Posts Tagged ‘4K’
Digital In The Desert: The 2014 HPA Tech Retreat
- Published on Thursday, 20 February 2014 15:00
- Pete Putman
- 0 Comments
I’m writing this while sitting in the third day of the annual Hollywood Post Alliance Technology Retreat, which is one of the top technology conferences anywhere and which attracted well over 500 attendees this year to the Hyatt Indian Wells Resort in the Palm Springs area.
I’ve been attending the Retreat since 2002, and it has grown by leaps and bounds since then. In addition to a rich, 3 ½ -day program of technical presentations, there is a mammoth demo room where manufacturers can show off the latest in video compression, camera, editing, post, color correction, storage, display, and interfacing products. Some products that are introduced at the NAB Show actually have their “sneak previews” here!
Presenters and attendees come from all walks of life and from around the world. We’ve had representatives of U.S. Canadian, and British TV networks, IT companies like Cisco and Google, Hollywood studios (Paramount, Universal, Warner Brothers, Disney, Sony Pictures), and well-known hardware and software manufacturers including Sony, Canon, Dolby, Adobe, Miranda, Belden, and NVIDIA. NHK, IBC, the EBU, SMPTE, and a host of domestic and international technology and professional associations are all well represented here.
The informal, ad hoc approach of the Tech Retreat contrasts with more structured and traditional technology conferences, and there are numerous opportunities for sidebar conversations, meeting, and networking. If you have a question about technology, there’s a very good chance someone at the Retreat has the answer.
There were several hot topics this year. UHDTV (4K) was one of them; so was the next-generation of file distribution and storage systems (clouds) and the move to IP-based facility interconnects instead of traditional copper serial digital interfaces. This is a hot-button issue right now for post facilities and on Thursday morning, we heard about different ways to do it from Axon (AV Bridging), Evertz, Belden, and Cisco, along with the BBC. (Belden’s Steve Lampen pointed out in a humorous talk that coaxial cable is still faster than most people think and rumors of its demise are premature.)
A Tuesday panel focused exclusively on “second screen” trends and generational differences in how media is accessed and consumed – and how broadcasters and studios need to adapt their business models to satisfy the demand that Gen Ys have for anywhere & anytime content delivery. The “I want it when I want it, where I want it” paradigm was supported and contradicted by metrics from SAP, Nielsen, and (believe it or not) a representative from Ultimate Fighting Championship (UFC).
Of course, the issue of video compression came up. A presentation on YouTube streaming proved a bit controversial when the presenters hinted that Google’s “free” VP9 codec might actually work as well if not better than the emerging HEVC H.265 platform, an assertion that was immediately challenged by Matt Goldman of Ericsson, an industry veteran who is well-versed in codec science and who later called for an independent, non-biased comparison test of both codecs.
I took the stage twice on Wednesday. First out of the gate was my annual review of the Consumer Electronics Show, which covers a lot of ground in 30 minutes including Ultra HD TVs, curved displays, curved phones, HDMI 2.0, DockPort, 4K streaming products, gesture control, wireless, body sensors, and near-to-eye displays. (Plus 4K washers and dryers, Bluetooth underwear, connected cars, and grumpy cats.)
I followed that with an in-depth look at the new generation of small, fast, and dense signal interfaces found on tablets, phones, cameras, and ultrabooks. Examples included Mini and Mobility DisplayPort, Mobile High-definition Link (MHL), Micro HDMI, SlimPort, and DockPort. I also discussed the HDBaseT standard for multiplexed signals over structured wire, and showed a few interesting applications for these connections including smartphone game controllers and smartphones that dock into notebook computers and provide CPU and video card functions.
Another unique feature of the Tech Retreat is the breakfast roundtables. These are held on Wednesday, Thursday, and Friday mornings before the main program kicks off. Banquet roundtables are set up with a number that corresponds to a list of topics outside the room. Show up, grab some breakfast, and enjoy an ad hoc, moderated discussion about that topic – or change the topic.
