Posts Tagged ‘Sharp’

Hey, This Is Really Hard!

A story in the October 27 edition of the Wall Street Journal states that television may no longer be the ‘king of the hill’ when it comes to watching programming.

 

Food for thought: Apple’s high-end 10.1” iPad costs more than a 42-inch LCD or plasma TV (even a 42-inch LED-backlit LCD TV). And based on a presentation in my Display Technologies session at the just-concluded SMPTE Fall Technology Conference, more and more sales of ‘displays’ are going to switch to smaller, portable devices like the iPad, and away from conventional TVs.

 

Neither Internet-connected TVs nor 3D have helped revive TV sales, which slowed considerably after the 2008 recession. According to DisplaySearch, more than half of all new TVs shipped by 2015 will have Internet connections, just as more and more TVs will include 3D as a feature and not a premium upgrade.

 

The WSJ article quotes TV industry executives as speculating Apple, Google, and Amazon might enter the TV arena with products of their own. Apple’s TV prototype is already circulating through factories in China, according to several published reports. And Amazon already has experience in mass distribution of content over its Kindle platform.

 

Profits are hard to come by in the TV business. Three of the top four Japanese TV manufacturers said they lost money on TV operations during Q2 ’11, with Sharp being the exception – although Sharp’s LCD fabrication business was its biggest loss leader in the same time period. I have previously documented Sharp’s rapidly-diminishing market share in U.S. TV sales, which has been accompanied by a worldwide decline to about 8% of the market for the latest reporting period.

 

Over in Korea, similar red ink was seen at Samsung and LG’s LCD fabs, according to the article. In contrast, the TV marketing and sales operations were profitable. The challenge that all manufacturers face is continually declining values even with larger and larger shipment volumes, and the fear that TVs will soon fall into the low-priced commodity trap of computer monitors.

 

Sony’s continuing struggle to make a profit in LCD TVs for the past eight years shows that even a strong brand can’t carry the day anymore. The real threat is between smaller, portable wireless tablets that can do an amazing job with video playback.

 

On my flight home last night from SMPTE, I counted two dozen iPads in use playing back cached video or DVDs, plus numerous notebook computers. Each and every one of those products is now climbing the hill, ready to topple the king…

Wishing Won’t Make It So

These Elite sets may look great, but you can't get by on looks anymore in the TV game.

Last Thursday in New York City, Pioneer and Sharp took the wraps off a new line of high-end LCD TVs that will carry the familiar Elite brand. These products are intended to fill a hole in the high-end television retail channel; one that was created when Pioneer pulled the plug on their Kuro plasma sets a couple of years ago.

 

For readers who didn’t know, Sharp owns a 14% stake in Pioneer, and the two companies have collaborated on products in the past. You may not remember, but Sharp once carried 42-inch and 50-inch Pioneer plasma TVs in their line. That was back in the day when large LCD panels were difficult to manufacture and very expensive.

 

It’s instructive here to remember why Pioneer pulled out of the plasma TV business. First off, Pioneer had the smallest fabrication capacity of any of the big plasma brands, cranking out a fraction of the monthly yields of Panasonic and Samsung.

 

Second, Pioneer made the mistake of continuing to focus only on high-end retail channels for their plasma TVs long after it was clear that the plasma market was being commoditized. Panasonic’s best plasma TV sets were widely available through numerous brick-and-mortar stores for much lower prices and offered comparable performance to Pioneer’s offerings.

 

Even the vaunted Kuro sets couldn’t compete. Sure, they had super-deep black levels. But the additional first surface polarizers used to pull off that trick also dropped brightness levels to the point where the Kuro sets had to be viewed in dark or near-dark rooms. Panasonic, Samsung, and LG suffered from no such limitations.

 

In the end, the math is what did Pioneer in. You can’t make money these days selling a mass-produced flat screen display product in limited quantities at a price premium. It simply will not work. That is one reason why Hitachi exited the plasma TV business and ultimately the LCD TV business in the United States.

