349. Some have said that Chromebooks will be doomed from the start because of the impression that they need a mobile broadband connection to be of any use. I’d say that’s a marketing error that needs to be corrected: Chromebooks can use WiFi to connect to the internet and can be useful anywhere there is a hot spot. The goal is convenience, not productivity. For consumers looking for an instant-on device with a long battery life and sleek design, just for connecting to the web for email and accessing digital media, Chromebooks will be of interest.

Chromebooks have recently started selling, so it’s too early to judge the market’s reaction. However, informal indications seem to point to some traction. As of this writing, the Acer Chromebook was ranked fourth on Amazon.com’s bestsellers list for laptops, and even the more expensive Samsung Series 5 in silver with WiFi was eighth, while the 3G versions in white and silver were ninth and eleventh, respectively.

According to the Quarterly Small/Medium Shipment and Forecast Report, if the three companies merged, the resulting entity would be the largest small/medium TFT LCD maker, with a (2010) revenue share of 21.5%.

If this were to occur, the merger would create not only a manufacturing powerhouse, but also a technology leader. Toshiba is a leader in LTPS (low temperature polysilicon) TFT LCD, the technology viewed as the leading choice for the high resolution and low power consumption performance required by smart phones. Toshiba also possesses other technologies like OCB (optically compensated bend) and autostereoscopic 3D for handheld devices.

Hitachi Displays is the inventor of IPS (in-plane switching) technology, which is the leading wide-viewing angle technology, required for tablet PCs and high-end smart phone displays. Hitachi is also a leader in ultra-high resolution panels, and has a partnership with Pixtronix to produce MEMS-shutter displays. Sony has IPS technologies as well as high resolution LTPS, and has a great deal of AMOLED know-how.

There is also speculation that the merger or joint venture deal would involve a Gen 6 fab, originally built by IPS-Alpha in 2006 in Mobara, Japan. IPS-Alpha was an earlier joint venture between Hitachi, Panasonic, and Toshiba, which restructured and became Panasonic LCD last year. The fab has been producing IPS TV panels and could possibly be retrofitted to produce tablet PC or handheld displays.

This new company would be created in the context of a very active small/medium FPD market. Japanese panel makers focusing on the small/medium market have been facing competition from Korean and Taiwanese panel makers, who have started to use their higher generation fabs (such as Gen 6) to produce 9” and smaller displays. Korean makers have been investing in both TFT LCD and AMOLED, and the Taiwanese makers are agile fast-followers. Both groups of companies have been focusing on IPS for handheld and LTPS for high resolution. Even Chinese panel makers like Tianma are building Gen 5.5 LTPS and AMOLED fabs to enter the small/medium panel business.

Until now, the FPD industry has been dominated by manufacturing large-area panels for TVs, but momentum has been shifting to mobile devices. The fast growing smart phone and tablet PC markets provide the Japanese companies a good chance to grow by utilizing their cutting-edge IPS and LTPS know-how.

Small/medium displays are not a minor business. Soon after the news of the potential merger, there were other indications of investment in this market. AUO reportedly will build a Gen 6 LTPS TFT LCD fab in Taiwan, and Chimei Innolux is planning to convert its Gen 5 fab in China, code-named Century, to a full scale IPS and LTPS line. Competition in FPD has now escalated into a new field, and the regional competition continues.

Retail has been an overlooked challenge for many tablet players but is key to the success of tablets and potential new emerging mobile device categories going forward. Retailers are still working out the kinks of properly differentiating tablets from notebooks and smart phones while also educating consumers on how to shop for a tablet. Tablets are much more about the computing experience, with apps and services being the key characteristics of the device. This is different from the speeds and feeds that consumers typically use to judge the value of a product.

Apple has had a distinct advantage when it comes to selling a tablet or any new device for that matter. Through its own retail environment, Apple is able to explain the iPad to consumers through dedicated sales people. This provides a handholding that consumers will likely need as mobile devices become less and less about hardware and more and more about software and services.

Increasingly, we are seeing tech companies become more active in the marketing of emerging device categories to consumers in hopes of helping them to better understand new usage models. Google recently announced that it would allow Virgin America travelers to test out their Chromebook mobile devices at airport departure gates and inflight along with a free WiFi session. Recognizing that emerging device categories emphasizing software and services is something new to consumers, tech companies are called upon to be more a part of the sales process.

Along those lines, as part of its TouchPad launch Friday, HP has started an initiative called “Top Gun” in which it has stationed HP employees at special kiosks dedicated to the TouchPad inside 100 Best Buy locations. The HP staffers are trained to market the TouchPad. The effort will last until the end of the year. This will certainly help HP to differentiate its TouchPad from the other tablets sold in Best Buy stores and help consumers to better understand what the TouchPad offers compared to notebooks and smart phones.

