Friday, April 3, 2009

The OLED screen revolution

Yesterday I wrote about a revolutionary new technology that is going to make a dinosaur out of Edison's light bulb. That technology is called OLED, short for organic light-emitting diode. Not only will it change the way we light up our lives but also the way we watch TV and interface with our computers. Today I'd like to conclude our discussion of this marvelous new technology by looking at how OLEDs will revolutionize screen technology and the companies that working to make this so.

What's so exciting about OLED screens?
Computer and TV screens based on OLED technology offer many advantages over today's flat-panel LCD (liquid crystal display) and plasma technologies, including the following:

1. Lower power consumption, making them a better choice in portable devices where energy efficiency is at a premium. Also, many countries and a few states including California either have or are considering banning large plasma screen TVs because they're such power hogs.

2. Faster refresh rate and higher picture contrast.

3. Greater brightness and a wider viewing angle.

4. Greater durability with the ability to operate over a broader temperature range.

5. Thin, light weight, flexible and even transparent which will make for exciting new displays. (The Sony flex-screen prototype is shown in the photo at the top.)

It's the last feature that's generating the most buzz. Imagine a widescreen TV that you can roll up, tuck under your arm, and unfurl anywhere—how cool is that? This is why there's so many entities interested in developing this technology as quickly as possible.

Of course, there are obstacles that must be resolved first. As I mentioned yesterday OLED technology is already being used in small-screen devices such as cell phones, digital cameras, and PDAs. Problems arise in translating the technology to larger screens. One of the main challenges is display lifetime especially with the color blue, but with the number of players all racing to develop this technology, industry experts feel that these problems will be conquered within a few of years.

The major OLED players
Governments, universities, and industry have come together around the world to fund joint research ventures into this promising and potentially vastly lucrative technology. In yesterday's article, I mentioned GE being at the forefront of developing OLED-based lighting. Also in that field is Energy Conversion (Nasdaq: ENER) and Universal Display (Nasdaq: PANL). (I forgot to mention Philips. See below for more info.)*

The major industry players in OLED screen development are the usual suspects: Sony (NYSE: SNE), Panasonic (NYSE: PC), LG Display (NYSE: LPL), Samsung, and Toshiba (these last two trade as bulletin board stocks in the US). Sony was the first company to bring a larger screen TV to market, the 11” XEL-1. The super-thin TV (shown above) was introduced late in 2007 at a price of $2500. A 27” model is in the works with plans to be introduced sometime in 2009, according to Sony CEO Howard Stringer.

Samsung has sent out mixed messages regarding its release of wide screen OLED TVs. First the company said February that they are committed to OLED technology giving a 2009 release date for OLED TVs and laptops and a 2010 time frame for the release of flexible OLEDs. Yet, a month later the VP in charge of Flat Panel Development said that the public shouldn't expect any OLED TVs from them anytime soon. Nobody is sure what happened—whether the company is getting its wires crossed or that it's reconsidering its commitment to OLED TVs. There's a good case for the latter scenario as advances in LCD technology has significantly lowered power consumption and they're much cheaper to make.

Toshiba has also put development of large-screen OLED TVs on hold citing high manufacturing costs. On the flip side, LG unveiled a 15” OLED TV at the 2009 Consumer Electronics Show in January. They're hoping to get it to market sometime this summer. No pricing structure has been set as yet.

A brief glance at the charts
The non-bulletin board stocks--Sony, Panasonic, and LG--are all trading off multi-year lows. LG's chart is the most compelling. It's trading near $12, double the price of its November low. Volume has been heavier than normal and yesterday it broke out of its base.

There seems to be an exciting and profitable future in store for OLED-base technologies, especially in lighting. Right now there are a lot of technological and cost impediments to widespread production of OLED computers and TVs, but I do believe that day will come. And I hope it's soon because I sure hate lugging my heavy laptop everywhere!

*One company I neglected to mention yesterday (because I just discovered it today) is Philips Electronics (NYSE: PHG) which is also racing to develop its own line of OLED lighting panels under the Lumiblade name. It plans to offer architects and lighting designers OLED starter kits to introduce them to this technology. Sounds like an excellent marketing plan. Philips stock has been stuck in the $15 - $20 range, trading well off its recent high of $45. A convincing break above $20 would be a good entry point.

1 comment:

Anonymous said...

You cover the OLED landscape as it applies to the sale of physical hardware very clearly and effectively, but you miss a large portion of the revenue to be generated by today's OLED research companies. Licensing of patents by research organizations will play a huge role in future earnings, and that's where betting on the manufacturers and brand names might leave investors wishing they got better advice.

Universal Display holds the lion's share of patents for OLED technology. Every application has a variety of patents assigned to it. OLED light bulbs, for example, have been developed over countless revisions to burn brighter, whiter, and longer on increasingly less power. Each generation of discovery comes with patentable technology. OLED video screens have formulas for each color, and, similarly, each has been subject to technological advances that sustain better color for longer periods of time.

I'm a PANL shareholder, and I've done my research. Don't take my examples to say that PANL is the only game in town. What you should be explaining, though, is that this is a very green landscape and a lot will happen when OLED becomes the default video technology. The patents will begin paying off for these companies long before Sony or Samsung produces their first consumer-ready TV.