The scope of topics will amaze you. Here are a few examples of the 34 breakfast roundtables that were conducted on Thursday:
On-Set Workflows: Faster, Better, Cheaper
4K = Four Times the Measurement Opportunities
Next-Generation Display Interfaces: the Conversation Continues
Cloud-Enabled Workflows: What Works, What Doesn’t
Should ITU-R Add 119.88 (Hz) as a Frame Rate to BT.2020?
Performance and System Requirements for a Reference Display
Deep Color Encoding: 12-bit Equivalent with Just 8 Bits
Conference organizer and industry veteran Mark Schubin likens the Tech Retreat to “drinking from a fire hose.” That’s how much information is available to attendees. You can absorb as much or as little as you want, and see some cool demos along the way.
There’s still a day left of the conference, but I’m writing this during the “Better Pixels: Best Bang for the Buck?” session, featuring speakers from Dolby, ETC, NHK, and the American Society of Cinematographers, along with Schubin. The question is this – do we really need more pixels on the screen (i.e. 4K or Ultra HD), or is a combination of high dynamic range and wider color gamuts a better approach to improving high-resolution displays and ultimately televisions?
Dolby, which bought Brightside Technologies’ high-dynamic range IP some years ago, is aggressively pushing for high dynamic range and the higher color saturation that comes along with it. Their argument is that HDR is a better fit to human visual systems, and a discussion has repeatedly come up about the interest of consumers in HDR TVs. (They’re talking about thousands of nits of brightness.)
I’d posit that the real challenge to selling HDR is the plummeting cost of large TVs. You can readily buy 55-inch LCD TVs with quite a few bells and whistles for less than $600, so just how much of a premium are consumers willing to pay to add high dynamic range? (Needless to say, such TVs would also be equipped with next-generation illumination systems, like quantum dots.)
My guess is that consumers would only tolerate a slight price increase to get HDR, as the benefit would be lost on most of them. Numerous studies have shown that consumers (at least, in the U.S.) prefer big, cheap televisions. They don’t care about 3D, and are ambivalent about “smart” TV functions for the most part. Both of these features have either become standard or seen a dramatic drop in price in the past four years.
If the Tech Retreat sounds intriguing, you should pencil it in on your calendar. Next year’s Retreat will be held from February 9 to February 13, and registration closes out very quickly – within a couple of weeks. For more information, go to http://hollywoodpostalliance.org/?page_id=5978.
Consumer Television: It’s Business As Usual (Or Maybe Not)
- Published on Friday, 24 January 2014 19:49
- Pete Putman
- 0 Comments
The official numbers haven’t been released yet, but a report in The Korea Herald, dated January 22 says that the final data will show Samsung dominated the global television business in 2013.
According to the story, Samsung was estimated to have sold 49 million units of flat-panel TVs last year. DisplaySearch had the totals at 32 million from January through September (the final DisplaySearch numbers for 2013 haven’t been compiled yet) and Yoon Boo-keun, Samsung’s consumer electronics division chief, stated at CES earlier this month that the company sold around 15 million TVs in Q4.
That’s an impressive number by anyone’s standards and reflects the complete dominance Samsung has in the television business. Think back 20 years to when Samsung was an afterthought; perceived as a 3rd-tier “bargain” brand for electronics.
Now, they’re on top of the heap, and have been so for eight consecutive years. In the meantime, LG looks to maintain its grip on 2nd place, with a varying market share number in the low to mid-teens throughout 2013. Between the two companies, they control over 40% of the worldwide television business.
The Japanese, on the other hand, will no doubt be disappointed by the final numbers for ’13. In the third quarter; Sony, Panasonic, and Sharp were hovering around 8%, 6%, and 5% market share respectively – and those numbers are expected to drop when the final tally comes in.
As I noted in my last DD, Panasonic seems to be charting a course away from televisions, based on what they didn’t show at CES (a full line-up of 2014 models) and their emphasis on commercial sales of everything from cameras and storage devices to digital signs and batteries. And of course, Panasonic pulled the plug on plasma panel and TV manufacturing at the end of December.