Retailers, such as Best Buy, have been making efforts to help differentiate tablets from notebooks and smart phones, but tablet brands are still faced with the challenge of having to differentiate their tablets from each other. And as more brands with incompatible operating systems and apps enter the market, things could potentially get more confusing for consumers.

We continue to believe Apple has the advantage in the retail environment because of its dedicated sales channel. Apple is able to capture more profit than competitors who have to share margins with retail partners. This makes it tougher for rivals to compete on price. However, efforts such as HP’s “Top Gun” will help to educate consumers and ease the takeoff of this new emerging product category, which has recently been stalling.

As we indicated in May, panel buyers said that, despite the good sales in China, they did not see strong enough sell-through to support continuous panel price increases. There are several reasons that panel prices are losing upside momentum:

• Major TV brands are reducing their 2011 sales targets.
• PC set makers are facing inventory pressure.
• Consumer markets in Europe and North America are soft, driven by macroeconomic conditions.

Without pull from the end markets, a supply-driven panel price increase is not sustainable.

Panel makers now intend to sustain panel prices at current levels (there is no room for prices to fall further as they are below costs in many cases), and then wait for the market to tighten in late Q3’11 when downstream customers will need to build inventories for the holidays. However, there is also a sense that if panel prices do not increase, then they will fall. Several people in the industry, especially from the panel buying side, have suggested that panel makers will face pressure to either reduce capacity utilization or reduce prices in order to maintain their shipments. In our latest panel price forecast, DisplaySearch adopted the former position. We do not foresee a situation in which panel prices will crash again, so we are forecasting that prices will stay flat for a couple of months and then increase from late Q3’11.

While end-market demand is not showing strong growth at this moment, LCD capacity utilization has been managed on a rational level across most panel makers. For the next few months, we expect that controlled capacity utilization will continue. On the demand side, we are seeing good growth in emerging markets; meanwhile, many brands have initiated street price cuts and promotions in order to accomplish their 2011 plan, leading to some reason for optimism about 2H’11 end-market demand. While “if it’s not increasing, it will fall” is a possible scenario, there are many conditions that will serve to keep panel prices flat. Based on experience, panel prices can stay flat for a couple of months.

On the other hand, the principles of panel pricing appear to be changing. In the past, we compared capacity and demand numbers to forecast panel prices. However, this approach might not work in a situation where capacity and demand growth is very soft. The more meaningful panel price factors are capacity utilization of panel makers and inventory adjustments by set makers, which DisplaySearch is tracking in MarketWise – LCD Industry Dynamics.

It’s been evident that the early Android-based tablets aren’t selling as well as many expected, and some brands we spoke to indicated that the late arrival of the OS could be a good thing. One brand said its engineers saw a significant difference between 3.0.1 and 3.1, so instead of coming out earlier in the year, the brand decided to wait until 3.1 was ready to release a device. Dell recently went as far as to say it would only come out with its 10.1” tablet in China because executives felt that the position of Android in the US was still unclear and that the platform was still immature.

Google is working to rapidly advance the OS. At its recent Developers Conference, Google laid out ambitious plans for Android. For starters, it looked to refine the OS and enable a number of new features in version 3.1 highlighted by changes to the user interface to make it more intuitive and efficient. The OS also enables support for USB-connected peripherals, resizable home screen widgets, support for more external input devices (like keyboards, mice, joysticks, gamepads), and a number of new developer features.

The new OS seems much more stable on the Samsung Galaxy Tab 10.1”. The apps run more reliably and consistently, and the platform hasn’t crashed yet. There are still some issues with running Adobe Flash, and the update process wasn’t as seamless as it could have been. Based on some forum postings, other users had similarly uncertain update experiences.

Currently, there are different versions of Android running on smart phones, tablets, and TVs. With its next version of Android, codenamed Ice Cream Sandwich, the company will attempt to bring all those device categories under one version of the OS. This will help to potentially increase the number of applications that can run on the different platforms with the idea that if you develop software for one platform, it will be able to run on others. This will certainly help to drive interest in the platform for developers and consumers. However, retail challenges still exist and may be getting worse as channels that aren’t accustomed to selling technology are making a go at the tablet market with limited success.

Still the tablet market marches on, and on June 13, Samsung and American Airlines announced that the airline will offer the Galaxy Tab 10.1” version, loaded with Android 3.1, for premium class in-flight entertainment.

We have highlighted the growing importance of baseband technology in SoCs (system-on-chips, which are also referred to as mobile processors and applications processors) for mobile platforms. What was once dubbed a commodity is now a differentiator because of the drive to higher performance with lower power and smaller footprints, which is all enabled by the fundamentals of Moore’s Law. At Mobile World Congress, Broadcom became the latest semiconductor vendor to introduce mobile processors with an integrated baseband modem, joining the ranks of industry leaders Qualcomm, Mediatek, and the notable intentions of Intel with the acquisition of Infineon’s wireless group.

