Posts Tagged ‘Sony’
We’re Not Having Fun Anymore…
- Published on Tuesday, 04 August 2015 16:49
- Pete Putman
- 0 Comments
Last Friday (7/31), Sharp Corporation made the announcement that they would finally throw in the towel and withdraw from marketing and selling televisions in “the Americas,” opting to sell the company’s LCD TV manufacturing plant in Mexico to emerging Chinese CE giant Hisense.
Sharp also indicated that it would allow Hisense to sell TVs on this side of the Pacific that are branded with the Sharp name. (Hitachi, JVC, and Toshiba have similar arrangements.) This announcement came just months after the announcement that industry marketing veteran Peter Weedfald was being hired by the company, presumably to try and turn the U.S. consumer electronics operation’s fortunes around.
Sharp also had a nice line show of nine new Ultra HD (4K) TVs back in May, signifying a commitment to the U.S. TV market. Now, it appears everything was for naught.
This has to be quite a blow to the ego of the company that basically created the LCD television business, and that just 9 years ago held a 21% worldwide market share in LCD TV shipments. Today? They’re not even on the radar, having ceded ground to Samsung, LG, Sony (who also is struggling), and most recently, Hisense and TCL.
But it’s the right move. The company’s world-largest Generation 10 LCD fab in Sakai, Japan became a white elephant almost immediately as the world went into a recession in 2008-2009. Pressed for cash, Sharp sold 46% of the Sakai fab capacity to Hon Hai Precision Industries for about 20 cents on the dollar not long after the plant opened.
Several years of red ink followed, as did numerous rounds of financing. In the 1st quarter of this year (April – June), Sharp booked an operating loss of 28.8 billion yen ($231.87 million), down from a 4.7 billion yen profit a year prior, with a net loss of 34 billion yen ($270 million). The company still maintains it will be profitable to the tune of 80 billion yen ($644 million) by the end of March 2016.
According to a Reuters story, Sharp’s CEO Kozo Takahashi was “…open to major restructuring including some kind of strategic deal for its LCD business.” It’s well-known that Hon Hai CEO Terry Gou would love to buy the Sakai facility – he already owns almost 50% of its capacity, and Hon Hai subsidiary Foxcon sources LCD glass from Sharp for various Apple i-products. Gou also stated earlier this year that he would be willing to put more money into Sharp in exchange for a seat on its board.
While Sharp continues to wrestle with black ink, Sony posted what appeared to be positive financial results for its 1st quarter. The once-formidable CE brand logged an operating profit of 97 billion yen ($781 million), far exceeding the estimates of financial analysts.
There’s no question that camera sensor manufacturing is a lucrative business for Sony. Hundreds of millions of cameras and phones use Sony sensors, and the company announced a few months ago that it would expand sensor manufacturing capacity at two plants in Japan.
The strong first quarter was helped by an increase in operating income for its gaming (PlayStation) division of 350% to 19.5 billion yen ($153 million). So everything is coming up roses in Tokyo – right?
Not really. Sony’s beleaguered mobile phone division strung up a loss of 22.9 billion yen ($184 million) for the same quarter, and according to a Reuters story, the company is now predicting a loss of 60 billion yen ($483 million) for the fiscal year that ends next March, citing “a significant decrease in smartphone unit sales resulting from a strategic decision not to pursue scale in order to improve profitability”.
Drilling down into Sony’s Q1 FY2015 Consolidated Financial Results, the Home Entertainment and Sound group posted 168.9 billion yen ($1.36 billion dollars) in sales during Q1, with operating income of just 7 billion yen ($56 million). (That is a margin of 4.1%.) Sales were down 13.8% from the same period last year due to a “…decrease in unit sales of LCD televisions, mainly in the mid-range” and a “decrease in home audio and video unit sales reflecting contraction of the market.”
For all of 2014, Sony sold 14.6 million LCD TVs. Their current forecast calls for 11.5 million to be sold by the end of next March, a drop of 21% Y-Y. (2.6 million LCD TVs were sold by the company in the first quarter.) The TV business has long been a cash-sucker and Sony has been racking up losses in this market segment for a decade.
If Sony was to cut loose its mobile and home entertainment businesses, it would be quite the profitable company. For that matter, even the digital camera segment is seeing a downturn, as the year-long forecast for camera sales (5.9 million units) represents a drop of 30% from last year’s numbers – which were 26% down from 2013.
Aside from PlayStation, the long-term view for Sony’s consumer business isn’t good. Cameras in general are being displaced by smartphones, and even powerhouses like Samsung are seeing their mobile phone business decline as Chinese companies gain more market share in Asia.
