Category: The Front Line

Fat TVs Come Back

A few years ago Samsung introduced very thin large-screen LCD-TV sets with LED edge-lighting and thin light-guide plates (LGPs). The company earned its place in the infamous marketing hall of fame by ignoring reality and calling these sets “LED TVs,” which has confused TV consumers and salesmen every since. With these thin, elegantly designed sets, Samsung created a reason for people to buy premium TVs and enjoyed a surge in market penetration that lasted until the rest of the industry caught up — about 9 months. Thin was in.

But as LEDs became more efficient and less expensive, manufacturers began to see advantages in returning to the old style of placing the backlight’s lamps directly behind the LCD, but with a significant difference. The old stack of several cold-cathode fluorescent lamps would be replaced by a full array of LEDs. This would also be a return to the old, thicker, “light box” style of backlight, which LGPs had seemingly relegated to the dustbin of history. Would consumers accept thicker TVs after the industry had spent so much time selling them on thin ones, or would Tei Iki’s old flat-screen insight carry the day?

Tei Iki? In the waning days of CRT monitors, Tei Iki was assigned the task of squeezing as much lifetime as possible from Sony’s then-large CRT and monitor operation in San Diego. Iki was fond of placing a flat-screen LCD monitor on a desk next to a nearly-flat-screen Sony Trinitron CRT monitor, and aligning the screens so they were in the same plane. “See,” he would say. “All screens are flat.” And then he went on, motioning to the very different depths of the monitors, “The rest is just infrastructure.” How much infrastructure will consumers accept? And what will they get in return?

Two-year-old Samsung TV, as seen at the GrafTech International booth at SID 2014.  The display is removed to show the full-array LED backlight. GrafTech makes the graphite heat spreaders seen under the LEDs on the left side of the backlight. (Photo: Ken Werner) Two-year-old Samsung TV. The display is removed to show the full-array LED backlight.

Two-year-old Samsung TV, as seen at the GrafTech International booth at SID 2014. The display is removed to show the full-array LED backlight. GrafTech makes the graphite heat spreaders seen under the LEDs on the left side of the backlight. (Photo: Ken Werner)

A couple of years ago, LCD-TVs with full-matrix LED backlights began to appear in the North American market as low-cost sets. (See photo.) One big saving was the elimination of the expensive LGP. And to keep costs really low, a minimal number of LEDs were used in the array. As a result, these sets generally had less luminance than edge-lit models.

But, as was very well-known at the time, the LEDs in a full-array backlight can be controlled in groups to significantly enhance the dynamic range of the images displayed. Thus, set makers could use the same backlighting technology for value-priced and premium sets, depending on the number of LEDs and the sophistication of the “local area dimming.”

And that’s what Vizio is doing as it rolls out its new 2014 M Series, FHD, smart LCD-TVs. The premium M series sets have their LEDs controlled in up to 32 separated zones, with the 70-inch having 36 zones. Only the 80-inch still uses an LGP. (The 80-inch also features local-area dimming since a somewhat limited version of this technology can still be implemented with edge-lit LGP backlights.)

The more economical E series also uses full-array backlights and local dimming, with the local control maxing out at 18 zones.

Although it’s not really part of this column, Vizio is not offering 3D capability on any of its 2014 sets. Chief engineer Ken Lowe has always said that Vizio achieves its very competitive pricing not by compromising quality, but by including only those features consumers value. Vizio feels that consumers’ lack of interest in 3D is so profound that the cost of 3D capability should be directed to other features.

Getting back on topic, AmTRAN, which has licensed the JVC name for direct-view TV sets, announced this week the introduction of a 32-inch HDTV model in its JVC Emerald Series. The EM32FL is intended for the growing number of people who inhabit small apartments but still want a full-featured TV. The $269 (MSRP) set features full-array backlighting. Since AmTRAN claims a four-million-to-one dynamic contrast ratio and “silky black levels,” we can assume the set is using local-area dimming.

