Category: The Front Line

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.

Smart Phones: Galaxy S5 Triumphs; Amazon 3D Entices

North American sales of Samsung’s long-awaited Galaxy S5 phone began on April 11, and pundits muttered that carriers were nervous about how the phone would sell. As it turns out, either the worries were overblown or the pundits were smoking funny cigarettes.

Four days after North American sales commenced, a Samsung spokesperson said GS5 orders “were already in the millions,” and that first-day sales were double that of of the GS4, the GS5′s prececessor that had its debut last year. The GS5 has sold out in many countries following its launch in 125 other countries on April 14, reported ZDNet Korea. The website went on to report that the GS5 is outselling the GS4 by a factor of 1.3 overall, and has double the sales of its predecessor in the UK and parts of Europe.

Two weeks ago, I wrote about Ray Soneira’s test results on the GS5′s display. I can now report that the GS5′s real-world performance is entirely consistent with the results of Soneira’s exhaustive testing. In particular, the screen is easily readable in bright sunlight. Or, to be pricise, in sunlight that is as bright as sunlight gets in southern New England in mid-April. It really makes a difference when you don’t have to hide under a picnic table to work out of doors.

Amazon entices. The Wall Street Journal’s Greg Bensinger and Evelyn Rusli reported on April 11 that Amazon will announce a “3D”smartphone in June for release in Q3. ”

Amazon's maybe-3D smartphone was shown with the case concealed with a shroud.  (Photo:  BGR)

Amazon’s maybe-3D smartphone was shown with the case concealed with a shroud. (Photo: BGR)

[Amazon] has been demonstrating versions of the handset to developers in San Francisco and its hometown Seattle in recent weeks,” sources briefed on the company’s plans told Bensigner and Rusli. The sources said the handset would use four front-facing cameras to perform eye-tracking and deliver autostereoscopic 3D (stereo 3D without glasses). Display people were immediately suspicious of this assertion because four cameras are not necessary for eye-tracking. Indeed, another source said the four cameras will be used to determine the distance of the user’s face from the phone, and perform zooming functions in response. Without more information, this explanation is not satisfying either.

According to Bensinger and Rusli, Amazon told one of its suppliers it plans to begin volume production of the phone late in April, with an initial order of 600,000 units. One of the two display makers who will provide panels for the phone is Japan Display Inc., which also makes displays for the iPhone 5C and 5S, according to a “person familiar with the details.”

There has been considerable discussion about why Amazon would want to get into the hyper-competitive smartphone market. Amazon’s Jeff Bezos has said that the company’s devices don’t have to make a profit if they further the company’s goals of selling more media. Analysts have added that an Amazon smartphones could also funnel more information about users to the company, creating a richer picture of users’ commercial and geographic lives.

Amazon has demonstrated its ability to make world-class devices. Its recent Kindle Fire HDX tablets and its very recent Amazon Fire TV streaming media player are excellent offerings in their segments. Based on this history, the forthcoming product — shall we call it the “FireFone?” — is likely to have excellent specs, ergonomics, user interface, and industrial design — and be an efficient front end for ordering even more stuff from Amazon. But can it shoulder Apple and Android apart sufficiently to get some breathing room?

That’s where the 3D comes in, if it is 3D. If the feature is well implemented, it could differentiate the phone and be a compelling enabler for key applications. What applications? Let’s try gaming. Smartphone users spend more of their time playing games than on any other application category. And Amazon understands the importance of games. The company is pitching the Fire TV as a game platform as much as a streaming media platform. That’s not to say that 3D has yet established itself as an essential gaming feature, but can be more effective on small screens than on large ones. So there is at least a chance that Amazon will find gold in them thar 3D hills. I look forward to seeing what the “3D” phone does and how well it does it — and whether it’s really 3D.

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.

Samsung Galaxy S5 has Best Cell Phone Display Ever

Friend and colleague Ray Soneira, President of DisplayMate Technologies Corp. (www.displaymate.com), recently published the results of his painstaking tests on the display in Samsung’s new Galaxy S5 smart phone. Soneira’s bottom line is that the GS5 has the best display ever put in a cell phone. Although the 5.1-inch display has the same number (1920×1080) of diamond-shaped pixels as the display that appeared in the GS4, this is a very different display. It’s brighter, has lower screen reflectance, provideds greater visibility in high ambient light, consumes less power, and has the most accurate colors of any smart-phone or tablet display DisplayMate has ever measured.

Samsung has been improving the luminance of its OLED smart-phone a tablet displays over the last few generations. The GS5 is 22% brighter than the GS4 (but consumes no more power) and 13% brighter than the Galaxy Note 3 tablet, according to DisplayMate’s measurements. For most image content it provides a luminance over 400 nits, which is comparable to or greater than LCDs of this size. But it gets even better. When “automatic brightness” is turned on, the GS5 generates a remarkable 698 nits in high ambient light. That’s 47% brighter than the GS4, and in this mode it’s the brightest mobile display DisplayMate has ever tested. On the other end of the luminance range, you can enter “super dimming mode” and reduce luminance to only 2 nits — useful for your next night operation with Seal Team Six.

Although multiple screen modes are not new in Samsung mobile devices, the GS5 implements the feature well, with the modes modes offering different levels of color saturation and display calibration. Of the five screen modes in the GS5, the “cinema mode” provides the most accurate color and white point calibration for the sRGB/Rec. 709 color gamut that is used for most consumer content on PCs, TVs, digital still cameras, and camcorders. The “professional photo mode” provides an accurate calibration for the Adobe RGB gamut, which is 17% larger than the Rec. 709 gamut.

The “adapt display mode” provides real-time adaptive processing. For some applications it will vary the white point, gamut, and color saturation based on the image content and the color of the ambient lighting as measured by an RGB ambient light sensor, which measures color in addition to illuminance. This mode also delivers higher color saturation, which helps compensate for the washing out of screen color and contrasts from reflected light under high ambient.

With our without this mode, the GS5′s display starts off with good specifications for high-ambient viewing. Screen reflectance is only 4.5%, which may not sound all that good if you design aircraft cockpit displays, but (along with the GS4) this is the lowest reflectance for a mobile display ever measured by DisplayMate. Combined with the GS5′s very high luminance when automatic brightness is turned on, this provides a contrast rating for high ambient light that ranges from 75 to 155, the highest DisplayMate has ever measured.

Soneira concludes his report this way: “Based on our extensive Lab tests and measurements, the Galaxy S5 is the Best performing Smartphone display that we have ever tested. It has a long list of new records for best Smartphone display performance including: Highest Brightness, Lowest Reflectance, Highest Color Accuracy, Infinite Contrast Ratio, Highest Contrast Rating in Ambient Light, and smallest Brightness Variation with Viewing Angle. It has raised the bar for top display performance up by another notch – an impressive achievement for OLED technology!” Soneira says a lot more about the GS5 display at http://displaymate.com/Galaxy_S5_ShootOut_1.htm, including extensive specification and comparison charts.

The Samsung Galaxy S5 may have the best specifications of any smart phone introduced to date, and generated the kind of pre-launch excitement that used to be reserved for new Apple products. Now, thanks to Ray Soneira’s typically diligent testing, we know that the phone has a display worthy of its other specifications.

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.