Multifunction Monitors – The Good, the Bad and the Ugly

by Christian Dias, Research Analyst

Wouldn’t it be great to have an LCD monitor that you could use for all of your regular PC tasks, and, simultaneously, watch your favorite TV show? Well, that was the idea that monitor maker Samsung had in mid-2000 when it launched its 15-inch 150MP and 17-inch 170MP multifunction LCD monitors in the U.S. Samsung remained the only manufacturer to invest in the space until October 2003, when it was followed by Sharp. However, since then, the concept has been imitated by Sony, LG, and NEC, just to mention a few. One may believe that the multiplication was evidence of success. However, is that how the story really goes?

According to Current Analysis’ Retail POS Panel, LCD monitors with built-in TV tuners have never exceeded 3% of total LCD monitor sales in U.S. retail, as illustrated in the graph below. Whether it will ever grow beyond that has yet to be determined.

The Good

Concept

The concept behind multifunction monitors is good. They give home users the ability to browse the Internet or work on an e-mail while watching a baseball game in a small TV window–or just sitting back between tasks and toggling between channels on a full screen with a remote control. Business users can be working on a spreadsheet at the same time they keep up with stock fluctuations through CNN. These displays even offer additional video and audio hookups, such as S-video and composite, that enable the user to connect the monitors to devices such as DVD players and video game consoles. The most recent multifunction displays are also designed to work independently of the PC, meaning that TV functionality is available even when the computer is off. The list of features can get so extensive that multifunction monitors are good enough to replace full-featured LCD TVs for small room and office set ups.

Variety

Another great thing about multifunction LCD monitors is variety. In retail, the number of SKUs has increased from those two early entrants in 2000, originally priced at $1,290 (15-inch) and $2,080 (17-inch), to eight today. If we take e-commerce into account, the number is significantly higher. Some of these products have interesting features.

Samsung is by far the most active LCD vendor in the multifunction space. In early 2005, Samsung refreshed its multifunction LCD lineup with the 17-inch 710MP and 730MW, the 19-inch 910MP and 930MP, and the 24-inch 242MP.

The redesigned analog 710MP and 910MP carry respective price points of $349 and $499 and reasonable feature sets that are highlighted by the 8ms response time of the 910MP –the most video-efficient video response time in the multifunction space. Samsung is currently offering a $20 mail-in rebate on both products. The 930MP goes up a notch and offers more comprehensive VGA and DVI-D PC inputs as well as a 1000:1 contrast ratio for $699 after a $100 mail-in rebate. The 730MW, which has yet to hit retail, features a stylish widescreen design, VGA and DVI-D inputs, and sells for approximately $500. Finally, the massive 24-inch 242MP offers high 1920x1200 resolution, 1000:1 contrast ratio, and 16ms response time for a post-rebate price of $1,499 ($1,599 before a retail-exclusive $100 mail-in rebate). Samsung also integrated an FM tuner into the 730MW, 910MP, 930MP, and 242MP, further broadening the concept of multifunction within its MP product line.

In February, Sony got into the multifunction game with the introduction of the 17-inch MFM-HT75W and 19-inch MFM-HT95. The SKUs married Sony’s new “rising design” with premium specifications highlighted by VGA and DVI-D PC inputs, high contrast ratios (800:1 and 1000:1, respectively), and video-efficient response times (16ms and 12ms, respectively). Sony’s rising design gives the screen an elegant look and the appearance of standing without the support of a traditional monitor base. The 17-incher goes for $599, while the 19-incher goes for $799.

NEC’s first multifunction LCD is its 23-inch LCD2335WXM. The display features VGA and DVI-D PC inputs, 1280x1024 resolution, and wide 170-degree viewing angles. Wide viewing angles are particularly important with larger screen sizes because they allow several people to enjoy the monitor’s picture simultaneously. NEC’s product is on sale for a sans-rebate price of $999.

Sharp currently has one multifunction SKU available in retail, the $1,299 23-inch IT-23M1U. The large analog/digital LCD features 1366x768 resolution, wide 176-degree viewing angles, and a 16ms response time. The manufacturer is offering a $200 mail-in rebate on the display, which reduces its final price to $1,099.

LG contributes to the multifunction space with a range of products going from 23- to 42-inches, none of which are present in the retail channel. The vendor’s “entry-level” SKU is the 23-inch L2323T, which offers VGA and DVI-D PC inputs, 1280x768 resolution, 176-degree viewing angles, and an average e-commerce ASP of $1,800. The product’s most noteworthy differentiator is an included external media station. The media station is designed to receive all cable connections from PC, TV, and other external devices and communicate with the monitor through a single interface, thus eliminating cable clutter behind the monitor.

The Bad

Confusion vs. Price

What’s bad is that even as a monitor geek, I have to ask myself the same question every time I come across a new monitor/TV crossover announcement: Is this product intended to be used primarily as a TV or a monitor? Regardless of the answer, the confusion that results paints a messy picture for the monitor market.

Multifunction displays are products that are intended to serve primarily as a computer monitor and double as an LCD TV. However, sometimes the differences between multifunction monitors and LCD TVs are not clear. For the most part, multifunction monitors have VGA and/or DVI hookups, higher resolutions, and the look and feel of a monitor. LCD TVs are specifically designed to please a TV-buying audience and generally stick to lower 480p or 720p resolutions, just enough to handle NTSC or HDTV signals. Despite the differences, we are starting to see some multifunction monitor designs blurring the lines between monitor and TV spaces with large screen sizes and lower, less-expensive resolutions. At the same time, there is a large number of TVs out there with DVI inputs for PC connectivity.