Is this enough performance and cost-saving to justify a fat TV? Well, they really aren’t that fat. Vizio’s 65-inch M-class is a whopping 2.28 inches thick. Yes, an LGP edge-light could cut that to less than an inch. But I feel Tei Iki leaning over my shoulder, saying, “It’s just infrastructure.”

Ken Werner is Principal of Nutmeg Consultants, specializing in the display industry, manufacturing, technology, and applications.  He consults for attorneys, investment analysts, and companies entering or repositioning themselves in industries related to displays and the products that use them.  You can reach him at kwerner@nutmegconsultants.com.

Of Phablets and 4K

Lately, trying to predict sales trends is like shooting at a moving target. And just when we think we have a market segment figured out, it turns in a new direction.

So it goes with the shipments of tablets, which most analysts had pegged to grow by 20% in 2014 over last year. But hold on – a recent report from IDC has dropped that number to 12% after Q1 shipment numbers came in.

In a January press release, IDC had predicted that tablet shipments would hit 270M units this year. At some point, that number was revised downward to 261M units. Now, IDC is forecasting 2014 shipments will drop to 245M units, based on lower-than-expected Q1 results.

What’s the reason for the fall-off? IDC states one obvious cause: People are keeping tablets longer than expected. Unlike smartphones, which are usually recycled every two years (the length of the typical service contract and phone battery), many older tablets are still in service. My wife still uses her iPad 2 daily, and I’ve gotten two+ years out of my Nook HD tablet.

IDC also found that older tablets are often “handed down” to another family member, which represents another lost sale. The vast majority of tablets are using conventional Wi-Fi connections to get data, which means they aren’t sold with annual contracts for LTE service.

But there’s another factor that IDC identified, and that is the growing popularity of large smartphones, or “phablets” as some wags have named them. Phablets are phones with screens larger than 5 inches, although IDC prefers to start the category at 5.5 inches. These gadgets can do everything a tablet can (plus make phone calls and send/receive texts), and many consumers find they’re large enough to stand in for a tablet screen.

The phablet category really took off when Samsung’s Galaxy smartphones broke the 5” screen barrier over a year ago. At the time, many analysts predicted that screen size would be too large for consumers. Guess what? They’ve been flying off the shelves. And now we’re starting to see 6” smartphones from the likes of LG and HTC. (LG even has a curved model, the G Flex.)

LG's new G-Flex curved phone has a 6-inch screen. Too big? Apparently not!

LG’s new G-Flex curved phone has a 6-inch screen. Too big? Apparently not!

IDC’s research states that smartphone shipments (30.1 million units) increased from 4.3% in Q1 2013 to 10.5% in Q1 2014. Consequently, shipments of larger tablets (8” – 11”) are expected to increase this year by 3% over 2013, while 7” – 8” tablets will see a decline of 5% in the same time period.

Even though phablets are pushing the limits of screen sizes, they’re finding a sweet spot with the public. The same thing appears to be happening on a smaller scale with 4K (Ultra HD) TVs, which IDC also tracks.

According to their research, worldwide 4K TV shipments reached over one million per month in March and are expected to hit 15.2 million for the full year. That’s better than most analysts expected, given the low awareness of 4K by the general public. IDC also found that the average selling price for Ultra HD TVs has fallen 86% since 2012 (when there were a handful of models) from $7,851 to $1,120 at the end of March.

According to a new report from Business Insider Market Intelligence, 4K TV sales are largely propelled by low prices in China, where many fabs are moving to 4K LCD panel production and leaving low-margin 2K panels behind. Indeed; the BI press release identified the Chinese market as “most accessible” for 4K TV.

In North America, BI predicts that 10% of all households will have at least one 4K TV by the end of 2018, and that worldwide shipments of 4K TVs will hit 11 million units by the end of 2016. We’ll no doubt see Korean manufacturers switch over to 4K LCD panels in larger sizes within two years, as the profit margins on 2K glass have dwindled to almost nothing.

There’s a precedent for the move to 4K, and that is the transition almost eight years ago from 720p/768p display resolution to 1080p. Now, history is repeating itself, and it’s likely that LCD TVs larger than 55” will all be Ultra HD in short order.

