3D Television: When will it become economically feasible?


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This paper analyzes the timing of a new technology’s economic feasibility using a simple yet novel approach. While the conventional wisdom that costs fall as cumulative production increases does not enable us to analyze this timing, the proposed approach enables us to do so using existing technological trends in the components that form a new technology’s system. For 3D television, although the concepts that form the basis of 3D television have been known for many years, improvements in specific components within two-dimensional (2D) televisions such as the liquid crystal display (LCD) are finally making 3D television economically feasible. More specifically, improvements in the frame-rates of 2D LCDs are making it economically feasible to introduce time sequential 3D, which requires special glasses. Similarly, increases in the number of pixels per area (resolution) will probably make auto-stereoscopic 3D LCDs economically feasible in the next five to ten years and thus eliminate the need for special glasses.

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3D Television: When will it become economically feasible?

  1. 1. When do New Technologies Become Economically Feasible? The Case of Three-Dimensional Television by Pei-Sin Ng Jeffrey L. Funk* *Contact Author: Associate Professor National University of Singapore Division of Engineering and Technology Management 9 Engineering Drive 1, Singapore 117576 etmfjl@nus.edu.sg; 65-6516-7446 Forthcoming, Technology and Society 1
  2. 2. When do New Technologies Become Economically Feasible? The Case of Three-Dimensional Television Abstract This paper analyzes the timing of a new technology’s economic feasibility using a simpleyet novel approach. While the conventional wisdom that costs fall as cumulative productionincreases does not enable us to analyze this timing, the proposed approach enables us to do sousing existing technological trends in the components that form a new technology’s system.For 3D television, although the concepts that form the basis of 3D television have beenknown for many years, improvements in specific components within two-dimensional (2D)televisions such as the liquid crystal display (LCD) are finally making 3D televisioneconomically feasible. More specifically, improvements in the frame-rates of 2D LCDs aremaking it economically feasible to introduce time sequential 3D, which requires specialglasses. Similarly, increases in the number of pixels per area (resolution) will probably makeauto-stereoscopic 3D LCDs economically feasible in the next five to ten years and thuseliminate the need for special glasses.Keywords: technological discontinuities; technology paradigms: geometric scaling; technicalfeasibility; economic feasibility; three dimensional television: liquid crystal display 2
  3. 3. 1. Introduction Understanding when a new technology might become economically feasible and begin todiffuse remains an allusive goal. The economics literature focuses on cumulative productionas a key driver of diffusion in that the cost of a new technology falls as cumulativeproduction increases in a so-called learning or experience curve, According to such a curve,product costs drop a certain percentage each time cumulative production doubles [1] [2] asautomated manufacturing equipment is introduced and organized into flow lines [3]. However,if cost reductions primarily come from production, as the learning curve suggests, bydefinition cost reductions cannot occur before production occurs thus making it very difficultto use a learning curve to analyze when a new technology might become economicallyfeasible and thus begin to diffuse. The management literature uses the term technological discontinuity to distinguishbetween new and old technologies where products defined as discontinuities are based on adifferent set of concepts or architectures than are the old technologies [4]. However, whilethere is wide agreement on the descriptions and timing of specific technologicaldiscontinuities, most research on technological discontinuities focuses on the existence andreasons for incumbent failure and in doing so treats these discontinuities as “bolts of lightning”[5] [6] [7] [8]. For example, the product life cycle, cyclical and disruptive models oftechnological change do not address the sources of technological discontinuities and insteadtheir emphasis on incumbent failure implies that the timing of these discontinuities dependsentirely on cognitive factors and thus cannot be easily analyzed [9] [10]. This paper analyzes the timing of a new technology’s technical and economic feasibilityusing a simple yet novel approach. This approach builds from the notion that technologiescan be thought of as a “system” of components [11] [12] [13] [14] [15] where newtechnological systems often borrow components from existing technological systems [16].Thus, this approach focuses on the concepts that form the basis of a new technological system 3