The other remaining player in televisions – Toshiba – took a similar approach to their CES booth, choosing to show a wide variety of 4K (Ultra HD) display applications for home and office and skipping the TV line-up. Toshiba has already shut down two manufacturing plants and laid off over 3,000 employees because of continued losses in television and computer manufacturing.
That leaves Sony and Sharp. The former continues to stay the course in sales and marketing of consumer TVs, but I’d be surprised if they don’t turn in yet another year of red ink – the ninth in a row. Sharp, meanwhile, has chosen to emphasize their super-sized lineup of TVs, plus clever engineering tricks like the Quattron+ line and their ability to manufacture IGZO TFTs with decent yields.
The problem for both companies is their uninterrupted slide in television market share that has been going on for eight years. With a 5% share worldwide and 3% in the United States as of Q3 2013, Sharp can’t afford to stay in this game for much longer. Neither can Sony, if they are serious about returning a profit to shareholders.
It doesn’t help matters that television sales are expected to have declined worldwide by 2.2% from 2012 when the accountants are done. The double-digit boom in TV sales in China kept that number from being a lot worse.
Amid the flurry of post-CES news stories about curved, super-sized UHDTVs was another item that went almost unnoticed, except for the sharp eyes of analyst Paul Gagnon of NPD DisplaySearch. In his blog post of January 17, Gagnon revealed how three retailers in the United Kingdom are already discounting LG’s “first to market” 55-inch curved OLED TV (55EA980W) by £3,000 ($4,910).
This product, which launched on these shores in July of 2013 for nearly $15,000, saw its price drop in the U.S by nearly $6,000 one month later when Samsung rolled out their own curved 55-inch model for about $9,000. And now – just seven months later – the LG model is selling in the U.K. for £4,999 ($8,178), almost one-half of its original sticker price. (Perhaps they overestimated demand?)
And the cannibalizing of TV prices continues unabated. On the last day of CES, Vizio announced its prices for a line of full-array LED 4K (UHDTV) “smart” LCD models – and they aren’t much higher than conventional LED “smart” TVs from LG and Samsung.
Case in point: The 50-inch P502ui-B1 will retail for $1,000, while the 55-inch version will have a sticker price of $1,400. The P602ui-B3 is set at $1,800, and the 65-inch model will command $2,199. Finally, a 70-inch skew (P702ui-B3) will be offered at $2,600. Consider that Samsung and Sony are trying to peddle 55-inch 4K LCD smart TVs for about $2,900 right now and you can clearly see the train wreck coming.
Summing up: Samsung dominates the consumer television world – business as usual. Panasonic and Toshiba de-emphasize TVs at CES – maybe not. Sony and Sharp keep pouring money into consumer television manufacturing and marketing, even though they are incurring substantial losses – business as usual. LG and Vizio slashing prices on OLEDs and 4K TVs – definitely not!
EDITOR’S NOTE: The original version of this article mistakenly quoted the discount applied to the LG 55EA980W as the actual selling price. The article has been updated on January 29 to reflect the correct selling price and discount of this TV.
CES 2014 In The Rear-View Mirror
- Published on Tuesday, 21 January 2014 15:21
- Pete Putman
- 0 Comments
Once again, CES has come and gone. It sneaks up on us right after a relaxing Christmas / New Year holiday. We’re jolted out of a quiet reverie and it’s back to the rush to board at the airport gate, walking the serpentine lines for taxis at McCarran Airport, and “late to bed, early to rise” as we scramble to make our booth and off-site appointments in Las Vegas.
We don’t make them all on time. Some we miss completely. But there’s a serendipity angle to it all: We might find, in our haste to get from one meeting to another, some amazing new gadget we didn’t know about as we take shortcuts through booths in the North, South, and Central Halls.
Or a colleague sends us a text or leaves a voicemail, emphatically stating “you have to see this!” Or a chance meeting leads to an ad hoc meeting, often off-site or over a hasty lunch in the convention center.