Have your doubts? At CES, Vizio announced a fall line-up of Ultra HD Smart TVs with eye-popping prices, such as a 50” model for $999, a 55-inch version of just $1,300, and a 65-inch offering for $2,200. Those prices aren’t much higher than what “loaded” smart 3D 2K LCD TVs command now. Vizio will even have a 70-inch 4K set for $2,600!

Consider also that Chinese manufacturers are setting up shop to build LCD TVs close to the US market. Last month, TCL purchased Sanyo’s TV manufacturing facility in Tijuana, Mexico, giving it a big advantage over other Chinese brands in shipping and tariffs. And you can bet that 4K Ultra HD TVs will be rolling off that line in the not-too-distant future.

By the way, 4K and phablets have already intersected. At least five new smartphones support native 3840x2160p/30 video recording; among them Sony’s Experia Z2, Samsung’s Galaxy Note 3 and S5, LG’s Optimus G Pro, and Asus’ Liquid S2. And three of them fall squarely into the phablet category, providing me with an appropriate wrap-up to my story…

A Tale Of Two Companies, Part II: The Best-Laid Plans…

In a recent post, I talked about Panasonic’s impressive financial turnaround from its last fiscal year, booking a nice profit after doing some soul-searching and consequent house-cleaning of underperforming business units. And I contrasted Panasonic’s performance with the struggles of Sony, who continues to struggle with red ink. Let’s take a few moments to revisit both brands.

Coincidentally, Panasonic held a couple of press days this week in New York City to talk about its 2014 TV lineup. I attended the Thursday session and can say that it was much more low-key than previous Panasonic TV events.

For 2014, the emphasis was on two things – 4K, and cloud connectivity. Panasonic introduced a new concept, LifeScreen, which is yet another search engine combined with a clever graphical user interface.  You pre-set your preferences, and your Panasonic TV searches for content to match them.

And how, exactly, does the TV know it’s you? Thanks to a pop-up camera and face recognition software, the TV comes to life when you stand or sit in front of it and loads up your programs choices. A new remote control provides both swipe control and voice recognition (shades of Samsung 2011!), and seems to work reliably.

Jay Park Presents 600p

Panasonic’s Jay Park fills us in on the 2014 TV lineup details.

Panasonic’s cloud structure isn’t much different than other manufacturers. You can download photos and video and share them with connected tablets and phones in your house. And you can upload your own photos and videos to the same online storage.

Now, to the nitty-gritty. As expected, the 2014 TV lineup is 100% LCD. What’s unexpected, but ultimately not surprising, is that you’ll find a mix of IPS and PVA LCD panels in these new TVs, meaning that Panasonic (like everyone else) is shopping for the best price and performance combination in LCD panels for their new TVs.

Given the cutthroat pricing in the TV market, this isn’t surprising and in fact is a smart strategy: There’s plenty of good LCD glass coming out of Korean, Taiwanese, and Chinese fabs, so why bother with the costs of making it yourself?

Panasonic's 2014 LCD TVs (center) predominantly use PVA glass and are quite improved over the 2013 models (right), holding their own against last year's ZT-series plasma (left).

Panasonic’s 2014 LCD TVs (center) predominantly use PVA glass and are quite improved over the 2013 models (right), holding their own against last year’s ZT-series plasma (left).

 

You can operate the 2014 TVs from an iPad, iPhone, or Android device - even to the level of a full grayscale and color calibration.

You can operate the 2014 TVs from an iPad, iPhone, or Android device – even to the level of a full grayscale and color calibration.

Panasonic’s value-add for these TVs is to improve the spectral response of the white LEDs used in these new sets, and it’s impressive. They’re claiming 98% coverage of the minimum DCI color space and have improved the rendering of yellow.

Side-by-side demos with last year’s award-winning ZT60 plasma TV showed the difference dramatically. Aside from the usual issues with PVA and IPS LCD panels, the images had excellent contrast, great color saturation, and decent black levels – and you can clearly see why plasma has fallen by the wayside.