 

It appears that Pioneer didn’t learn that lesson. Neither did Sharp, who has a seen a precipitous drop in LCD TV market share since 2006. The Aquos brand, which once commanded better than 20% of the U.S. TV market, now struggles to hold onto 3% of it. Even the new Quattron four-color LCD TVs have met largely with yawns, and it doesn’t help that TVs are a tough sell in general these days. (Notice how even market giant Vizio has been pushing tablets and phones lately?)

 

According to a story in TWICE, the motivation for the new Elite LCD TVs came from Cedia dealers who said there was a definite hole in the market after the Kuro sets were discontinued and Runco shut down its Vidikron brand. (Runco/Planar’s misadventures in the home theater channel are another story altogether.)

 

Hence, Sharp and Pioneer created an Elite sales and marketing channel, with Sharp providing the TVs and Pioneer supplying Blu-ray players and AV receivers. The Elite TVs will be sold exclusively in North America, limited at first to about 750 dealers with the possibility of expansion into a larger base.

 

Elite dealers can either order TVs directly from Sharp or through a one-step distribution process. That last sentence should give pause; moving products to distribution guarantees that prices will drop over time and more retail outlets will be found to increase the volume of sales, thereby removing the ‘elite’ part of the equation. That’s what distributors do, unless they’re not serious about making money.

 

If this is such a good idea, why haven’t Sony and Samsung taken a similar approach? Sony’s woes with TV profitability are well-documented, while Samsung (and LG, and even Panasonic) recognized that mass-produced products can’t be sold in onesies and twosies for very long. But with Sharp’s inability to reverse its six-year slide in TV market share and Pioneer’s apparent jonesing to get back into the TV business, it appears both companies will give any idea a try these days.

 

For the record, the two Elite models that were launched were the 60-inch PRO-60X5FD, shipping this week for $5,999, and the 70-inch PRO-70X5FD, shipping later this month for $8,499. Those same screen sizes in the Aquos LCD TV line can be had for about $3,300 and $4,800, respectively.

 

The usual hype accompanied the press event, with Pioneer claiming these sets have the best black levels in the LCD TV business (that’s not saying much) and no competitors can come close. Sound familiar?

 

Here’s something else to think about. According to HIS iSuppli research, the “sweet spot” for U.S. TV sales is in the range of 40 to 49 inches. In the first quarter of 2011, that bracket accounted for 40% of all TV sales. The #2 position was occupied by the 30 – 39 inch group with 25% of all TV sales. In short. these two categories combined accounted for two out of every three TVs sold in this country from January through March.

 

Screens measuring 50 inches and larger represented 23% of all TV sales in that same time period. Although iSuppli didn’t drill down, I’d bet that 60 to 70 percent of the TVs sold within that category measured between 50 and 55 inches. That doesn’t leave a lot of market share to play with, if you want to sell 60-inch and larger screens.

 

The question here – as was the case with the Kuro plasma TVs – is how many units would have to be sold to turn a profit, and how many units the pro AV and Cedia channels could absorb at the listed prices. I would suspect that the answers are (a) a lot more than Sharp and Pioneer think, and (b) a lot less than Sharp and Pioneer think.Again, it’s all about the numbers these days – competitive prices and volume of sales.

 

Sharp has additional pressure on it to perform, given that it built the world’s only Gen 10 LCD fab a couple of years ago in Sakai, Japan. Sony was supposed to hold a 34% stake in the fab, but has capped its investment below 10% and is instead looking to China for lower-cost LCD TV panels. What will Sharp do with all of that capacity? And the fact that their finished panels are too expensive when compared to Korean and Chinese glass?

 

You can’t exist on high-end TV sales alone. Mitsubishi was the latest company to figure this out and underwent a massive re-organization this past spring to try and salvage what’s left of their rear-projection TV operations. Sony has lost so much money in the television business that it may have to walk away from manufacturing altogether and just private-label Chinese-made products in the future.