My point is this: You “find” as many cool things at the show as you “lose.” For every must-see product that you don’t see, there’s another one you trip over. Granted; many “must-see” products are yawners – you’ve figured it out 30 seconds into your carefully-staged meeting with PR people and company executives, and you’re getting fidgety.
My best CES discoveries involve products or demos where I can observe them anonymously, without PR folks hovering at my side or staring at my badge before they pounce like hungry mountain lions.
Unlike most of my colleagues in the consumer electronics press, I don’t need to break stories the instant I hear about them. There are already too many people doing that. What’s missing is the filter of analysis – some time spent to digest the significance of a press release, product demo, or concept demo.
And that’s what I enjoy the most: Waiting a few days – or even a week – after the show to think about what I saw and ultimately explain the significance of it all. What follows is my analysis of the 2014 International CES (as we are instructed to call it) and which products and demos I thought had real significance, as opposed to those which served no apparent purpose beyond generating daily headlines and “buzz.”
Curved TV screens: OK, I had to start with this one, since every TV manufacturer at the show (save Panasonic and Toshiba) exhibited one or more curved-screen OLED and LCD televisions. Is there something to the curved-screen concept? On first blush, you’d think so, given all of the PR hype that accompanied these products.
The truth is; really big TV screens do benefit a little from a curved surface, particularly if they are UHDTV models and you are sitting close to them. The effect is not unlike Cinerama movie screens from the 1950s and 1960s. (That’s how I saw Dr. Zhivago and 2001: A Space Odyssey back in the day.)
Bear in mind I’m talking about BIG screens here – in the range of 80 inches and up. The super-widescreen (21:9 aspect ratio) LCD TVs shown by Samsung, LG, and Toshiba used the curve to great effect. But conventional 16:9 TVs didn’t seem to benefit as much, especially in side-by-side demos.
The facts show that worldwide TV shipments and sales have declined for two straight years, except in China where they grew by double digits each year. TV prices are also collapsing – you can buy a first-tier 55-inch “smart” 1080p LCD TV now for $600, and 60-inch “smart” sets are well under $800 – so manufacturers will try anything to stimulate sales.
Is that the reason why we’re seeing so many UHDTV (4K) TVs all of a sudden? Partially. Unfortunately, there’s just no money in manufacturing and selling 2K TVs anymore (ask the Japanese manufacturers how that’s been working for them), and the incremental cost to crank out 4K LCD panels isn’t that much.
Chinese panel and TV manufacturers have already figured this out and are shifting production to 4K in large panels while simultaneously dropping prices. You can already buy a 50-inch 4K LCD TV from TCL for $999. Vizio, who is a contract buyer much like Apple, announced at the show that they’d have a 55-inch 4K LCD TV for $1299 and a 65-inch model for well under $2,000.
Consider that the going price for a 55-inch 4K “smart” LCD TV from Samsung, LG, and Sony is sitting at $2,999 as of this writing and you can see where the industry is heading. My prediction is that all LCD TV screens 60 inches or larger will use 4K panels exclusively within three years. (4K scaling engines work much better than you might think!)
And don’t make the popular mistake of conflating 4K with 3D as ‘failed’ technologies. The latter was basically doomed from the start: Who wants to wear glasses to watch television? Not many people I know. Unfortunately, glasses-free (autostereo) TV is still not ready for prime time, so 3D (for now) is basically a freebie add-on to certain models of televisions.
4K, on the other hand, has legs. And those legs will get stronger and faster as the new High Efficiency Video Codec (HEVC) chips start showing up in televisions and video encoders. HEVC, or H.265 encoding, can cut the required bit rate for 2K content delivery in half. That means it can also deliver 4K at the old 2K rates, somewhere in the ballpark of 10 – 20 Mb/s.
While consumer demand for 4K is slowly ramping up, there is plenty of interest in UHDTV from the commercial AV sector. And Panasonic focused in on that sector almost exclusively in their CES booth. I’m not sure why – there are plenty of inferences here; most significantly, it would appear that Panasonic is exiting the money-losing television business entirely. (Ditto nearby Toshiba, which had similar 4K “applications” showcased and which also did not exhibit a line of 2014 televisions.)