The confusion I face is most likely amplified for consumers due to a gaping lack of information. If vendors are not able to effectively educate consumers on the added benefit of their multifunction products, vendors cannot expect consumers to pay more for them.

Multifunction monitors are more expensive than their monitor-only counterparts. In May 2005, the price difference averaged 51% and 40%, respectively, in the 17- and 19-inch spaces, as illustrated in the graph below.

*In the 23/24-inch space, three of the four current multifunction SKUs offer resolutions that are significantly below those of full-featured LCD monitors; this lowers the average price of the monitors.

Lack of Education

Lack of education is one of the biggest obstacles that today’s multifunction vendors need to overcome. E-commerce, which makes up the lion’s share of multifunction product placement, is not a sufficient venue for this task. The nature of this channel does not allow vendors to persuasively exhibit these products’ features. Retail is the way to go. However, the channel has serious limitations. Retail stores have two sections for display products: one for monitors and another for TVs. When displayed in the monitor section, multifunction monitors do not have access to TV signals, so they are typically presented as traditional PC-use monitors. Without the ability to demonstrate TV capabilities, multifunction LCDs come out as plain over-priced monitors. When presented in the TV section, the products completely miss the monitor-buying target audience. To make matters worse, they are generally too small to compete with the surrounding TVs and too monitor-looking to attract significant attention.

Feature Set

Another problem faced by multifunction LCDs is that their feature sets are not optimal. Manufacturers choose to sacrifice select monitor and/or TV features to reduce the premium associated with a multifunction product. This ignores the fact that monitor buyers are not TV buyers. Monitor buyers want a monitor that performs well for computer use. Secondarily, if the budget allows, they may opt for a few additional features, like a built-in TV tuner. However, each model has its own inadequacies.

The slow 25ms response time of Samsung’s 710MP will affect the TV-watching experience. The 930MP has the same problem due to its PVA-based platform. Contrast ratio and viewing angles are great, but response time suffers. With the 24-inch 242MP, Samsung decided to go all the way. However, the end result was a steep $1,599 price point in retail–and between $1,700 and $1,900 in e-commerce.

Sony, loyal to its premium roots, also offers two full-featured multifunction monitors: the MFM-HT75W and MFM-HT95. While the consumer does not sacrifice monitor or TV performance with the displays, they do pay the price.

Sharp, NEC, and LG all made the same misstep. The three companies are marketing 23-inch multifunction products that offer great TV functionality, but limited monitor resolution. The products’ resolutions are good enough for general PC use and good-quality HDTV, but 23-inch monitor buyers, which are usually demanding PC users, will mind the weakness.

Finally, on top of all problems, there is the success of Media Center PCs–which make up 10% of all retail PC sales. Most of these systems already feature built-in TV tuners, which allow users to watch and record TV. With the growth of this technology, it is likely that multifunction monitors will eventually lose their reason to be.

The Ugly

The present is bad. The future looks ugly. After five years, it is more than clear that this market needs some changes if it wants to move forward.

Price

Price drives the LCD monitor market. If monitor makers are able to neutralize the cost of the added TV tuner, the price proposition will become more interesting. Approximately 95% of all retail shoppers looking for a 17-inch LCD are spending between $200 and $399. For a 19-incher, 75% of all buyers are spending between $300 and $499. Multifunction monitor prices in the 17- and 19-inch spaces must be kept within those bands.

Higher-end 23/24-inch monitor sales represent less than 0.5% of all retail monitor sales, obviously due to price. However, for vendors fighting for a piece of this market, it is important to mind the demands of its typical premium user. “HDTV-ready” resolutions will simply not cut it. On the other hand, 1920x1200 displays must still be priced competitively (retail 23/24-inch monitor shoppers are currently paying an average $1,600).

Presentation

It is clear that multifunction monitors are the types of products that buyers “must see to believe,” so they demand some sort of retail distribution. On the other hand, the current retail presentation of these unique LCDs needs to be revised. Perhaps the monitor and PC sections should neighbor the TV section so that the monitors can take advantage of TV signals at the same time TVs can help promote Media Center PCs. Convergence is leading the way to the Digital Home. Mainstream computer and electronic stores have yet to come up with a format that will fully embrace this up-and-coming reality.

Another alternative would be to dedicate a new store section to multifunction displays. The section would give the displays access to both computer and TV signals. If a TV signal is not available, an external DVD player could supply the video signal necessary to show both monitor and TV functionality simultaneously.

On top of a much-needed reorganization, vendors must be able to familiarize store reps with their technologies. In mainstream retail, a store rep’s opinion will, in many cases, make a difference in a buyer’s final purchase decision.

Promotional activity must also be backed by educational efforts. Free-standing inserts and in-store merchandising efforts must bring out the added benefit of multifunction displays.

Abandon

Despite all efforts, the multifunction monitor market may turn out to be a wasted investment for several of its participants. Maybe the integrated TV tuner is an unnecessary and costly add-on. With the growing number of homes investing in digital cable, which requires a separate converter box, maybe just cable and video connectors will do the trick. Finally, if it comes to that, maybe monitor manufacturers should apply part of the removed TV tuner cost to making full-featured, cheaper monitors. In the end, isn’t that what PC users really want?

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