Flat panels thin margins

The flat panel system is getting cheaper and cheaper. The average 27 inches LCD set now retails for less than $650, compared with $1000 in early 2006. It will hit $500 at the end of 2007. The competition from smaller brands has made the LCD sets cheaper than ever. There are 102 LCD television brands in U.S. up from 26 in 2002. Westinghouse Digital with annual sales of $650 million, which is 7.7% of the market. Westinghouse has 120 employees, and the company doesn’t have manufacturing facility. The company partners with Taiwanese flat panel maker Chi Mei Optoelectronics. Westinghouse‘s advertising budget is nonexistent. The overhead cost of the company is just 0.7% of sales. Therefore, the company can sell the LCD with low price.