Long story short; you may be buying 4K televisions in the near future whether you want ‘em or not. It’s a manufacturing and plant utilization issue, and if commercial demand for 4K picks up as expected, that will drive the changeover even faster.
As for sources of 4K content; Samsung announced a partnership with Paramount and Fox to get it into the home via the M-Go platform. Comcast had an Xfinity demo for connected set-top-boxes to stream 4K, and of course Netflix plans to roll out 4K delivery this year direct to subscribers.
I’m not sure how they’ll pull that off. My broadband speeds vary widely, depending on time of day: I’m writing this at noontime and according to CNET’s Broadband Speed Test, my downstream bit rate is about 22 megabits per second (Mb/s). Yet, I’ve seen that drop to as low as 2 – 3 Mb/s during late evening hours, when many neighbors are no doubt streaming Netflix movies.
Even so, HEVC will definitely help that problem. I spoke to a couple of Comcast folks on my flights out to and back from CES, and they’re all focused on the bandwidth and bit rate challenges of 2K streaming, let alone 4K. More 4K streaming interface products are needed, such as Nanotech’s $300 Nuvola NP-H1, which is about the size of an Apple TV box and ridiculously simple to connect and operate.
Oh, yeah. I should have mentioned organic light-emitting diode (OLED) displays earlier. There were lots of OLED displays at CES, ranging from the cool, curved 6-inch OLED screen used in the new LG G-Flex curved smartphone to prototype 30-inch OLED TVs and workstation monitors in the TCL booth and on to the 55-inch, 65-iunch, and even 77-inch OLED TVs seen around the floor. (LG’s 77-inch offering is current the world’s largest OLED TV, and of course, it’s curved.)
OLEDs are tricky beasts to manufacture. Yields are usually on the low side (less than 25% per manufacturing run) and that number goes down as screen sizes increase, which explains the high prices for these TVs.
And there’s the unresolved issue of differential color aging, most notably in dark blue emitters. With current OLED science, you can expect dark blue emitters to reach half-brightness at about 5,000 hours of operation with a maximum brightness of 200 nits. Samsung addresses this quandary by employing two blue emitters for every red and green pixel on their OLED TVs, while LG has the more difficult task of managing blue aging in their white OLED emitters.
Several studies over the past three years consistently show people hanging on to their flat screen TVs for 5 to 7 years, which is likely to be a lot longer than 5,000 hours of operation. Will differential color aging rear its ugly head as early adopters shell out close to $10K for a 55-inch OLED TV? Bet on it.
Turns out, there’s another way to get wide color gamuts and saturated colors: Quantum dots. QDs, as we call them, are inorganic compounds that exhibit piezoelectric behavior when bombarded with photons. They emit stable, narrow-bandwidth colors with no drift, and can do so for long periods of time – long enough to work in a consumer television.
QDs are manufactured by numerous companies, most notably Nanosys and QD Vision in the United States. The former company has partnered with 3M to manufacture an optical film that goes on the backside of LCD panels, while the latter offers Color IQ optical components that interface with the entire LED illumination system in edge-lit TVs.
Sony is already selling 55-inch and 65-inch 4K LCD TVs using the Color IQ technology, and I can tell you that the difference in color is remarkable. Red – perhaps the most difficult color to reproduce accurately in any flat-screen TV – really looks like red when viewed with a QD backlight. And it’s possible to show many subtle shades of red with this technology.
All you need is a QD film or emitter with arrays of red and green dots, plus a backlight made up of blue LEDs. The blue passes through, while the blue photons “tickle” the red and green dots, causing them to emit their respective colors. It’s also possible to build a direct-illumination display out of quantum dots that would rival OLED TVs.
