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  (Source: LG Electronics)
South Korean firm beats Samsung to market, fulfills long-standing promise

With a five-figure price point, LG Electronics, Inc.'s (KSC:066570) latest television set is a bold gamble, testing whether a recovering consumer electronics market is willing to pay an extreme premium for the best technology.

I. Meet the First Big OLED TV

LG has enjoyed a relatively good track record in the LCD television market and looks to leverage its reputation for reliability with a $10,300 USD 55-inch organic light-emitting diode (OLED) set, which just went on sale this week.

The new set is a mere 4 millimeters thin and features LG's new SmartTV technology and on-board Wi-Fi.  A "Magic Remote" is included with purchase.

The release marks the realization of a long standing promise -- Samsung and LG had been showing off OLED prototypes at trade shows since at least 2008.

The move is somewhat of a surprise given the unicorn-like status of commercially available large OLED TV sets in recent years.  For example, Toshiba Corp. (TYO:6502) had vowed in 2009 to release a 30+ inch OLED model, only to abruptly bail on the launch and OLED efforts in general.

OLED TVs are more power efficient than traditional LCD TVs, but that's somewhat a moot point given that they cost nearly twice as much as their LCD brethren.  More relevantly, OLED sets feature much more vivid and accurate color reproduction than LCD models.  For consumers obsessed with picture quality, OLEDs deliver a clear edge over their less expensive predecessors.

But some are not convinced that the advantage will be enough to convince consumers to pony up $10.3K for the LG set.  Comments Seo Won Seok, an analyst at Korea Investment & Securities in Seoul, to Bloomberg, "The key issue here is how LG could possibly narrow the price gap between the new OLED TVs and the conventional LCD TVs.  The price for OLED TVs should come down to about $5,000 to $7,000 to open up the initial market, which is expected about late this year at the earliest."

II. LG Gets a Head Start

For better or worse, LG seems committed to testing the waters and Samsung will likely follow close behind.  Samsung had previously committed to selling OLED sets before the end of 2012, but on Dec. 21 backed off those claims, punting its launch to sometime in 2013.  Samsung cited weak demand and high prices as reasons for the delay.

LG shares rose on the launch of the OLED model.  Despite skepticism regarding sales in the short term, investors appear to view LG's head-start on Samsung in this growing sector as a good thing.  Market research firm IHS Inc.'s (IHS) ISuppli unit labels the OLED sector as the fasting growing part of the $100B USD TV industry.  It predicts that sales will rise from 34,000 units in 2012 to 2.1m units by 2015.  Given continued process improvements OLED panels are predicted by some analysts to be cheaper than LCD units by 2016.

OLED TV shipments
OLED TV shipments are predicted to rise to to 2.1m units in 2015. [Image Source: iSuppli]

In an email LG boasted to Bloomberg, "LG is prepared to ramp up quickly to take the lead in the OLED segment."

Samsung TV
LG's new set gives it a head start on rival Samsung Display [Image Source: Flickr]
Sony Corp. (TYO:6758) was the first to sell an OLED TV debuting the 11-inch XEL-1 in Japan for roughly $2,000 USD back in 2007.  Sold exclusively in Japan and at low volume, the tiny, expensive set was viewed as somewhat of a flop.  Sony eventually pulled the plug on XEL-1 sales in 2010.  Regardless, Sony continued to pour money into its OLED offerings.

Struggling with profitability, Sony latest move was to partner with domestic display rival Panasonic Corp. (TYO:6752).  The pair will look to produce technology for new OLED display sets to be launched sometime in 2013 or 2014.

Sources: LG Electronics, Bloomberg

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RE: So much drool
By BansheeX on 1/2/2013 6:31:36 PM , Rating: 5
I'm always amazed by how little people seem to care about all of LCD's issues. Screw 4k and 3d, these were trotted out because LCD can't improve its inherent image problems. It will always have gray blacks, crap viewing angles, backlight bleed lotteries, varying panel types that sacrifice i.e. color quality for better response time. You should visit an LCD forum and read all the threads of people endlessly trying to figure out which panel has the least problems. OLED resolves all of these shortcomings, its only problem right now is cost and somewhat shorter lifespans.

RE: So much drool
By hubb1e on 1/2/2013 6:44:01 PM , Rating: 1
Dude, how many homes, bars, etc have you been in that have their TVs set to stretch out their picture and run the burn your eyeballs display mode? They don't even realize people look fat. Do you really think they care about grey blacks and light bleed? It's only a small % of people who actually know what we are talking about and even less who actually care.

RE: So much drool
By someguy123 on 1/3/2013 10:32:32 PM , Rating: 2
It's more the standard that people are used to. These days everyone is used to DVD quality, so if you went to that same bar and it had some VHS quality signal stretched out people would think the image was terrible.

If OLED had the kind of marketshare that DVD does people would see it as the baseline and would probably notice washed out blacks and response time.

RE: So much drool
By tng on 1/3/2013 11:42:05 AM , Rating: 2
OLED resolves all of these shortcomings
Sure it does... Then there will be another whole bunch of problems that will surface with OLEDs.

I take it you are a PDP fan. I bought three LCDs for my house and have noticed some issues with them, but for the most part, I just watch TV, not grey test screens to complain about the unevenness of the backlight. Sometimes you just have to enjoy the media, not complain about the delivery system.

RE: So much drool
By messele on 1/7/2013 4:00:24 PM , Rating: 2
Yes indeed. When my 52" Samsung (5 years old) has a plain white screen displayed every defect in the uniformity of backlight and slight yellowing that has occurred over time is evident.

That is annoying for all of 5 seconds before I put something on that I actually want to watch as opposed to sitting their like an OCD uber-nerd taking measurements.

RE: So much drool
By Nutzo on 1/3/2013 12:26:28 PM , Rating: 2
My 32 inch CRT was so much better since it had a better viewing angle, no light bleed, and good blacks :(

Think I'll stick to my Sony LCD with it's 1080p resolution.
Even with LCD's limitations it was still a huge improvement.

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