 

Wishing won’t make it so.

It’s Deal Time!

Have you been checking TV prices lately? There are some amazingly good deals to be had on big screen TVs and they have nothing to do with Christmas carols, turkeys, and football games.

 

Right now, retailers are moving out older TV models to make room for the 2011 lines. And that means some big time discounts. Here are a few examples from last Friday’s (March 11) Philadelphia Inquirer.

 

P. C. Richard, a New York City-based retailer with stores in New Jersey, Connecticut, and Pennsylvania, ran a half-page ad advertising some ‘incredible deals’ on TV and other goodies. Want a 42-inch Panasonic WiFi-ready plasma TV with 720p resolution? It’s yours for $387.63 (TCP-42X3).

 

How about a 50-inch 3D-ready 1080p plasma TV? Take it home for $796.84 (TCP50GT25). By the way, the 50GT25 was one of the first Panasonic 3D TVs launched a year ago, and it was bundled with a Blu-ray player and a pair of glasses for about $2,800 at Best Buy.

 

Want a good deal on an LED LCD TV? Sharp’s LC40LE820UN (yes, it is a Quattron model) has been cut to $698.74. This is a 40-inch 1080p set with 120 Hz motion correction.

 

Speaking of Blu-ray players, P.C. Richard is pushing Samsung’s BD-C5500 out the door at $111.97. It supports Netflix and Pandora, but is NOT a WiFi player. You’ll need a conventional network connection (RJ45) to set it up.

 

There are plenty of other TV deals to be had, and not just at P. C. Richard. I’d take a closer look at those Sunday fliers and cruise the Best Buy – Target – Wal-Mart – hhgregg Web sites to see what other deals you can score. (Don’t forget Sears and the regional department store chains, either.)

Google TV: Oops! Never Mind…

In a story reported by the New York Times, Google has asked TV manufacturing partners Toshiba, Sharp, and LG to hold off on introducing any new Google TV products at next month’s Consumer Electronics Show.

The official reason is that Google needs more time to refine the software. The real reason may be the lackluster reception that Google TV has gotten so far from consumers. The first sets to launch with Google TV were Sony Bravia TVs, back in October.

If any readers walked the aisles of Best Buy recently, you probably noticed the Google TV kiosk that featured an incredibly complex remote control – one that outdid Rubik’s Cube in complexity. The Sony Google TV remote featured two mouse disks and dozens of tiny alphanumeric keys, and was a sure turn-off for those viewers used to one-button navigation to Netflix and YouTube.

It's just like a smart phone keyboard...only vastly more complex...

In fact, the question now is whether there is any real interest in using a video engine as part of a NeTV – or if consumers are happy with icons or apps that take them directly to Hulu, Netflix, or other content sources.

To make matters worse, major TV networks including CBS, NBC, and ABC are blocking their online programming from Google TV, as is Hulu. Given that the top-rated TV shows are carried by these “old school” networks – as is the current #1 time-shifted show, The Office – that’s not good news for early adopters.

Logitech’s Google TV set-top box has also met with indifference and disdain. According to the Times story, 38% of reviewers on Amazon.com gave the Logitech Google TV receiver three stars or less, and 19% gave it just a solitary star. Not good!

Does this mean consumers don’t like the idea of NeTVs? Not at all. What they DO seem to prefer is a limited number of directed channel apps for the most popular content providers, and not another Web TV-approach to merging computer and TV viewing…something that is akin to mixing oil and water.

Don’t bet against Google, though. They’ll eventually figure out what consumers want and don’t want. The question is; can they compete against the amazingly user-friendly TiVo interface and the ‘directed apps’ approach of companies like Samsung (also a Google TV partner)?

And is Google TV destined for success, or will it go the way of Web TV? (Challenge: Do any readers even know what happened to Web TV? It’s still around, although under a vastly different name…)