Cage Match: LCD v. OLED

There's no such thing as a silver bullet, or an outright winner in the next-generation digital screen races.

Just like the last generation of flat-screen technologies, where LCD has largely beaten plasma screens to a bloody pulp, the next change of the guard promises to offer some solid excitement -- all the way to the finish line. OLED screens are coming on strong to challenge the LCD hegemony, but the incumbent technology isn't taking it sitting down. In the latest development, Sony (NYSE: SNE) will deliver "Super-LCD" (SLCD) screens to HTC to alleviate production bottlenecks in HTC's workflow that are caused by OLED shortages.

Freeze-frame!
Here's how the battle lines are being drawn right now:

Manufacturing capacity is holding OLED back today in a big way. Samsung and LG Display (NYSE: LPL) are cranking out OLED screens as fast as they can while also building massive new factories, but it's not nearly enough to keep up with demand. OLED holds the promise of super-simple screen building by essentially printing pixels onto a plastic or glass surface using the same basic technologies you see in inkjet printers. But that process is not yet ready for prime time, giving LCD mavens some breathing room and a window of opportunity to play catch-up.

According to HTC CEO Peter Chou, Sony's new LCD screens can hold their own next to the OLED screens he's been using on some handsets. In fact, he hopes to be able to make the switch from OLED to LCD without consumers even noticing. The claims of LCD screens equaling their OLED peers may or may not be true – for example, reviews of the iPhone's LCD screen have been phenomenal -- and it may or may not be an ethical way of approaching the switch. However, the LCD move seems necessary at this point due to equipment shortages.

Orchestral maneuvers in the dark
Verizon has long reported the OLED-equipped Droid Incredible as being out of stock, pushing back the delivery time and time again. Right now, your Incredible phone is only a week away if you order one today. The Droid X by Motorola (NYSE: MOT) shows the same delivery date of Aug. 3, but then that LCD-wearing handset has enjoyed a marketing campaign unlike anything I've seen since the original Droid. I can't remember ever seeing a TV commercial for the Incredible, but my kids have started to look forward to "the robot commercial" now. Yeah, it's on Cartoon Network too.

But if Chou is right about Sony's improved LCD screens, previously unavailable OLED phones may soon become available with a different screen. And you might be none the wiser if you picked up a revamped model.

So now it looks like the ball is back in the court of Universal Display (Nasdaq: PANL), E.I. du Pont de Nemours (NYSE: DD), and other technology researchers to reclaim the technology lead that Sony just usurped. Interestingly, OLED-screen leader Samsung is also a partner in Sony's LCD-making ventures, surely making for some tense politics behind the scenes.

What's up?
Samsung's newest OLED plant fires up the manufacturing lines sometime next year, instantly multiplying the supply of OLED screens many times over. It'll be the first time OLED really is ready for mass-production on the scale someone like Apple needs, and will empower gadget builders and network operators to throw some serious marketing muscle behind the technology. By then, both LCD and OLED displays will undoubtedly look better and last longer already, and it's anyone's guess which one will be more power-efficient.

In the long run, I still believe that OLED will win out, though. LCD tech has been around for a long time, and you can only push a technology so far before the laws of physics start to impose some hard limits. OLED, on the other hand, is barely out of diapers and has many years of improving technology and economics ahead of it. And Universal Display is the only true pure-play investment available in the sector. You know what to do.