Monday, September 10, 2007

A Possible Invisible Hand "Sighting"

This was posted at The Internet Movie Database:

"Sales Boom for HDTV Sets, But Where's the Profit?

Consumer electronics stores may be doing a booming business in big-screen, high-definition TV sets these days, but they are seeing profit margins drop as a result of a supply glut and intense competition from mass merchants like Wal-Mart and Costco, the New York Times reported today (Tuesday). The newspaper cited research by iSuppli indicating that the price of 42-inch HDTVs has declined 23 percent to $1,655 from $2,140 last Christmas. The newspaper noted that Best Buy recently attributed a 6-percent drop in its gross profit rate in large part to "promotional environment in home video." Still, the price of big-screen HDTV sets remains beyond the means of many consumers, and, the Times observed, there are signs that sales are slowing. Morgan Stanley analyst Greg Melich told the Times: "For the past few months, growth in the total TV market has been zero or negative, because demand is not there at these price points.""

So I would like to hear from my students. Any experience with the HDTV market? Anyone getting good deals? Are they worth it? This little piece implies that the desire to profit from selling HDTVs is leading firms to lower the price.


Anonymous said...

Actually, I did purchase a HDTV this past spring. It has a difference from the norm.We bought it after the price dropped by about 20%. My husband and I had been watching the prices. So far, we love it. I do notice that we watch far less TV than before. Maybe the size makes us feel that we have absorbed enough screen time.

Cyril Morong said...

Thanks for dropping by. Maybe the quality of your viewing has increased, so you can now reduce the quantity. But it's interesting that you mention you watched the prices. That is in line with the invisible hand, that producers know customers react to price changes. Maybe I will get one. Sometimes I just can't see the ball on HRs when I watch baseball on TV.