The Looming LED Price War & Implications For End-Users

January 17, 2014 by guest author, Nick Donaldson

GUEST POST

The LED display business is maturing, and that’s going to inevitably trigger a price war that’s both good and cautionary news for the digital signage industry.

Surface-mounted LED display technology is now teetering between a period of growth and a period of maturity. Maturity will see some companies grow, others will disappear and the price war will reach an all-time high of brutality.

Lower prices would seem like good news, but aggressive competition puts buyers at risk. Choosing the wrong vendor can lead to massive problems, and this is a time for prudence.

So as an end user, how do you avoid being a casualty?

Most technologies follow a typical life-cycle of development, introduction, growth, maturity, and eventual decline. As digital signage is embraced further and further, and with it, LED display technology, the LED digital display market for manufacturers is reaching the turning point from rapid growth to a stage of sustainable maturity.

In this case, a “growth” period is defined as an increase of production levels and a decrease of production cost, leading to a period  of plentiful competition. However, as LED display technology moves towards the maturity phase, the product will reach the upper limits of its demand curve, leading to the elimination of competition.

This progression changes a great deal for manufacturers, as:

• Major players will defined;
• Competition will be eliminated;
• Acquisitions and mergers will happen;
• Price wars will increase in intensity.

LED Display manufacturers started the price war during the period of growth,  cutting their profit margins and reducing operating capacity. Buyers are able to look for the lowest price for a solution, focusing on point of purchase margins instead of long term investments. As we move towards a mature market, the elimination of competition is inevitable—this is where the buyer need be concerned.

As companies merge and dissolve, end users could face a rough reality of voided warranties and failing displays that may receive zero post-sales support. They’ll have eyesores instead of an assets.

Instead of focusing on price at the point of sale, end users need to instead focus on risk, and protect themselves by looking for these attributes in their LED display manufacturer:

• Is their focus on quality or just on price?
• What kind of post-sales support do they offer?
• What kind of warranty do they offer?
• What kind of pre-sales support have they offered me?

A company that offers helpful and dedicated pre-sales support is demonstrating genuine care about their clients. A focus on quality gives an end-user peace of mind that their display will look great and function for years to come. A great warranty and post-sales support show company strength and dedication, giving confidence that they’ll be one of the companies standing when the dust settles in a mature market.