When you should buy a plasma TV.

Has there ever been a more alluring gizmo than the plasma TV? The first time you see one, you really do gasp. The screen is so big and wide, the image is so bright, the set is so amazingly flat, just a few inches deep—you could hang it on the wall. And if you've been taking peeks for a while, you've noticed that the prices keep coming down. So, you've bought the DVD player, hooked up the satellite dish or the digital cable. Is it time to take the next step, to junk the clunky cathode-ray picture tube and flick on the gas?

If you have more money than you know what to do with, and if you heed certain warnings (details to come), then yes, go ahead, do it. If you have some money but hate to feel ripped off, then wait a year, maybe two. Plasmas are going to get a bit better and a lot cheaper. Just a year ago, they were toys for rich boys, a work in slow progress, a lousy TV set. If you bought one back then, you made a serious mistake. Now, all of a sudden, they're not only cool, they're very good—or at least some are.

How good, and how (relatively) cheap, could be seen at last week's InfoComm trade show in Las Vegas. Panasonic and Zenith announced that their new 50-inch plasmas are now listing for $11,000—a crazy price for a television, but two weeks ago they were $15,000 and the year before that, $20,000. The 42-inch plasmas, which last spring went for $10,000 to $12,000, are now going for $8,000. And that's retail. The street price is less—on some streets, much less.

Industry figures indicate that plasmas are following the same trend lines as those other consumer blockbusters, the DVD player and the digital television (DTV). As demand soars, prices plunge, which spurs still more demand, which triggers outright price wars.

In the past four years, sales of DVD players have risen by 15 times, from 1.1 million in 1998 to an estimated 15.5 million this year. Over the same period, the average wholesale price has fallen by about 60 percent, from $490 to $180.

DTVs (which include projection televisions, LCD screens, and high-definition monitors) tell a strikingly similar story. Since becoming a serious item, sales are up 16 times, from 121,000 to 2.1 million. Average wholesale prices are down by nearly 50 percent, from $2,433 to $1,300." [Editor's note: When this piece was first published on June 24, some of the numbers in the previous sentence were in error. On June 28 they were corrected.]

The price-demand curves for plasmas are, so far, a bit less steep. Since 1999, the year they were introduced, sales have risen by 30 times (from 18,000 to 550,000) while wholesale prices have fallen by just 30 to 40 percent.

But there are two reasons for believing plasma prices will plunge more steeply very soon. First, this is a new, incredibly complex technology. The glass screens alone must be baked in huge ovens, which require a large, ultramodern factory and resulted, early on, in very high reject rates. As the "learning curve" and economies of scale take hold, manufacturing costs will plummet, especially since nearly all plasma screens are built by three mega-companies (Panasonic, Pioneer, and NEC). Other companies sell plasma TVs, but they buy the screens off-the-shelf from one of those three.

Second, Samsung and Lucky Goldstar (Zenith's parent company) have set up a plasma-screen factories in South Korea, while a division of the computer firm Acer announced at InfoComm that it's built one in Taiwan. Both countries offer low labor and land-use costs. This move will soon seriously underprice the big three, which will have to respond even if it means cutting profits. (Competition has slashed the prices of DVD players so deeply—as low as $60, good ones $150—that profits barely exist.)

Gary Merson, editor of the HDTV Insider newsletter, estimates that the retail prices of plasma TVs will drop by one-third each year until they hit parity with conventional televisions. If he's right, 50-inch plasmas will list for $7,000 next year, $4,000 or so in two years; 42-inch models will go for $5,500, then $3,700. Not long ago, these prices might have seemed insanely high. But given that my exterminator just spent $5,000 on a large-screen rear-projection television, I think we're talking mass market here.