There will be six series of models in the 2014 TV line-up, starting with the entry-level A400 and moving all the way up to the new 55-inch and 65-inch Ultra HD AX800-series TVs. The new remote and camera system come with three of these lines, and some models now include a sound bar (smart move!) in the box.

HDMI 2.0 and HEVC decoding are standard on the AX800, which is interesting considering how few Broadcom HEVC decoder chips have been deployed by TV manufacturers to date. And you can operate the TV from your iPhone or iPad (or Android device), even to the point of doing a full color and grayscale calibration, thanks to a new app.

So Panasonic remains a player in the TV game, even though the company’s worldwide market share fell out of the top five in 2013. Panasonic’s return to corporate profitability will take a lot of pressure off the TV division, which has relocated to San Diego from New Jersey.

In contrast, Panasonic’s neighbor down the street in San Diego – Sony – continues to struggle with red ink. The company released its final numbers for fiscal year 2013 last Thursday, and things still don’t look good, even though the picture is lightening up a bit.

For 2013, Sony booked a net loss of -¥125B (about $1.23B USD) with operating income of ¥26.5B (about $265M USD). There were a couple of operating divisions that continue to drag down profit, most notably Sony’s discontinued PC business unit, battery manufacturing, and disc manufacturing (DVD, Blu-ray) outside Japan and the U.S.

Sony’s long-struggling TV operations are reported as part of the company’s Home Entertainment and Sound business unit, which recorded a loss of -$248M for FY 2013. That’s actually a 70% reduction from FY 2012, which is a silver lining. Overall, the TV division saw its sales increase 30% Y-Y, which is more good news.

Another bright spot for Sony is its Imaging Products and Solutions (IP&S) division, which booked $256M in operating income. That’s not enough, however, to offset the -$729M operating loss from PC operations and the -$78M loss from the Game division. And an impairment charge of -$250M was assigned to the disc manufacturing business, adding more red ink.

Getting rid of the unprofitable PC business will definitely help next year’s results. (Apparently, so will the sale of Sony’s New York City headquarters on Madison Avenue, which netted almost $700M, according to the company’s financial statement.) The operating loss reported for the Game division (-$78M) was a surprise, but Sony attributed it to costs involved in launching the PlayStation 4 console and a $60M write-off of PC game software titles.

There’s no question that Sony has quite a mountain to climb and get back on the “plus” side of the ledger. Unlike Panasonic, Sony’s worldwide share of television shipments held pretty steadily in 2013 (about 7%, down slightly from 2012), but that number either has to go up or further cost-cutting must take place to make TV retailing worth continuing.

Sony also has to make a decision about its optical disc business unit. The Blu-ray Disc Association (BDA) hasn’t released a standard for 4K yet, while the Digital Entertainment Group’s numbers have shown pretty consistently over the past four years that digital media consumption is shifting emphatically to digital downloads and streaming. Given this trend, it’s not likely that the disc manufacturing unit will ever return to profitability and might also be a candidate for the axe by year’s end.

You know that old saying about the best-laid plans oft going astray? Hmmm…

What Comes after Amorphous IGZO?

Sharp has established indium gallium zinc oxide (IGZO) as a successful backplane material that enables high aperture ratios in high-pixel-density LCDs in sizes too large for low-temperature polysilicon (LTPS) to be financially viable. IGZO is also an attractive, lower-cost alternative for LTPS in high-pixel-density smart-phone LCDs.

Sharp and Qualcomm are working together on IGZO-driven pixtronix displays, which use in-plane MEMS shutters and field-sequential color.

Sharp is not discussing plans for IGZO-driven OLED displays, although they show an increasing variety of IGZO/OLED prototypes at trade shows. There are good reasons for being cautious. When it became clear that the switching characteristics of amorphous silicon (a-Si) were extremely unstable when a-Si TFTs were used to switch current-driven OLEDs and that LTPS was both expensive and not readily scalable to monitor and TV sizes, the industry set out to find a backplane material for OLEDs that ideally combined the low cost and scalability of a-Si with the stability of LTPS. R&D teams were drawn to the class of materials called transparent metal-oxide semiconductors.