And it’s pretty clear what’s happened to the Japanese TV business – only Sony, Sharp, and Panasonic retain a presence in the United States, and Sharp just announced it’s getting out. Look for Panasonic to do the same by year’s end, as their market share is miniscule and supporting continued sales of televisions doesn’t make much sense financially.
That just leaves Sony, who once proudly exclaimed that they had a chain of products “from lens to screen.” Well, that was in the good old days, when everyone was having a great time selling consumer electronics.
But we’re not having fun anymore…
Has Sony Finally Seen The Light?
- Published on Wednesday, 25 February 2015 13:00
- Pete Putman
- 0 Comments
Sony’s ongoing financial woes have been well-documented by this writer over the past few years. Gone are the days when the Tokyo-based electronics giant could invent and own all parts of a media format, like the Walkman and Betacam.
It’s exceedingly difficult to make any money selling hardware to consumers these days, as fellow CE giants Panasonic, Toshiba, and Hitachi have all found out. And one of the biggest loss leaders is the Bravia television business, thanks to cutthroat competition from Samsung and LG, and now Chinese brands like Hisense and TCL.
Sony’s late entry into the LCD television marketplace a little over 10 years ago didn’t help. Back then, the company had OEM deals for LCD and plasma TVs with Pioneer and the aforementioned LG, along with a joint venture with Samsung to manufacture LCD televisions (S-LCD). But even with the Sony brand and decent market share, profits were nowhere to be found.
As losses piled up in the television unit, more red ink started flowing from Sony’s VAIO computer operations (since sold off to Lenovo). And in a real head-scratcher, Sony bought out its share of a mobile phone joint venture from Ericsson, only to see that miscalculation produce even more financial misery than the TV group ever did.
Now, chairman Kazuo Hirai has made it official: Sony will no longer chase higher sales in smartphones, where its Experia models just can’t compete with Samsung and Apple. And Sony won’t get any traction in the world’s largest mobile phone market, China, where home-grown brands like Huawei play a dominant role.
Significantly, Hirai also said that he would not rule out an exit strategy for both smartphones and televisions. (Sony’s TV operations were recently spun off as a separate operating unit so their losses can be clearly identified from the rest of the company.) Sony is on track to post a $1.5B loss for the current fiscal year that ends March 31, continuing a string of down years. Layoffs have continued company-wide and about 1200 more employees will be let go from the mobile division this year.
Despite the gloomy news, Sony’s ace in the hole is a burgeoning entertainment division. Sony Pictures, Sony Pictures Television, Sony Music, and PlayStation – taken together – are profitable operations. More than one institutional investor has called for Sony to exit the hardware business altogether and concentrate on content and software, which is where the money is nowadays.
But Sony has such a strong and rich legacy in consumer electronics that they can’t bring themselves to let go of the past, even after posting year upon year of record losses attributable to that same CE hardware. It’s gotten so bad that the company even announced last year that they would not pay a stock dividend for the first time in 50+ years. (Boy, did THAT news wake everyone up!)
In a recent Reuters story, Hirai stated that Sony would target a return on equity of more than 10% by 2018, aiming for an operating profit of $4.2 billion for fiscal 2017. That would be quite a turnaround, given Sony’s performance over the past five years. And it won’t be possible unless the company kisses the TV and phone businesses goodbye, once and for all.
Did Sony learn the lesson of Panasonic, who bit the bullet and shut down their plasma TV manufacturing business cold turkey in 2013, returning to profitability last year? (Panasonic is on track to make about a $2 billion profit for FY 2014.)
Panasonic also shut down other underperforming business units and shifted its focus to commercial products, and it would not surprise me to see them walk away from consumer TVs altogether in the next year or so as their market share is so small.
What about Sony’s Japanese competitors? Hitachi read the tea leaves several years ago and gave up on TVs altogether, while Toshiba is retrenching to the Japanese market. Sharp continues to struggle in the television business as its once-dominant 21% worldwide market share in TV shipments (2006) has dwindled to about 3% and a $250 million loss is staring them in the face for FY 2014.
It seems like everyone but Sony figured out the way back to profitability several years ago. Now, has Sony wised up? Have they finally seen the light?
Time will tell…
CES 2015 In The Rearview Mirror
- Published on Monday, 12 January 2015 16:12
- Pete Putman
- 0 Comments
After all the PR hype and anticipation, the 2015 International CES has come and gone, leaving me to edit over 1500 photos and a bunch of videos and sift through stacks of press releases to see what was really significant about the show…and what was just fluff.