If the recent smart phone and tablet introductions are any indication, the mobile processor incumbent, TI, is seeing significant competition from Qualcomm in smart phones, and from NVIDIA in tablets. But competition is even stiffer, with a plethora of ARM partners vying for the same socket, including Broadcom, Freescale, Marvell, Renesas Mobile, Samsung, and ST-Ericsson just to name the major players. Qualcomm’s Snapdragon and NVIDIA’s Tegra 2 appear to be benefitting the most as of late.

Icera was working with two key processor vendors on development platforms: NVIDIA and TI. While Icera claims that it will continue working with existing partners, this definitely creates a problem for TI, which exited the baseband business in 2009-2010. Not only does this eliminate one of the potential independent baseband partners, it makes partnering with the remaining suppliers more difficult. Icera was the only remaining independent supplier with a solution that supported both 3G and 4G standards. For NVIDIA, the acquisition opens the door to any connected application with its Tegra family of processors and the timing could not be better.

In many applications, such as tablets, integrated baseband has not been a requirement due to the current business models of mobile operators. However, as business models change from being device- to user-specific (the broadband bucket approach), having wireless baseband in tablets will be an advantage. Although mobile operators have been hesitant to make this change, In-Stat believes it will be the result of increased competition. In addition, the drive to connect every part of our lives, including our cars and our homes, will further open opportunities for processors with integrated baseband solutions. In-Stat believes that NVIDIA’s acquisition is a positive move for both companies and that it will further enhance NVIDIA’s competitive position.

• What consumers are doing while mobile: search, navigation, social media, check-ins, etc.
• Who the consumers are

So, maybe it’s better to call it contextual-based advertising (CBA)?

No matter what it’s called–LBA, CBA, or dubbed something new in mobile–one thing is clear: it’s really early. While mobile advertising has arrived, leveraging a consumer’s location to improve relevance is still relatively new. But important pieces are coming together to make it more of a reality:

• Smartphone penetration is on the rise. According to NPD’s Consumer Tracking Service/Mobile Phone Track, 52% of mobile phones sold in the US in January 2011 were smartphones. Smartphones are not only a significant driver of mobile data usage (e.g., browsing, search, navigation, apps, etc.), but are also critical in seeding LBA capabilities (GPS). And more common mobile channels like text messaging cannot be ignored for their potential use for LBA alerts.
• Some enabling technologies that support and enhance location-based services are maturing, while others are emerging. The here-and-now include 2D barcodes (think of the Starbucks payment app). Others such as NFC, geofencing, femtocells, 3D and augmented reality are emerging.
• Mobile advertising has moved beyond niche. Beyond the cast of usual mobile characters, Google, Facebook and Apple are “all in” and are aggressively extending location capabilities.

Still there are still hurdles to clear:

• Extending the reach and ramping LBA relevant inventory to attract advertisers
• Tying together the LBA pieces: LBA is only as good as technology used to pinpoint the user, to identify nearby POIs, and to provide the linkage between them.
• Providing proof points: Beating the drum around what is working and what is not is needed to educate advertisers in an early market. This includes offering guidance around use cases and results (e.g., eCPMs, CTRs, click-to-X, post-click activities, etc.).
• Paying attention to privacy concerns. Industry best practice guidelines for availing location to third parties (i.e., opt-in/opt-out) should help. Care should also extend to implementing relatively new LBA technologies, including push-based geofencing.

So, while it may not matter what we call it (LBA, CBA or something else), what is important when leveraging a user’s location to deliver ads is paying close attention to the consumer experience.

As the network now behind both the Kindle and Nook, AT&T has held up e-readers as an example of successful connected devices. Indeed, it has been rare to find a device that so combines affordability and such light data usage that service can be completely subsidized (although the debutante Mavia introduced at this year’s CES is a promising potential next example). While Amazon continues to pursue tablet clients – the bookseller is a launch partner for the forthcoming HP Touchpad – the diverse functionality of such products tends to make the carrier more of a purchase consideration. In contrast, AT&T’s deals to power e-readers have become long-term exclusives that live below most consumers’ radar.

Around 2002, it became clear that audio had moved permanently from the shelf to the pocket and would follow its owner. As a result, while CDs and home audio systems were not going away, the center of gravity going forward was to be the iPod and all other products would crowd around it.

We have now reached that point in video. It will start moving away from STBs, TVs and Blu-ray, towards personal devices, be they tablets or smartphones. Moore’s law will enable flash memory to provide enough storage for a decent library, and in-home networking will allow mobile devices to control and to push streamed or broadcast content between boxes and screens.

It is going to take a while. NPD recently found that fewer than 20% of Americans have yet experienced either a tablet or smartphone, and that might be true for most developed markets. However, we can feel the first effects of that change: a surprising number of connected TVs that can be controlled with an iPhone or Android device. A new revolution begins….