How about 4K display interfaces? By now, you’ve probably heard that HDMI has “upgraded” to version 2.0 and can support a maximum data rate of 18 gigabits per second (GB/s). Practically speaking; because of the way display data is transmitted, only 16 Gb/s of that is really available for a display connection. Still, that’s fast enough to show 4K content (3840×2160, or Quad HD) with a 60 Hz frame rate, using 8-bit color.
Over at the DisplayPort booth, I heard stories of version 1.3 looming later this spring. DisplayPort 1.2, unlike HDMI, uses a packet structure to stream display, audio, and other data across four scalable lanes, and has a maximum rate of 21.6 Gb/s – much faster than HDMI. Applying the “20 percent” rule, that leaves about 17.3 Gb/s to actually carry 4K signals. And the extra bits over HDMI means that DP can transport 3840×2160 video with a frame rate of 60 Hz, but with 10-bit color.
Don’t underestimate the value of higher data rates: 4K could turn out to be a revolutionary shift in the way we watch TV, adding much wide color gamuts, higher frame rates, and high dynamic range (HDR) to the equation. HDMI clearly isn’t fast enough to play on that field; DP barely is. Both interfaces still have a long way to go.
So – why not make a wireless 4K connection? There were plenty of demos of wireless connectivity at the show, and I’m not just talking about Wi-Fi. Perhaps the most impressive was in the Silicon Image meeting room, all the way at the back of the lower South Hall, near the Arizona border.
SI, which bought out wireless manufacturer SiBEAM a few years ago, demonstrated super-compact 60 GHz wireless HDMI and MHL links using their UltraGig silicon. A variety of prototype cradles for phones and tablets were available for the demo: Simply plug in your handheld device and start streaming 1080p/60 video to a nearby 55-inch LCD TV screen.
Granted, the 60 GHz tech is a bit exotic. But it works quite well in small rooms and can take advantage of signal multipath “bounces” by using multiple, steerable antenna arrays built-in to each chip. And it can handle 4K, too – as long as the bit rate doesn’t exceed the HDMI 2.0 specification, the resolution, color bit depth, and frame rate are irrelevant.
This sort of product is a “holy grail” item for meeting rooms and education. Indeed; I field numerous questions every year during my InfoComm wireless AV classes along these lines: “Where can I buy a wireless tablet dongle?” Patience, my friends. Patience…
The decline in TV shipments and sales seems to be offset by a boom in connected personal lifestyle and health gadgets, most notably wristbands that monitor your pulse and workouts. There were plenty of these trinkets at the show and an entire booth in the lower South Hall devoted to “digital health.”
Of course, the big name brands had these products – LG’s LifeBand was a good example. But so did the Chinese and Taiwanese manufacturers. “Digital health” was like tablets a few years back – so many products were introduced at the show that they went from “wow!” to “ho-hum” in one day.
This boom in personal connectivity extends to appliances, beds (Sleep Number had a model that can elevate the head of the bed automatically with a voice command), cars (BMW’s i3 connected electric car was ubiquitous), and even your home. Combine it with short-range Bluetooth or ZigBee wireless connectivity and you can control and monitor just about anything on your smartphone and tablet.
Granted; there isn’t the money in these small products like there used to be in televisions. But consumers do want to connect, monitor, and control everything in their lives, and their refrigerators, cars, beds, televisions, percolators, and toasters will be able to comply. (And in 4K resolution, too!)
Obviously, I didn’t visit the subjects of gesture and voice control. There were several good demos at the show of each, and two of the leading companies I showcased last year – Omek and Prime Sense – have been subsequently acquired by Intel and Apple. Hillcrest Labs, PointGrab, and other had compelling demos of gesture control in Las Vegas – a subject for a later time.
Summing up, let’s first revisit my mantra: Hardware is cheap, and anyone can make it. Televisions and optical disc media storage are clearly on the decline, while streaming, 4K, health monitoring, and wireless are hot. The television manufacturing business is slowly and inexorably moving to China as prices continue their free-fall.