  4. 4. and the levels of performance that are needed in the relevant components before new the newconcepts become technically and economically feasible. This enables us to utilizetechnological trends in the relevant components to analyze the timing of economicallyfeasibility. Since data on technological trends are available for a wide variety of existingcomponents, the ability to utilize this paper’s approach primarily depends mostly on ourunderstanding of a technology’s system and components. This paper demonstrates this approach using three-dimensional (3D) television, atechnology whose basic concepts have been well understood for many years. Building fromone author’s experience with televisions and a second author’s knowledge of technologicalchange, the key components in a 3D television are identified and analyzed. Such a systemincludes LCDs, ICs, and other electronic components where improvements in thesecomponents continue to be made somewhat independently of the existence or introduction of3D televisions. For LCDs, costs have been falling quite rapidly as firms have graduallyincreased the size of the substrate and production equipment. In addition, improvements intheir frame-rates and in the number of pixels are also being made in response to demand fromother electronic products and these improvements are gradually making 3D televisiontechnologically and economically feasible This paper first describes the ideas that form the basis of this paper’s approach, thesources of these ideas, and their application to televisions. Second, it briefly describes theresearch methodology. Third, it summarizes the improvements in LCD displays and otherelectronic components that are making 3D LCD televisions technologically and economicallyfeasible. Third, it describes how these improvements are improving the technological andeconomical feasibility of time-sequential and auto-stereoscopic 3D televisions, which are thetwo most discussed methods of achieving 3D television. Time-sequential 3D displaysrequires special glasses that include an active or passive LCD display while auto-stereoscopic3D LCDs do not require glasses. Fourth, this paper speculates on a pattern of diffusion for 3D 4
  5. 5. television2. Key concepts Technological discontinuities are typically defined and classified by the extent to which anew product, when compared to a previous one, involves changes in the core concepts thatform the basis of a product or in the linkages between a product’s key components [4].Radical innovations change both the concepts and the linkages, architectural innovationschange only the linkages between components, and modular innovations change only the coreconcepts of a single component. Although some scholars also focus on a technology’s impacton the linkages between a firm and the market [17], these types of discontinuities, includingso-called disruptive ones, can also be classified as either radical or architectural innovations[7]. This paper focuses on radical innovations in televisions and in particular it focuses on 3Dtelevisions. Looking at the concepts that form the basis for electronic displays, the first oneswere cathode ray tubes (CRT) that were initially used in oscilloscopes and only later used intelevisions. In the cathode ray tube, one electrode emits electrons and electrons strikingphosphors cause the phosphors to luminesce [18]. By controlling the direction of theelectrons with an electric field, one can determine the specific phosphors on a glass tube thatwill be struck by the electrons. By using three electrodes or so-called electron guns and theright type of phosphors, color images can also be displayed on the television screen. Likeother forms of electric discharge tubes such as incandescent lights, many improvements incathode ray tubes came from finding better phosphors and better materials for the electrongun. Nevertheless, limits to these improvements began to emerge many years ago. Theirminiaturization (and thus their costs) has been severely constrained by the size of electrodes,glass bulbs and sockets, and the resolution of them is constrained by similar problems (anability to control electrodes, emitted electrons, and impacted phosphors). 5
  6. 6. LCDs are based on a different concept than are CRTs. They use an electric field to controlthe orientation of the liquid crystals. Although the properties of liquid crystals had beenidentified by the late 19th century, it was not until scientists were able to control them with anelectric field in the mid-1960s that interest in them emerged. Applying an electric field causesthem to align in the appropriate direction and thus either block or transmit polarized lightfrom an external source such as a so-called backlight. Applying different electric fields todifferent regions, or so-called “pixels,” in a liquid crystal causes light to be either passed orblocked by the different pixels and thus enables an image to be formed on a display. Findingthe appropriate liquid crystal materials along with materials for polarizers and color filterstook many years of scientific research in the 1960s, 70s, and 80s where these advances werefacilitated by the ability to use semiconductor manufacturing equipment to deposit and formpatterns in these materials. This semiconductor manufacturing equipment also facilitated achange from so-called passive-matrix to active-matrix LCDs where cost reductions are nowlargely driven by increasing the scale of this production equipment along with reducing thethickness of the materials [19][20][21][22]. A variety of technological discontinuities have been envisioned by scientists andengineers for television and other displays. One is