If you spent the last couple of weeks poring through all of the breathless headlines coming out of the Consumer Electronics Show, you'd think that the era of 3-D TV was right around the corner. Journalists and bloggers exhaustively chronicled all the 3-D-capable sets announced by companies like Sony (NYSE:SNE), Toshiba, Vizio, and Samsung -- sets which the manufacturers hope will be on the shelves of your local Best Buy (NYSE:BBY) or Wal-Mart (NYSE:WMT) in the near future.
But forecasts provided this week from industry researcher DisplaySearch paint a very different picture. DisplaySearch expects 218 million TV sets to be shipped in 2010, but it believes only 1 million of them will be 3-D capable. To be fair, the firm does see 3-D TV shipments reaching the 25 million range in 2014, and rising to 64 million by 2018. But between limited content availability and the high markups that currently exist for 3-D sets relative to 2-D sets with similar features, not to mention the awkwardness many people feel when putting on 3-D glasses, it's easy to understand why a slow, gradual rise for the technology seems far more likely.
Two technologies that will deliver
Looking for a TV technology that actually will make big waves in 2010? LED backlighting would be a good place to start. With its lower power consumption relative to traditional, lamp-based backlighting, and its ability to enable thinner set designs, LED technology took the industry by surprise last year. DisplaySearch found itself increasing its 2009 LED TV shipment forecast from a mere 2 million during the first half of the year to 4.5 million by September. But that pales in comparison to the 32 million LED-based sets it expects will ship in 2010, as the big-name manufacturers roll out new products with mainstream price points.
Internet-enabled TVs are another technology DisplaySearch predicts will hit the mainstream. With online video providers such as YouTube, Netflix (NASDAQ:NFLX), and Amazon.com (NASDAQ:AMZN) doing everything they can to get their content onto TV sets, manufacturers are responding by putting Ethernet and/or Wi-Fi functionality into much of their new hardware. As a result, the firm estimates that shipments of "connected TVs" will more than double this year from the 15 million seen in 2009, and reach 70 million by 2012.
The chipmakers that benefit
At least a few chip companies out there stand to gain from the LED and Web TV booms. LED chip giant Cree (NASDAQ:CREE) is one of them. While Cree, which just produced a blowout earnings report, gets more of its growth these days from outdoor lighting applications than LCD backlighting, its Taiwanese competitors are currently experiencing massive demand for their TV backlighting chips, keeping industry capacity tight. That, in turn, is boosting the selling prices and margins for Cree's chips.
On the Web TV side of things, Broadcom, a leading vendor of chips that enable Ethernet, Wi-Fi, and TVs' core video processing, is bound to benefit. So should Texas Instruments (NYSE:TXN), which is likely to see stronger demand for its huge catalog of TV chips as the complexity of the average "boob tube" grows.
2010 promises big changes for a TV industry known for a glacial rate of progress. Just don't expect those changes to involve millions of consumers wearing funny-looking 3-D glasses in their living rooms.