IGZO eventually appeared to be the best suited to the task, but several categories of instabilities raised their ugly heads. One by one, solutions for those instabilities were found, with a couple of exceptions. LG Display made a strategic decision to commit itself to IGZO when most researchers though that at least a couple of years more were needed to make IGZO ready for volume production of OLED-TVs. LG initially paid a price for its leap of faith. Knowledgeable sources believe that LG’s manufacturing yield of IGZO/OLED panels was 10% last year, rising to 50% early this year. LGD has established an internal goal of 70% for its new Gen 8 M2 fab, which is scheduled to begin producing OLED-TV panels in the third quarter of this year. Will the lessons LGD has learned by climbing this painful learning curve ultimately pay off? Time will tell.

Quick summary of the story so far: IGZO is a success for LCDs and is working its painful way forward for OLEDs. There is certainly room for alternatives.

Sharp is working on crystalline IGZO (x-IGZO). The original appeal of a-IGZO was that its carrier mobility was not too much less than the crystalline form, and offered the vision of inexpensive a-Si-like fabrication. But Sharp now feels it understands how to crystallize the amorphous form economically and obtain the greater stability and even greater carrier mobility that crystallinity will impart. That, says Sharp, will provide a material that is more suitable for OLED backplanes, as well as very high-ppi LCDS.

Other possibilities are the wonder materials graphene and carbon nanotubes, but they are still quite a way from being ready for incorporation in commercial panels.

Amorphyx, a development-stage Oregon State University spin-off, is developing the amorphous metal nonlinear resistor (AMNR) for display-switching applications. The AMNR is a two-terminal device that has just three thin films and uses current tunneling for its operational mechanism. Amorphyx claims no sensitivity to light, 40% lower cost than a-Si and better optical performance, and a manufacturing process that leverages a-Si TFT production equipment.

Finally, for the purposes of this column, is CBRITE. CBRITE has a management and technical team that grabs your attention. The Chairman and co-founder is Nobel Prize winner Alan J. Heeger. Former Display Fellow at DuPont Display Gang Yu is CTO and co-founder. Bruce Berkoff, former EVP and CMO at LG.Philips Display is CMO.

CBRITE is using a metal-oxide TFT, but the metal oxide is something other than IGZO. The material and process delivers carrier mobility that is greater than IGZO’s, says Berkoff. The mobility readily goes beyond 30cm²/V·sec, and 80cm²/V·sec has been demonstrated. CBRITE’s switches are OLED-stable, says Berkoff, and I(ON)/I(OFF) ˜ 10¹º @ 10V. A five-mask process reduces cost compared to a-Si. Gang Yu says partners are likely to receive panels for qualification late this year. Berkoff adds the technology will probably appear in shipping products in 2015 or 2016.

Expect lots of discussion about these issues at next month’s SID Display Week. a-IGZO is an important chapter in the development of display backplanes, but it’s certainly not the last one.

Ken Werner is Principal of Nutmeg Consultants, specializing in the display industry, manufacturing, technology, and applications.  He consults for attorneys, investment analysts, and companies entering or repositioning themselves in industries related to displays and the products that use them.  You can reach him at kwerner@nutmegconsultants.com.

 

A Tale Of Two Companies, Revisited

It’s annual meeting time in Japan, and the final reports for fiscal year 2014 are trickling in. (In Japan, the fiscal year starts on April 1 and runs through March 31.)

Given all of the financial misery that Japan Inc. has been enduring for the past four years, you’d probably cringe before opening the latest consolidated financial statements. Yet, there was a surprise this time.

Let’s look at two of the dominant CE brands in Japan – Panasonic and Sony. The former company grabbed some headlines last year when it announced an exit from the plasma display panel (PDP) business, effective 12/31/13. For years, plasma displays and televisions were synonymous with Panasonic – they dominated the market and provided most of the technological breakthroughs that led to the (still to this day, IMHO) “best in class” televisions on the market.

Sometimes “best’ doesn’t always win. Plasma TV shipments and sales had been in steady decline for the past seven years as more and more consumers chose LCD TVs, particularly after 1080p resolution became widespread and national discounters like Vizio forced prices down to bargain-basement levels.