the replacement of existing backlights,which are so-called cold cathode fluorescent lights, with light-emitting diodes (LEDs) sincethe LEDs are much thinner and have higher luminosity per watt than do cold fluorescentlights. A second discontinuity is the replacement of the entire LCD with a display constructedwith organic light-emitting diodes (OLEDs). While most LEDs are made from semiconductormaterials, OLEDs are constructed from organic materials in which it is much easier to placedifferent color polymers on a single substrate (usually glass) using ink jet printing than toplace different color LEDs on a single semiconductor substrate. OLEDs are potentiallythinner, more flexible, and cheaper than are LCDs while the elimination of an external lightsource enables OLEDs to use less power and have higher viewing angles than LCDs. 6
  7. 7. A third possible discontinuity is 3D television. 3D television requires a new form ofdisplay and new content. Although 3D televisions can be constructed from either OLEDdisplays, LCDs, or even plasma displays, this paper focuses on LCDs since they are currentlythe dominant form of television display. Two of the most common ways of displaying 3Dimages with an LCD are time-sequential and auto-stereoscopic. The first method requiresspecial glasses that include an active or passive LCD display while auto-stereoscopic 3DLCDs do not require glasses. In both types of televisions, a key component is a LCD. One reason for using the term“component” is to distinguish between components and systems in what can be called a“nested hierarchy of subsystems.” Systems are composed of sub-systems, sub-systems arecomposed of components, and components may be composed of various inputs includingequipment and raw materials [11][12] [13] [14]. This paper will just use the terms systemsand components to simplify the discussion. For example, a system for producing integratedcircuits (ICs) or LCDs is composed of components such as raw materials and manufacturingequipment. Other reasons for using the term “component” is that some components experience moreimprovements in performance and cost than do other components [23] and when thesecomponents impact strongly on the performance and cost of a system, rapid improvements insuch a “key component” can lead to rapid improvements in the cost and performance of asystem. For example, some argue that improvements in the cost and performance ofcomputers came directly from improvements in the cost and performance of integratedcircuits (ICs) [23][24] and that increases in the recording capacity of hard disks or magnetictape-based systems came directly from improvements in the magnetic recording density ofplatters or tape [23] [25]. Taking this argument one step further, some argue thatimprovements in ICs, magnetic platters, and magnetic tape led to discontinuities in the designof computers, hard disks, and magnetic tape-based systems [16] [26]. These arguments are 7
  8. 8. consistent with Nathan Rosenberg’s argument that complementary technologies are oftenneeded to implement new discontinuities [27] [28] [29] [30]. There are several reasons why a specific component may incur more improvements thando other components. These include a greater potential for: 1) improving the efficiency bywhich basic concepts and their underlying physical phenomena are exploited; and 2)geometrical scaling [31][32]. The first method includes finding materials that better exploitthe basic concepts and their underlying physical phenomena. Such materials have been foundfor batteries [33], lighting [34], displays [19], vacuum tubes, ICs [35], and magnetic storage[36] technologies. The realization and exploitation of each physical phenomenon that formsthe basis of these technologies required a specific type of material and finding the bestmaterial has taken many years. The best material exploited the physical phenomenon moreefficiently than did other materials and this higher efficiency also often led to lower costs asfewer materials were needed. For LCDs, there has been a search for liquid crystal materialswhose orientation better responds to electrical signals than do other materials where recentsearches have focused on crystals with fast response times in order to increase frame rates. Geometric scaling refers to the relationship between the geometry of a technology, thescale of it, and the physical laws that govern it. Or as others describe it: the “scale effects arepermanently embedded in the geometry and the physical nature of the world in which we live”[32]. Some technologies such as integrated circuits (ICs) benefit from reductions in the scaleof specific features such as transistor gate length or metal line widths because thesereductions in scale lead to improvements in both cost and performance. For LCDs, the mostrelevant form of scaling is increases in the scale of LCD substrates and their associatedproduction equipment where large LCD substrates, some are now greater than 10.5 squaremeters, are cut into smaller panels for televisions and other electronic products [37] [38]. Thebenefits from increases in this scale are somewhat similar to the large benefits that have beenexperienced from increasing the scale of chemical and steel plants, engines, and oil tankers 8
