Posts Tagged ‘Philips’

A Niche Too Small – Pete Putman

Published on Wednesday, 14 March 2012 16:07
Pete Putman
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Rumors had been spreading for a couple of months now that Philips would give up production of its unique Cinema 21:9 (2.40:1 aspect ratio) LCD TV, a product also sold by Vizio and other brands. The TV originally had a resolution of 2560×1080 pixels and was available in one size – 56 inches.

The Cinema 21:9 made its debut in 2009.

 

The 56PFL9954H was introduced in 2009 and got everyone buzzing about its unique shape, which matches the Cinemascope format. Problem was; there isn’t a whole lot of content to watch in this format aside from feature films.

 

Conventional HDTV programs showed up as pillar-boxed images, with black bars to either side. And the odd 4:3 program looked like a tiny square in a sea of black.

 

Now, apparently the last manufacturing run of Cinema LCD sets has been completed, and no more will be made for sale.  Not surprising, as that decision was driven mostly by the cut-throat pricing of LCD TVs in general and a sluggish market for TV sales.

 

The truth is; 16:9 TVs are hard enough to sell these days. But they can accommodate any TV format nicely without leaving too much of the screen area unused, and let’s be honest: Was it really all that uncomfortable to watch Cinemascope films on a 50” LCD or plasma TV anyway? Betcha most people didn’t even notice the top and bottom black bars if the movie was halfway interesting.

 

Projector manufacturers have also tried to sell Cinemascope systems with slide-on anamorphic lens attachments into the home theater market, but haven’t experienced a whole lot of success other than with true cinephiles who are also loaded with cash. Besides, projection screen manufacturers already offered multi-format image masking systems for existing 16:9 screens that made a lot more sense.

 

Sometimes marketers find a niche only to discover that it is simply too small to bother with. And Cinemascope TVs clearly fell into that category. C’est la vie…

Ho-Ho-Ho! Is Turning Into Uh-Oh-Oh!

Published on Monday, 07 November 2011 12:37
Pete Putman
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The results are in, and they aren’t pretty.

 

Both Sony and Panasonic posted substantial losses for the current fiscal quarter and are looking at lots of red ink next March, when their current fiscal year ends. Sony forecast a $2.2 billion loss for its TV operations in the fiscal year that ends next March. Overall, the company is looking at a $1.1 billion net loss for the current financial year, which reverses an earlier prediction of a $730 million profit.

 

This is Sony’s eighth straight year of losses for its flagship TV lines and rumors are flying that its S-LCD partnership with Samsung may be deep-sixed. Earlier, Sony announced it would split its television business into three divisions, consisting of (a) outsourcing, (b) the current LCD TV business, and (c) next-generation TVs (read: OLEDs), starting November 1.

 

But that may not be enough to stem the tide. Some prominent Asian market analysts think Sony should bite the bullet and just pull the plug on TVs altogether, concentrating on their gaming console, smart phone, VAIO computer, and camcorder operations.

 

The easier path to income may be for Sony to license its name to a Chinese TV manufacturer and collect royalties, much the same as Philips has done with Funai in North America.

 

Panasonic is looking at as much as $5.4 billion in losses by year’s end. The culprits are the high value of the yen against the dollar and euro, and the merger and re-sizing of the combined Sanyo – Panasonic operations.

 

Two TV manufacturing plants in Japan will be taken offline, while plasma TV production capacity will be cut by 48%. Further procurement will move to Singapore from Osaka, and plans to relocate plasma fabs to mainland China will also be put into limbo. The company expects to cut its payroll to 350,000 employees worldwide.

 

What does all of this mean to you? Expect to see deep discounts on TVs starting around Black Friday. There will be some amazing deals on large (55 inch and up) LCD and plasma TVs. Even the 3D products are going to come down in price, continuing a trend of diminishing premiums for 3D functionality.

 

So if you are in the market for a new LCD or plasma TV, this could be the perfect year to upgrade. Watch your online price trackers and be ready to move when you see a good price. Right now, you can find ‘basic’ LCD and plasma TVs for about $10-$12 per diagonal inch, up to 55 inches – use that as a baseline when you are wheeling and dealing. Who knows? You may do even better!

Sony: “Make. Believe” Isn’t Making It Anymore

Published on Monday, 08 August 2011 11:02
Pete Putman
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An August 2nd Reuters news story said that Sony is preparing to overhaul its LCD television business to reduce costs and attempt to remain competitive against the likes of Samsung and LG. That means selling off TV factories to Chinese companies such as Foxconn Technology (manufacturers of the iPad) and moving more and more to a Vizio-style rebranding model.

 

Sony’s TV business has lost money for eight consecutive years, which about as long as Sony has been selling Bravia LCD TVs. The company cut its sales forecast for the current fiscal year by 19% to 22 million units, and now there is talk among analysts of the possibility that Sony might exit the TV business altogether – something that is almost inconceivable, given Sony’s long involvement with television.

Three words: Wake. Up. Call.

But the facts are hard to argue with. Ever since Sir Howard Stringer took over at the helm six years ago, Sony Corporation has lost 50% of its market value. According to the Reuters story, Sony is currently valued at just $25 billion, less than 25% of the market valuation of Samsung.

