If you’ve been following the price plunge of LCD and plasma displays, then you might find this article over at CNET interesting. This holiday season, we’ve seen significant reductions in prices for flat panel displays – which was expected from the smaller lower tier manufacturers like Vizio and Olevia. However what wasn’t expected was how many of the top tier manufacturers like Panasonic and Sony also got into the game of lowering prices to unheard of lows and guess what? Sony isn’t very happy about it.

While it’s hard for consumers to feel any pity for the companies out there that make a killing off of consumers by charging higher prices, there is a point where the price droppage will have to stop. At some point, companies do have to make some sort of living or else they’ll simply go out of business.

CNET points out that prices for LCD TV’s have plunged 25 to 30 percent this year which is 5 to 7 percent more than Sony had expected. So why is Sony unhappy? Well besides affecting the bottom line, Sony claims that the lowered prices could hurt the overall market for flat panel displays. Companies will be weakened financially because they simply are not making enough profit and therefore they can’t spend money on R&D.

While true for smaller outfits, I don’t believe that holds true for larger companies such as Sony, Panasonic, and Samsung. There are plenty of other products which have higher gross margins that could certainly help replace the lost revenues. Also – one other thing to consider – lowering prices means companies will have to be more efficient in both their manufacturing processes and in the materials used to create displays. This could actually spur companies on to create better cheaper displays over time.

In the meantime, consumers should enjoy the low prices while they still can. It’s hard to imagine seeing 37 inch displays falling below 500 dollars anytime soon (though you NEVER know)

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