  9. 9. [30] [31] [39] [40].3. Methodology This paper uses the concept of a nested hierarchy of subsystems, an understanding of a3D television’s system and component, and Eisenhard’s [41] case study approach tounderstand the timing of 3D television’s economic feasibility. In particular, Eisenhardt’snotion of cross-pattern search was used to interpret data from a wide variety of technicaljournals, trade magazines, and technical reports. First, the analysis focused on the factorspreventing 3D television from being implemented. Second, it looked at the components in 3Dtelevisions and in particular the ones experiencing improvements. Third, to what extent couldthese improvements solve the problems that were preventing 3D television from beingimplemented? Fourth, when would the components reach the levels of performance and costthat were needed to make 3D television technologically and economically feasible?Eisenhardt’s notion of cross-pattern search was appropriate because these issues wereaddressed in a recursive method in which increasing levels of details were considered.4. Improvements in 2D displays and other “components” 2D displays have been and are still being improved in a number of ways and as discussedbelow, these improvements facilitate the implementation of 3D displays. First, recent LCDtelevisions with LED (light-emitting diode) backlights yield a more comprehensive colorspectrum than do previous LCDs (and CRTs). Second, the sizes of LCD televisions have beengradually increased and one reason that LCDs replaced CRTs is that the size of flat panelLCDs can be more easily increased than can the size of CRTs. This is because increases in thesize of CRTs require increases in the thickness of glass, which increases cost and causesimage distortion around the edges of screen. Another advantage of LCD panels is that theycan be produced in a variety of rectangular dimensions and thus are more easily matched with 9
  10. 10. the widescreen format commonly used in films for cinema screens than are CRTs. Third, increases in the substrate size of LCDs and other improvement in the LCDproduction process have reduced the cost of displays. For example, the size of LCDsubstrates used in making panels has grown by a factor of 1.8 every 3 years, and doublesevery 3.6 years where each doubling is often labeled by new generations of substrate sizesand production equipment [42]. This doubling in substrate size is a major reason why costsfall about 22% for each doubling of cumulative production in terms of area. The reason thatincreases in the substrate size led to lower costs is that large LCD production equipment canmore quickly handle and process substrates on a per area basis and they have smaller “edge”effects than do small equipment1 and thus have lower equipment costs per output than dosmall equipment. For example, the output (substrate area per hour) per dollar of capital costs for one type ofLCD manufacturing equipment was increased by 8.5 times as the substrate size was increasedby almost 16 times from 0.17 (Generation II) to 2.7 square meters (Generation VI) [37]. Thecapital cost, this time for a complete facility, per area dropped by 36% as the substrate sizewas increased from 1.4 (in Generation V) to 5.3 square meters in Generation VIII [39].Generation XI panels are now being produced in sizes of 10.5 square meters. Furthermore,the most important material in LCDs, glass, also benefits from increases in the scale of theirproduction equipment [37]. The result is that the average selling price of large LCDtelevisions on a per meter squared basis dropped 18.8% a year between the first quarter of1998 and the first quarter of 2007 [43]. Fourth, improvements in liquid crystal response time enable increases in frame rate (SeeFigure 2) and these improvements facilitate the technical and economic feasibility for one1 Like IC wafers, large LCD substrates have smaller edge effects than do small substrates since the LCD production equipment must bewider than the substrate in order to have consistent processing across the substrate. Thus, the extra width of the production equipment as apercentage of the substrate width declines as the width of the substrate is increased. 10
  11. 11. form of 3D television called time sequential with active glasses. These improvements aredriven by the use of new materials and the use of higher voltages [44]. By enabling fasterframe rates in both televisions and glasses, these improvements eliminate the blurring thatcan occur when an image for the left-eye is followed sequentially by an image for a right eyeand when these images are assigned to each eye by glasses that also contain LCDs. As shownin Figure 2, a rate of 120 frames per second was achieved in 2010 and this is considered theminimum necessary to prevent blurring. Fifth, improvements in pixel density (See Figure 3) facilitate the technical and economicfeasibility for a second form of 3D television called auto-stereoscopy where pixel count hasincreased by four-times every 3 years [42]. These improvements are being driven by the useof better photolithography and etching equipment that are being borrowed from thesemiconductor industry. By reducing the feature sizes for transistors and thus pixels, thisbetter equipment enables improvements in pixel density and thus resolution where increasesin resolution are needed to implement auto-stereoscopy. The reason these increases inresolution are needed to implement auto-stereoscopy is because