OLEDs- an overhyped technology

OLEDs - Overhyped and Over Priced.

If you have heard of Motorola’s Nexus One handset, you probably know that it supports Google’s Android operating system. What you are less likely to know is that it sports an Oled - organic light emitting diode - screen. Oled screens are supposed to be brighter and have a wider viewing angle than conventional LCD screens. Last year, 15 mobile handsets, supplied by Samsung, Nokia and Sony Ericsson, were equipped with Oled screens. Few people know this and fewer people care.

According to Display Search, the leading independent experts on screen technologies, in 2008, the global market for Oled was worth $600m. The two companies offering the most exposure to Oled are Universal Display (PANL US), and DS Hi Metal Display (077600 KS).

Samsung SDI, which has a 50/50 joint venture with Samsung Electronics, also offers exposure. LG Display and AUO of Taiwan are two of the other leading Oled wannabes. For each of these quoted companies, Oled is a miniscule part of sales. 

In the last two weeks, Sony announced that it was closing its Oled effort because of technical problems. Oled screens work fine for the small screens used in mobile phones unfortunately, they are between three to five years away from prime time as far as TVs are concerned. More worrying are the latest results of an independent test carried out by Displaymate, which found that for all the excitement, the Oled screen on the new Nexus was inferior to the conventional LCD screen found on Apple’s iPhone.  Oled’s and most other hardware innovations are a side issue. In the era of the Smart Paradigm, content, applications and brand determine the success of a product. This is bad news for Asian handset makers who depend on hardware innovations to make their products stand out.

Superior Technology

Besides the brighter colours and the greater viewing angle, Oled technology will, one day, be cheaper than TFT LCD screens to produce. To understand why, a basic comparison of the two technologies will suffice.  TFT LCD is made by laying an array of thin film transistors upon a glass substrate. Then, when an electrical current is applied to this matrix, some of the transistors are turned on while others remain turned off. This combination of on and off transistors create pixels, which are the basic element of any electronically created video, or picture. 

Like a TFT LCD, an Oled screen also requires a back pane, but instead of a matrix of thin film transistors a layer of organic diodes are deposited. When an electrical current is applied to the back pane the organic diodes emit different coloured lights. 

A TFT LCD screen requires a back light source, which increasingly is supplied by LEDs; in addition, various colour filters have to be applied to the glass. Non of this is required in an  Oled screen, which is why the technology promises, one day, to be cheaper to produce. In addition, to cheapness, Oled screens are thinner, consume less power and eventually will be flexible. What’s not to like? 

Unfortunately, the technical problems behind creating Oled are daunting, which is why Japanese manufacturers, such as Sony and Kyocera, have either abandoned or moth balled their Oled efforts. For the time being, Oled screens are expensive, as a quick analysis of the handset market will underline.

Today, an Oled screen in a mobile handset costs about 50% more than a comparable LCD screen. Even by 2013, it is believed that Oled screens will still be 8% to 10% more expensive than LCD screens. For televisions the comparisons are worse. By next year the production cost of a 42 inch Oled TV panel is expected, according to standard industry estimates, to be 73% more costly than LCD. By 2013, Oled screens will still be almost 40% more costly than LCD. Therefore, Oled is unlikely to be a significant feature in the TV market before the second half of the current decade. This is why Sony has just withdrawn from the market. 

Oled, therefore, will remain a side issue for a few more years. Any investor wishing to keep abreast of Oled should monitor Universal Display in the US. This company is the world’s leading supplier of both Oled intellectual property and the chemicals used to make the diodes. In particular, Universal Display is a leading supplier to the Samsung joint venture that is currently the biggest producer of Oled screens for smart phones.  

Apple and the future of publishing

We wanted shock and awe, instead we got shock and confusion. What to make of the launch of the iPad? The first rule for the folks who live at Infinite Loop, Cupertino, is that great products create their own market. Second, Steve Jobs actually knows quite a bit about publishing and print. With that in mind we shouldn't get too fixated on the iPad as a Kindle killer.


When it comes to divining the the future of publishing  activate the link. It will take you through to a fascinating mock up of what an e-magazine or e-newspaper could  look like. Think National Geographic, Life - um maybe Playboy - with high quality graphics, some of which mutate into speaking videos when you click on them. This is surely the kind of thing that someone would watch on the iTab. The Kindle is better suited for long reading sessions, but the iTab still has great potential  in the publishing arena.


As for its prospects in other markets, we will have to wait and see what the Apps  Community make of it. My guess is that the ITab will take off slowly but will then build considerable momentum a year or more out. Video traffic, which is already growing at 130 compound, according to Cisco is the real market for this device. I think a number of vertical markets, such as medical, could also run with the iTab.


The really big news out of Apple this week though has to be the astonishing breakthrough the company has made in Asia. Asia as a per centage of profits, doubled to 20%. Sales in Taiwan and Japan were up several fold and in China, 200,000 legal iPhones have been activated. I say legal because several hundred thousand have been smuggled into the country. China Unicom confirms that 70% of those buying an iPhone are switching to 3G. 


To put that number in context, the iPhone sells for $1000 dollars in China, a country were per capita income is around $3,400. Furthermore, you cannot use WiFi on the official iPhone, though you can if you smuggle one in. The new official number for 3G users in China is 13m. That could double this year. Chinese operators are a accident prone as their Western cousins. 3G wont be big there unless they embrace a device like the iPHone. Apple growth in Asia will be the single most important event of the coming year.


A few days after Apple announced, LG Electronics published a 70% drop in mobile profits. I think we have seen the high water mark for Asian handset makers. It used to be possible to travel the length and breadth of Asia without seeing an Apple product but that is now changing. Asian handset makers compete on hardware design, but that doesn't count for much in the Smart Paradigm. Apple can now fight on its own terms - applications and content. Asian handset makers and Nokia will struggle to equal the richness of the Apps Store. I wonder what Good Night Vienna is in Mandarin