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The Honolulu Advertiser
Posted on: Thursday, January 12, 2006

Super Bowl helps drive TV sales

By JOSHUA FREED
Associated Press

Ben Zimmerman says buying a TV is “like buying a car in the old days. I bought a car for less than this thing costs.” Last month, Zim- merman paid $2,050 for a 26-inch LCD TV and extended warranty.

JIM MONE | Associated Press

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CONSUMERS HAVE PLENTY OF CHOICES

A brief guide to today’s TVs:

• CRT television: The old cathode-ray tube. Analog versions are relatively cheap vs. newer TV designs, and last longer.

• Digital television: A new way of transmitting television signals. Over-the-air broadcasts are switching to digital, and eventually the traditional analog broadcasts will be switched off, by federal mandate, no later than 2009. Not all digital TVs are high-definition.

In digital TV, consumers have the following options:

• LCD screens: They’re thin and can be wall-mounted. They’ve become especially popular in smaller screen sizes because they’re relatively cheap and their size makes them easy to mount in places such as kitchens. The displays are getting brighter so pictures are as brilliant as plasmas.

• Plasma: Screens are bright, and many are only 4 inches deep, so they can be mounted on a wall. New technologies are eliminating the so-called burn-in effect caused by stationary images.

• Rear-projection: Used for larger screen sizes and are generally the cheapest big set for the money, but they take up a lot of space. To complicate matters, some rear-projection sets use CRT displays. Those based on new display technologies such as LCD are digital.

• High definition, or HDTV: Offers highest-resolution images on the market in photolike detail. Sports fans love it because games are very clear, even with faraway camera shots.

• One other thing: Most DVD players are NOT high-definition. Their signal quality falls between standard and high definition.

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MINNEAPOLIS — For TV shoppers and sellers, Super Bowl XL is Christmas II.

While shopping for most consumer electronics peaks around Christmas time, the Super Bowl on Feb. 5 sends the holiday season into overtime for TVs.

"The NFL and the college bowl season is the gift that keeps on giving for us," said Randy Baumberger, president and chief operating officer of Ultimate Electronics, a retailer with 32 western U.S. stores.

The holiday selling season is still the company's largest. But while sales of digital cameras and audio equipment drop off after Christmas, television sales stay strong in January. And the broadcast of NFL games in high definition can provide the extra incentive to upgrade sets.

"You probably have to go back to the transition between black and white and color to see what we're seeing today," Baumberger said of the booming sales of digital TVs.

TV shoppers won't have any trouble finding a place to buy.

"You can now buy TVs at supermarkets and office superstores, not to mention Costco and Wal-Mart," said Paul Semenza, vice president of display and consumer research at TV parts-tracker iSuppli Corp. Even Home Depot and clothing retailer Kohl's have been selling liquid crystal display TVs.

Sales of the 10 best-selling models of televisions in January 2005 were $875.9 million, higher than eight of the 11 preceding months, according to data from the NPD Group Inc. And analysts say many sports-related TV sales are made in December, right after Christmas.

George Creighton, operations manager for a Circuit City store in Rockville, Md., says it's not uncommon for shoppers to wait until game day. On the morning of Dec. 18, when the Redskins played the rival Dallas Cowboys, his store sold three high-end TVs to people who wanted a better set for the game.

Because big sporting events are often the main reason people buy high-definition televisions, retailers heavily promote TVs during January, said Eric Haruki, an analyst at IDC.

There are other factors, too.

Microsoft Corp.'s new video game console, the Xbox 360, displays games in high definition, and Sony Corp.'s Playstation 3 will, too, when it goes on sale later this year.

Analysts differ on how much the video game consoles influence sales, though Microsoft chairman Bill Gates asserted last week that nine out of 10 Xbox 360 owners have a high-definition television or plan to get one.

Falling prices are helping, too. Thirty- to 34-inch LCD TVs sold for an average of $2,379 this time last year. That has dropped to $1,566 now, said Semenza of iSuppli. TV shoppers can thank innovations from Asian manufacturers.

Screen-makers are also figuring out how to handle larger pieces of glass, which means they can make plasma screens more efficiently and charge less. For example, a TV maker would have paid $676 for a 32-inch screen in January 2005. By December that had fallen to $544, Semenza said. Prices are expected to keep dropping.

Though ongoing pricing wars have cut retail prices and gross margins to levels lower than vendors would like, the TVs are still not cheap.

"It's like buying a car in the old days. I bought a car for less than this thing costs," said Ben Zimmerman, 71, during a visit to a Best Buy in the Minneapolis suburb of Roseville. He and his wife were picking out the TV they were buying each other for their anniversary. They settled on a 26-inch Sony, which they planned to use mostly for watching DVDs.

He ended up paying about $1,800 for an LCD TV, and shelled out another $250 for an extended warranty.

The big discount stores generally offer bare-bones service — you pretty much walk in and pick out the TV you want. Best Buy and Circuit City Stores Inc. sell installation packages, and increasingly those extra services help to drive profits. That's fine with them.

Haruki said prices drop even lower at online-only retailers. His survey of more than 40 resellers found a Samsung 50-inch projection HDTV selling online for $1,600 vs. $2,500 suggested retail. He said some buyers are overcoming their reluctance to make such big-ticket purchases online by first looking at TVs in stores.