2013’s final numbers from NPD DisplaySearch show that plasma TV shipments from all brands (Panasonic, Samsung, and LG) accounted for slightly more than 4% of the global TV market. You don’t need a weatherman to know which way the wind blows, and Panasonic – who had been in the midst of a massive review of all 80+ of its business units – did the right thing and quickly cut its losses, however painful that may have been.

Now, it appears all of that aggressive restructuring and cost-cutting has paid off. For FY 2014, Panasonic posted a net profit of about ¥120.4 billion, or $1.18B USD. That represents a spectacular turnaround from a ¥754 billion loss in FY 2013, or about $7B USD.

In addition to the money-losing plasma operations, Panasonic also jettisoned its mobile phone business. (Didn’t know they made mobile phones? Neither did most people.) Along with slimming down underperforming business units, finishing the acquisition of Sanyo and all costs associated with it, and shifting their focus to everything from energy storage solutions to Lumix cameras, the company realized an operating profit of ¥305 billion ($2.3B) for the fiscal year.

Now, on to Sony, who has struggled to maintain profitability for several years, thanks in part to the never-ending red ink generated by its television business unit. Sony won’t post its final numbers until May 15, but an advisory went out on May 1 saying that they won’t be pretty – and in fact will be worse than previous guidance suggested.

The company now is forecasting an operating income of ¥26 billion ($255M USD) for FY 2014 when all is said and done. That number represents a steep drop of 67% from the company’s original forecast of ¥80 billion ($783M USD). Sony identified two primary reasons for the drop in income. I’ll quote from the company’s press release:

“Sony expects to record approximately 30 billion yen in additional expenses in the fiscal year ended March 31, 2014 related to exiting the PC business. Since Sony’s announcement on February 6, 2014 that it will exit the PC business, PC sales for the fiscal year ended March 31, 2014 and expected PC sales for the fiscal year ending March 31, 2015 are underperforming the February expectation. Consequently, Sony expects to record write-downs for excess components in inventory and accrual of expenses to compensate suppliers for unused components ordered for Sony’s spring PC lineup. In addition, certain restructuring charges are expected to be recorded ahead of schedule.”

Okay, so the computer operations weren’t pulling their weight, which is why Sony decided to exit stage right and reportedly sell their VAIO operations to Lenovo (as announced in February). But there’s more:

Sony expects to record approximately 25 billion yen in impairment charges mainly related to its overseas disc manufacturing business. Primarily due to demand for physical media contracting faster than anticipated, mainly in the European region, the future profitability of the disc manufacturing business has been revised. Consequently, Sony has determined that it does not expect to generate sufficient cash flow in the future to recover the carrying amount of long-lived assets, resulting in an expected impairment charge. Primarily due to the reason mentioned above, the fair value of the entire disc manufacturing business also has decreased, resulting in an expected impairment of goodwill.”

Translation: The Blu-ray and DVD business is in the tank, particularly in Europe. Clearly, consumers are turning more and more to cloud storage and streaming of movies and TV shows, and not purchasing or renting optical discs. That’s definitely not good news in Tokyo, but it’s not like this trend snuck up and blindsided the company: I’ve been writing about it for several years now in Display Daily.

Given how aggressively Sony worked a few years ago to convince Warner Home Media and other studios to dump the nascent HD-DVD format in favor of Sony’s home-grown Blu-ray platform, this development must sting all the more. And talk about bad timing: The latest numbers from the Digital Entertainment Group (DEG) show that digital movie sales (streaming and downloads) during the first three months of 2014 totaled $330.25 million, while optical disc sales and revenue were down 13.7% to $1.82 billion from $2.1 billion in the first quarter of 2013, continuing a long-term steady decline that goes all the way back almost a decade.

We won’t have the final numbers from Sony for a few weeks. (Sharp and Toshiba also have yet to report their year-end results.) But you can clearly see what happens when one company faces reality and takes the bull by the horns, while another keeps stalling for time. I’ll check in again in two weeks with the rest of the numbers from Japan, Inc.