pixel elements on the displayneed to be divided into ones for the left and right eye and for each necessary “viewing zone”(See details below). Sixth, improvements in ICs such as graphic processing units (GPUs) (See Figure 4) anddigital storage facilitate the introduction of 3D television because 3D images require moredata processing than do 2D ones. For example, stereoscopy requires the processing of twostereoscopic streams of video and thus requires more data processing than do 2D television.Furthermore, improvements in GPUs enable the use of more complex software algorithms forconverting existing 2D movies into 3D ones. For example, Samsung 3D television includessoftware programs for converting regular 2D content into 3D [45]. The importance of improvements in GPUs is also relevant for animation where millionsof motion control points and polygons are used to represent images. One expert estimated 11
  12. 12. that the "reality threshold" (simulations indistinguishable from ordinary human vision) ofcomputer animation is about 80 million polygons per frame [46]. Polygon count generated byleading video game hardware doubles roughly every 2 years. If these trends continue, thereality threshold may be achieved by 2014. Seventh, improvements in digital storage include improvements in magnetic (See Figure 5),optical and semiconductor storage and these improvements enable the cheaper and morecompact storage of video. For example, while a DVD disc containing two hours of video(720p, MPEG-2) contains 4 gigabytes of storage, a blue-ray disc containing 9 hours of HDvideo has 50 gigabytes of storage. The result of these improvements is that the “street” priceper gigabyte of optical and magnetic hard disk storage had fallen below $0.10 per GB by2010. Eighth, improvements in Internet bandwidth facilitate the introduction of 3D televisionbecause these improvements facilitate a move towards Internet downloads of both 2D and 3Dmovies. According to Nielsen’s Law of Internet Bandwidth [47], the connection speed ofhigh-end Internet users grows by 50% annually, or double every 21 months. By 2011, Internetbandwidth for high-end users would exceed 40Mbps, the average bitrate of high-quality 3DHD video streams, enabling high-quality 3D-HD content to be distributed over the Internet. Ninth, standardization of compression and digital broadcasting methods also facilitate 3Dtelevision and this standardization is partly driven by the improvements discussed above. Forexample, although many countries have adopted different forms of digital broadcast standards(DVB/T, ATSC, ISDB-T, DMB-T/H), most of these standards include a common MPEG-4video compression standard with an extension called Multiview Video Coding (MVC). Thismeans that most of the digital broadcast standards are “3D ready” [48] and since mostcountries already broadcast partial or all in digital, a lack of agreement on standards willprobably not slow diffusion [49]. Tenth, since many of the above-mentioned improvements facilitate the introduction of 3D 12
  13. 13. content, together they facilitate a growth in 3D content. As shown in Figure 6, the number of3D movies has grown quickly since 2005. Although most of these movies have been viewedin theaters with special glasses, these movies can provide the first content for 3D televisionsas the televisions become economically feasible. Similar things can be found in video gameswhere video game consoles typically include faster graphic processing units than do personalcomputers and thus 3D content is probably diffusing more rapidly with video games thanwith 3d movies. For example, in late 2010, more than 500 3D PC games titles were listed onNvidia’s 3D Vision website [50].5. Impact of improvements in 2D displays on achieving 3D displays While various methods of implementing 3D displays exist, this paper focuses on two ofthem: 1) Time-sequential 3D with active shutter 3D glasses (or passive ones); and 2.)Development of “Glasses-free” auto-stereoscopic 3D displays. 3D televisions using the firsttechnique were introduced in 2010 and they sold 1.1 million units and they are expected tosell just under two million units in 2011 [51].5.1 Time-Sequential 3D In time-sequential 3D, a special LCD and glasses containing a similar LCD are used tocreate the illusion of 3D images for the viewer. Separate streams of images for the left andright eyes are displayed sequentially on the display, i.e., a frame for left eye followed byanother for the right eye, and by synchronizing the LCD television and the LCD in theglasses, the appropriate images are presented to the right and left eyes. In order to preventblurring, improvements in the frame-rate of 2D LCD displays were needed before this couldbe achieved. As shown in Figure 1, the frame-rate of 2D LCD displays surpassed the contentframe rate of 120 frames per seconds in 2010. The shutter glasses incorporate a liquid crystal that selects appropriate images for the left 13