The consumer is shifting his and her focus to all the devices in the home they use every days; not just television. Connectivity is everything, and the television is evolving from an entertainment device into a control center or “hub” of connectivity. The more those connections are made with wireless, the better – and that includes high-definition video from tablets and phones.
It’s going to be an interesting year…
The Diverging Fortunes of Sony, Panasonic, and Sharp: Is There Life After Television?
- Published on Friday, 01 November 2013 15:24
- Pete Putman
- 0 Comments
Last week; Sony, Panasonic, and Sharp announced their financial reports for Q2 2013. And it’s clear that all three would benefit from phasing out the production and sales of televisions.
Panasonic, who is on track to shut down production of plasma display panels by the end of the current fiscal year in March of 2014, turned in a strong performance and raised its operating profit forecast to $2.75B, according to a story on the Reuters Web site.
The company posted a net profit of $627M for the period from July through September, helped by strong sales of automotive and battery products. This number just exceeded an estimate of $621M by industry analysts.
The surge of black ink was helped by downsizing plasma TV operations, along with semiconductor and smartphone manufacturing. Panasonic also concluded a sale of 80% of its healthcare business unit to KKR for about $1.7B.
Not long after saying the company would increase shipments of lithium ion batteries to carmaker Tesla Motors by nearly 2 billion cells through 2017, Panasonic also announced it will exit plasma TV manufacturing, which along with its LCD TV operations lost $261M in the second quarter.
Down the road, Sharp (who operates the world’s largest LCD fab in Sakai, Japan) managed to pull a rabbit out of its hat and announced a profit of $138M for the same quarter, largely due to increased demand for solar cells and a weaker yen against the dollar. Just one year ago, Sharp had a $5.5B net operating loss and required transfusions of cash from Samsung (2012) and Qualcomm (2013) to stay open.
While both companies have seen a steady decline in their worldwide TV market share (Panasonic dropped 26% from a 7.8% share in 2011 to 6% in 2012, while Sharp plummeted 22% from 6.6% to 5.4%), they’ve obviously figured out that it’s time to re-focus their efforts on more profitable products and are making progress in that direction.
Not so Sony, who evidently never heard Einstein’s famous definition of insanity as “…repeating an experiment and expecting different results.” Sony’s latest financials showed a net operating loss of $197M for the 2nd quarter, largely attributable to its TV operations. The fact that Sony Pictures also had a disappointing quarter didn’t help.
The TV group lost $95M between July and September after recording a $53M profit during the previous quarter. Sales of cameras, camcorders, and Vaio computers were also weak, with only smartphones showing any strength. The company also has high hopes for its PlayStation 4 platform, which will debut later this month.
Still, analysts aren’t convinced that Sony’s strategy to maintain its traditional consumer electronics products presence will work anymore. In a related Reuters story, Makoto Kikuchi, CEO of Tokyo-based Myojo Asset Management, was quoted as saying, “I still cannot see any fundamental and believable strategy for the rebirth of Sony’s electronics business. On the other hand Panasonic, which is shifting its business away from consumer electronics, is reporting better-than-expected results. The contrast is like night and day.”
Let’s be clear: Neither Panasonic or Sharp is out of the woods yet – far from it. Panasonic’s TV operations took an even bigger hit than Sony (-$261M) in Q2 ‘13, and Sharp is still sitting on the edge of bankruptcy. But Sony’s insistence on maintaining a losing CE presence may cost it dearly: Moody’s is apparently considering dropping Sony’s credit rating to junk status.
The fact is; Japanese manufacturers can’t sell TVs and remain profitable anymore; not as long as Samsung and LG maintain aggressive pricing and newcomers like Hisense, Haier, and TCL crash the party (not to mention discount giant Vizio).
And the move to 4K won’t help. Although Sony, Sharp, and Panasonic all have 4K LCD TVs at retail for about $80/inch, the Chinese appear primed for a 4K TV price war that they will inevitably win. Consider that without China, the worldwide market for TV shipments actually declined in 2012 by 4%. Add China to the mix, and it’s an eight-point upward swing.