 

Over the years, pursuing profitability in the TV business has led Sony to form an alliance with Samsung (S-LCD), announce plans to take a 34% investment stake in Sharp’s Gen 10 LCD fab (later pruned back to less than 10%), and search high and wide throughout Taiwan and Hong Kong to find a competitive source for the smaller LCD panel TV sizes that still dominate the market.

 

Sony’s initial TV strategy was to position themselves as an Apple-like brand, getting people to pony up a premium for a perceived advantage in Sony product quality and engineering smarts. Trouble was; it was all too easy to surf the Internet and discover that smaller Sony LCD TVs were being sourced from many of the same manufacturers as 2nd-tier LCD TV brands.

 

Sony’s “own the manufacturing chain” business model was blown out of the water by Vizio, the ultimate OEM TV partner, who spent millions of dollars in advertising and went for the jugular with aggressive pricing in wholesale clubs and discount outlets. And of course, Samsung is responsible for much of Sony’s misery, given how aggressively the Korean TV giant followed its ten-year blueprint to become “the next Sony.”

 

It doesn’t help that 3D and Google TV have done little to stem the losses. 3D TV is still struggling to gain widespread acceptance and will likely become just another option built-in to all future TVs; one that cannot command a premium.

 

Google TV is even more of a bust. If you’ve ever had a chance to use the remote control for Sony Internet TVs, you’ll know why: It’s complicated and intimidating to use. People like the idea of watching Internet-delivered video, but they don’t want to search for it with a computer-like interface.

Seriously - Who thought THIS was a good way to watch TV?

To make matters worse, the Sony name doesn’t command respect like it used to.  Interbrands’ annual survey of global brands places Samsung 15 places above Sony. That is mind-boggling, given the strong brand equity Sony used to have.

 

The Reuters story states that Sony could lose close to a billion dollars this year in its TV operations, and that would push total losses to almost $5 billion since 2004. So the question is – how long will Sony continue to spill red ink?

 

One obvious solution to the problem is for Sony to wash its hands of TV manufacturing completely and instead license the Sony name to a line of OEM TVs, much like Kodak is doing these days with digital cameras and photo frames.

 

There is a precedent: Earlier this year, CE manufacturing giant Philips threw in the towel on its TV business, citing increasing losses and an inability to remain competitive even on its home turf in Europe. Going forward, Philips has licensed its brand to Funai for all future Philips LCD TV manufacturing.

 

By following this model, Sony could finally achieve profitability in the TV game. Ironic, isn’t it?

This TV business is a killer!

Published on Tuesday, 29 March 2011 16:05
Pete Putman
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In a recent Wall Street Journal story, Blockbuster announced it will let leases on 186 stores expire at the end of this month as it struggles to climb back out of Chapter 11 bankruptcy. Double-digit store closings were predicted for California and Texas.

 

By the time this latest round of closings takes place, Blockbuster will have shuttered 1,145 ‘brick and mortar’ DVD/Blu-ray rental and sales outlets, or more than a third of the stores it had when bankruptcy proceedings started last fall.

Blockbuster is struggling with a prolonged decline in DVD rentals, caused primarily by the popularity of Netflix’ Watch It Now streaming service. DVD and Blu-ray sales have also slipped in the past two years as more consumers have decided they don’t need to own physical copies of movies, but are content to watch them through video-on-demand (VOD), digital downloads, or streaming.

 

Believe it or not, New York-based hedge fund Monarch Alternative Capital has bid $290 million for Blockbuster, and there are likely to be alternate bidders next month at auction. What these companies would be bidding for isn’t exactly clear; no one in their right mind would want to keep Blockbuster’s old business model going when it’s clear that streaming and downloads are the wave of the future.

 

Nevertheless, Hollywood continues to ship DVDs and Blu-ray discs to Blockbuster, and the auction should generate enough proceeds to pay off numerous creditors including the studios.

 

Across the pond, the news is just as bad for Royal Philips Electronics NV, a consumer electronics giant that sells everything from TVs and Blu-ray players to refrigerators and toasters. (I’m still waiting for them to combine a toaster with a TV.)

According to Bloomberg News, Philips expects to lose as much money in Q1 ’11 in the television business as it did in all of last year! The predicted loss is at least $155 million and maybe more. The culprit? Continued downward pricing pressure on all types of TVs as manufacturers and retailers attempt to stimulate sales.

 

This means Philips will suffer its fifth consecutive annual loss in the TV biz, which makes you wonder why they don’t just get out of it altogether as Hitachi has already done in the United States (and may soon be followed by Mitsubishi and JVC, if present economic trends continue).

 

To show you what impact this pile of red ink has, TV sales amounted to almost one-third of all the revenue earned by Philips’ consumer lifestyle division. If one-third of your business activity is losing money, you’d be reorganizing fast. Indeed, the company will get a new CEO this week, but it’s not clear how he can stem the tide.

 

My guess is that Philips will pull the plug on TVs in 2012 if they don’t see a substantial turnaround in profitability through Q4 of 2011. In 2008, they sold the Philips name to Funai for TVs retailed in the United States, a move that is paying off nicely for the Japanese manufacturer. It also generates some royalties for Philips, which is perhaps the best approach to take with what’s left of their European and other remaining markets: Cut bait, and stay with lighting and health care products, two businesses that actually make money.