  14. 14. and right eye. Faster liquid crystal response times were also needed for these glasses to workeffectively in that the active 3D glasses must quickly process the streams of stereoscopicimages to prevent blurring. The disadvantage of these glasses is that their estimated retailprice is about US$100 due to use of a display in the lens, an infrared or radio frequency framesynchronizing circuit, and a power source to operate the shutter [52]. On the other hand, the falling cost of LCDs will probably reduce the cost of these glassesand reduce the cost of the overall 3D television to a point at which the 3D television ischeaper than current 2D televisions for the same size display. The estimated cost of adding3D capability to an LCD television was about 10 to 30% in 2010 the cost of the television.Since the cost of large screen LCD televisions fell 18.8% a year between 2003 and 2007 [43],it is likely that 3D televisions will become cheaper than the current 2D televisions for thesame display size over the next few years even if this rate of price reduction falls. Another option is passive glasses that do not require a power source and that are expectedto cost less than 10 USD. Although images for the left and right eye are displayedsequentially on such a display as in time-sequential 3D, the images are polarized by anadditional active polarizing filter before leaving the LCD displays. These filters also dependon improvements in the frame-rate of the displays so that the displays can process the imagesfast enough to prevent blurring. Polarized glasses then filter the images for each eye thuscreating an illusion of 3D images. Polarize-filtered 3D glasses are smaller and lighter andthus more comfortable and affordable to users.5.2 Auto-stereoscopic 3D Improvements in pixel density are needed to make auto-stereoscopic 3D displaystechnically and economically feasible and thus eliminate the need for glasses. Inauto-stereoscopy, pixels are divided into two groups -- one for displaying left-eye images,another group for displaying right-eye images. A filter element in the LCD is used to focus 14
  15. 15. left and right images into appropriate “viewing zones” where respective eyes of the observershould be located, as shown in Figure 6. Manufacturers estimate that more than 128 million pixels per square inch are needed tomake auto-stereoscopic 3D technically possible. This is because 8.3 million pixels are neededto enjoy the full benefits of high-definition television and an auto-stereoscopic 3D televisionshould have about eight viewing zones in order to accommodate head movements. Since eachviewing zone requires two sets of pixels, about 128 million pixels per square inch are neededbefore auto-stereoscopy 3D television is technically feasible. The best auto-stereoscopic 3D display panel exhibited at the Consumer Electronics Showin 2011 [53] had a pixel density of 8.3 million pixels per square inch. If pixel densitycontinues to increase four-times every three years, it will be two more cycles or 2017 beforepixel density reaches 128 million pixels per square inch and thus auto-stereoscopic 3Ddisplays become technically feasible. As for economic feasibility, this depends on theincremental cost of the higher densities. If the incremental cost is small, they will probablybecome economically feasible before 2020.6. Diffusion of 3D Televisions The cost of 3D televisions and both the cost of making and distributing of 3D content aregradually falling and thus becoming more economically feasible as the cost and performanceof 2D displays, ICs, various storage technologies, and the Internet are gradually improved.The cost points at which 3D televisions and 3D content begin to diffuse is more difficult toanalyze. The fact that 3D movies are popular in theaters, albeit that popularity has dropped asthe quality of 3D movies have fallen [50], suggests that many consumers would like to watch3D programs in their homes. But how much do they want to watch them? And how much arethey willing to pay for these 3D televisions and content. These questions are difficult toanswer and are not addressed by this paper’s approach. 15
  16. 16. A second set of questions revolves around the interaction between the availability of 3Dprograms and the diffusion of 3D televisions. A large body of research suggests that a criticalmass of users, content, and hardware must be created for growth to occur in those industriesin which strong network effects exist [54][55][56]. Will the availability of 3D movies fortheater viewing reduce the challenges of creating a critical mass by making a sufficientnumber of movies available before 3D televisions begin to diffuse? The answer is probablyyes but to what extent? Furthermore, even if the availability of 3D movies for theater viewingreduce these challenges, significant increases in the amount of 3D content are still needed formost consumers to purchase 3D televisions. How fast might these increases occur? A third set of questions revolves around whether users will be willing to wear glasses towatch television. Surveys of consumers have found that users do not like glasses and worryabout eye strain, nausea, and fatigue [50]. Thus, the diffusion of 3D television may have towait for auto-stereoscopic ones. The second and third sets of questions are not addressed bythis paper’s approach Nevertheless, it is likely that 3D television will diffuse over the next 5 to 10 years (from2011). Improvements in frame rate, pixel density, and overall costs continue to be improvedsince they are being made for 2D LCDs and thus these improvements will continue to bemade even if 3D television is not implemented. In other words, 3D television is benefitingfrom spillovers from 2D displays and the economic feasibility of 3D television will continueto improve even if 3D television is not implemented. In particular, as long as the prices oflarge screen LCD televisions continue to fall through increases in substrate size, reductions inmaterial thicknesses, and other improvements, consumers will upgrade to larger screens,higher-definition, and eventually 3D televisions. At the same time, as more movies andtelevision programs move to the Internet, it is likely that 3D displays will begin diffusing inthe personal computer market and thus drive a move to 3D content for many media. 16
