LCD desktop monitor shipments rose almost 6% sequentially in the second quarter of 2009 to 40.5 million units, with China becoming the world's largest market for the quarter and for the first half of 2009, according to the DisplaySearch.

While DisplaySearch expects that Europe, Middle East, and Africa (EMEA) will regain its lead in the LCD desktop monitor market in the second half of 2009 - due to seasonality, a more stable global economy, and the end of successful Chinese rural subsidy programs - China's presence in the worldwide landscape for IT products is here to stay.

Unlike other regions, China's domestic LCD monitor business has a close correlation to its desktop PC sales, as the lack of a historical installed base of PCs means a smaller upgrade market. In regions where the PC market is more mature, companies and consumers often purchase new monitors as an upgrade to their current PC. Organic growth in China was stimulated by such recent programs as the rural subsidy program that provided discounts of as much as 13% for home electronics equipment (including personal computers) for buyers outside of China's large cities.

"While China is following the worldwide trend toward mobile computing, the region's PC business is still heavily concentrated on desktop PCs, as opposed to notebook PCs, which makes the market favorable for stand-alone monitors," noted Chris Connery, DisplaySearch VP of PC and large format commercial displays. "Markets such as the US and Europe now see notebook PCs and netbooks outpacing desktops with penetration rates of as high as 60%."

A distinctive feature of the Chinese desktop PC market is the prevalence of build-to-order solutions (sometimes referred to as DIY for "do it yourself"), where the monitor is one of the components. This opens up greater opportunities for non-PC monitor brands. Analysis of the brands being purchased with such customized PC solutions reveals that AOC was the top desktop monitor brand shipped into China for domestic PC sales in the second quarter, beating China's domestic PC brand leader Lenovo and showing the continued strength of China's DIY market. AOC is the main brand of TPV, the largest OEM producer of LCD monitors (with almost one-fourth of the market), not only for its own brand but also for partners including most of the world's largest PC and monitor companies, like Hewlett-Packard (HP), Acer, Lenovo, Dell and Founder.

According to DisplaySearch, leading indicators show that China is already well stocked to meet demand. Furthermore, rising panel pricing in the second and third quarters will limit re-stocking shipments into the region and make the overall global market challenging in the fourth quarter of 2009 and in 2010.

In an attempt to overcome a pending over-supply in the space and subsequent potential price crash, vendors are re-evaluating new technologies and platforms to re-invigorate PC monitor sales in the coming quarters. One such technology is LED backlighting for LCD monitors. While LED backlighting has clear benefits for portable PCs - allowing them to be thinner, lighter and to consume less battery power - the use of LED backlights for desktop monitors is a question of costs vs benefits. Some brands are already offering LED-backlit LCD monitors for only a small premium over their equivalent products with CCFL backlights, promoting the green aspects of the technology to consumers and businesses.

In terms of new platforms, PC and monitor vendors continue to roll out new all-in-one PCs. While many new all-in-one PCs have been announced, panel shortages in the first three quarters of the year prevented most companies from full worldwide launches, especially for new lower-priced products. With panel supplies now becoming less constrained, many companies have plans to introduce a significant portfolio of all-in-one PCs in 2010 in a wide assortment of price points, with many planning on targeting specific markets such as the China domestic market. In the near term, however, rising panel prices in recent quarters may prevent all-in-one PC companies from reaching the price points necessary to create a desktop version of the netbook (all-in-one PCs are often referred to as nettops) until later next year.

Source: DisplaySearch, compiled by Digitimes, October 2009