To sum up; Panasonic seems to have gotten religion, while Sharp is still sobering up. But Sony apparently needs an intervention. Will disgruntled shareholders and/or downgraded credit and a higher cost of borrowing force the issue? Stay tuned…
Who ARE Those Guys?
- Published on Monday, 30 September 2013 10:34
- Pete Putman
- 0 Comments
A recent article on the Reuters Web site details how Chinese LCD TV manufacturers are quickly gaining ground on Korean TV heavyweights LG and Samsung – and they’ve used UHDTV, a barely-hatched technology, to do it.
According to the Reuters story, LG and Samsung were so focused on one-upping each other in the still-gestating OLED TV business that mainland brands like BOE Technology and TCL and Taiwan-based Innolux and AU Optronics managed to sneak into the party and capture significant sales of 4K UHDTV sets using conventional LCD technology.
Until last year, a paltry 33,000 UHDTV sets had been sold worldwide (200M 2K and 720p LCD TVs were sold during the same time period). But shipments of 4K TVs have since multiplied by 20 times, based on data from IHS. And the Chinese are a big reason why.
In a rare moment of candor, LG Display’s CEO Han Sang-beom was quoted as saying, “…I have to admit that we hadn’t fully appreciated the potential of the UHD market. We assumed it’ll be too early for this type of display to take off, and thus didn’t think much of having diverse UHD product line-ups, especially in the low end. But I think we are not late just yet and we are working hard to lead the market here.”
In Q2 ‘13, BOE Technology reported an 8.9 percent operating profit margin, while China Star Optoelectronics Technology (CSOT), a unit of TCL Corp, achieved a 9.6 percent margin. LG Display, the world’s No.1 LCD maker, posted a 5.6 percent margin, while Samsung Display, a unit of Samsung Electronics, had a whopping margin of 13 percent. But take out the OLED business and Samsung’s LCD margin drops to somewhere between 3 and 7 percent.
To show you just how severely the winds have changed against Japanese TV manufacturers, Sharp Corporation – the company that basically invented the LCD TV – reported a 0.5 percent profit margin for Q2 ’13, after several quarters of red ink.
Can the Chinese do to Korea what the Koreans did to the Japanese? It’s entirely possible: During the same Q1 ’13, global TV shipments grew by 4% Y-Y, according to NPD DisplaySearch. But all of that growth was in mainland China, where TV shipments ramped up an astonishing 28% Y-Y. Take out those numbers from the overall worldwide shipments total, and LCD TV shipments actually declined almost 4% Y-Y.
In recent weeks, we’ve seen a flurry of 4K and UHDTV announcements from Panasonic, Sony, and now Sharp. The latter, which unveiled a 70-inch 4K set (LC-70UD1U) at CE Week back in June, is now shipping it and the SRP (so far) is $7,500. Keep in mind that Sony brought out its LGD-manufactured 84-inch 4K LCD TV for $25K a year ago; LG dropped that price by $5K not to long after, and JVC’s 4K monitor version (also using the same LGD panel) is available for $15K.
Samsung and Sony both have 4K LCD TVs in the 55″ – 65″ range that are retailing for about $90 – $100 per diagonal inch. That’s quite a drop from the nearly $300/diagonal inch that Sony started out with in 2012!
There’s no question that everyone is jumping the gun on pricing, and it’s most likely due to worries about the new crop of UHDTVs from from what is becoming the world’s fastest-growing market for consumer electronics devices.
It took over a decade for 2K HDTV to really get established in the market. Then, prices collapsed, and with them, operating margins. Will 4K follow that same timetable, or will it make even faster inroads?
Fans of the 1969 movie Butch Cassidy and the Sundance Kid will recall how those two fled the U.S. for supposedly safer quarters in South America. And yet, their pursuers stayed doggedly on their trail, following them all the way to Bolivia. “Who ARE those guys?” asked Robert Redford, over and over as they were flushed from yet another supposedly-secure hiding place.
Now, Samsung, LG, and Japan Inc. may very well be asking the same thing…