  17. 17. 7. Discussion This paper analyzes the timing of a new technology’s economic feasibility using a simpleyet novel approach. While the conventional wisdom that the cost of a new technology falls ascumulative production increases cannot address economic feasibility until a technology hasbeen introduced, this paper’s approach enables us to analyze economic feasibility long beforea technology has been introduced. This approach builds from the notion that technologies canbe thought of as a “system” of components [11][12] [13] [14] [15] where new technologiesoften borrow components from existing technologies [16]. Thus, this approach focuses on theconcepts that form the basis of new technologies and the levels of performance that areneeded in the relevant components before new concepts become technically andeconomically feasible. For a 3D television “system,” key components include LCDs, ICs, hard disks, and theInternet. Key dimensions of performance for them include the frame rate and pixel density ofthe LCDs and various dimensions of performance for ICs, hard disk storage, and the Internet.In particular, we were able to identify specific levels of performance that are needed in theframe rate and pixel density of LCDs before time sequential and auto-stereoscopic 3Dtelevisions will respectively become technically feasible. Based on this analysis, we werethen able to identify other improvements in costs that are occurring and that mightcompensate for the cost disadvantages that may result from the implementation of higherframe rates and pixel densities. This paper’s approach to understanding economic feasibility highlights two problemswith the economics literature’s use of learning curves. One problem is that many applicationsof learning curves assume that all of the components in a new technology’s system are uniqueto that technology and thus any cost reductions in these components come from production ofthis technology’s system. This is clearly not the case in 3D television and in many otherelectronic products such as computers and mobile phones [15][16][26][30]. 17
  18. 18. A second problem is that many applications of learning curves assume that the costreductions come from activities in a factory [1] [2] [3].. Building from other research, thispaper considered several other ways in which 3D television related technologies are beingimproved. These include: 1) improving the efficiency by which basic concepts and theirunderlying physical phenomena are exploited; and 2) geometrical scaling. For the firstmethod, there has been a search for liquid crystals whose orientation effectively responds toelectrical signals where recent searches have focused on crystals with fast response times. Forgeometric scaling, LCDs have benefited from increases in the scale of the productionequipment for them where increases in substrate size have facilitated the realization of thesebenefits. In showing how these improvements are being made in LCDs, this paper also showssome of the limitations with assuming that cost reductions are mostly from cumulativeproduction as automated equipment is implemented and organized into flow lines. Some readers might argue that this paper’s approach is too simple. However, the author’sargue that we need simple approaches that can be used by managers and students tounderstand technological change and how this change leads to the emergence oftechnological discontinuities. In particular, we need simple methods that students can use tolook for opportunities in the university courses that are intended to help students look foropportunities. This paper (and a forthcoming book) provides a simple method for analyzingthe economic feasibility of new technologies and thus provides a simple method that studentscan use to look for new opportunities. It demonstrates the method using an analysis of 3Dtelevision, which is the type of near-term technology that we would like students to analyze.Furthermore, by going beyond the notion that costs fall as automated equipment isimplemented and organized into flow lines and illuminating two other methods of achievingimprovements in cost and performance, this paper can help students and managers analyzeother technologies. A forthcoming book by the one of the author provides additional detailson this methodology. 18
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  24. 24. Figure 1. Improvements in display frame rate. Sources: [44], [57], author’s analysis.Figure 2. Increasing pixel density for LCD. Sources: [42] and author’s analysis. 24
  25. 25. Figure 3. Increasing performance of graphic processor units. Source: [58]Figure 4. Reductions in price per gigabyte of hard disk drive storage. Source: [59] 25
  26. 26. Figure 5. Increased 3D Content. Source: [62]Figure 6.Concept of Auto-Stereoscopic 3D Display. Source: [63] 26