Before I drill down to make my top picks, I should point out some trends that have been building for a few years. We all know that the majority of our electronic gadgets (phones, tablets, home alarm systems, televisions, computers, cordless phones, and so on) are manufactured in China and Southeast Asia.
Still, the expanding CES footprint of Chinese brands (Haier, TCL, Hisense, Changhong, Konka, Skyworth) takes some getting used to. So does the shrinking footprint of former Japanese powerhouses like Sony, Sharp, and Toshiba. There is a profound shift in power happening in the CE world as the center of gravity moves farther away from Tokyo and Osaka past Seoul to Shenzen and Shanghai.
Another unmistakable trend is the decline in prices for a wide range of CE products. “Connected health” was a big deal at least year’s show, but is there really any news to be found in $60 Fitbits? Or $149 home security systems? Or $125 32-inch televisions?
Speaking of televisions, they are becoming less important in the overall scheme of things with each passing year. 4K Ultra HD was all the rage last year – this year, everyone had 4K televisions, and many models were equipped with quantum dot backlights for high dynamic range. Of course, there was no shortage of curved televisions in all sizes.
The facts are these: Changhong and TCL can make a large, curved 4K LCD TV with high dynamic range just as easily as Sharp, Samsung, and Panasonic. In some cases, the LCD panels used in these TVs are all coming from the same factory.
Samsung made a big splash this year with their S UHD television line, but they’re using quantum dots just like anyone else. LG showed both quantum dots and their new M+ technology that adds white pixels to an LCD matrix to boost brightness. TCL is selling QD-equipped TVs in China and expects to launch them on these shores this year.
Perhaps surprisingly, LG decided to make a big push for OLED technology, unveiling five new Ultra HD models at the show. While the Chinese also showed OLEDs (as did Panasonic), LG appears to be “all in” with their white OLED technology, claiming manufacturing yields as high as 70%. Well, someone’s got to pick up the torch that plasma dropped in 2013.
For many of these manufacturers, appliances and white goods are taking on a more important role in contributing to the bottom line. The margins are better on high-end refrigerators and washer-dryer sets for the likes of Samsung and LG, even though consumers don’t turn them over as often as televisions. For Panasonic, beauty products are an important income stream.
Cameras and camcorders are still holding their own against mobile phones, surprisingly. I entered the CES arena equipped with both a new Samsung Galaxy 5 phone and a Panasonic Lumix ZS40 camera. While the Galaxy 5 does take some great pictures under ideal conditions, it was no match for the 30:1 optical zoom lens (Leica glass) on the Lumix – the latter allowed me to shoot under, around, and over people to get the photos I needed.
Speaking of mobile phones and tablets, there wasn’t much news to be had at the show. LG showed its updated LG G-Flex 2 and Samsung had a crowd around its Galaxy family of phones and tablets, but there just wasn’t the “BYOD buzz” we’ve seen in previous years. The 5” to 5.5” screen size seems to be a sweet spot for phones now – 6-inch models were scarce in Vegas.
Connecting all of this stuff together made for a more compelling story from my perspective, especially as far as wireless technology goes. I saw more demos of wireless video streaming, wireless appliance control, wireless security systems, and wireless display connectivity at CES than at previous shows.
The 802.11ac channel bonding protocol is becoming increasingly important for making this stuff work in the 5 GHz band. And the wide-open spaces at 60 GHz are starting to attract everyone’s attention – having 2 GHz channels to play with is a lot more appealing for making high bitrate connections than fighting the congestion at 2.4 and 5 GHz.
Display interfaces are getting fast – a lot faster – and relying on compression for the first time. And now we’re starting to see the boundaries blur between small, high-performance mobile display interfaces and full-sized versions, which leads me to wonder why we need so many versions of HDMI and DisplayPort in the first place.
I’d be remiss if I didn’t mention the growing number of automobile manufacturers who set up shop in the North Hall every year. It reminds me of the New York Auto Show, with the likes of Hyundai, VW, Ford, Fiat Chrysler, and Audi showing off their latest high-tech “connected” automobiles that can do everything from mirror your smartphone’s display to recognize speech commands, navigate flawlessly, and even drive themselves.
And there were plenty of alternatives to gasoline-powered engines to seen, from BMW’s i3 electric car to Toshiba’s Mirai hydrogen fuel cell vehicle. All equipped with Bluetooth, 802.11, Sirius, and in some cases, user-customizable dashboard displays using flexible displays (important to survive vibration and G-forces).
Quite a bit to take in over three and a half days! What follows is my list (in no particular order) of significant products and trends I spotted in Vegas. Let’s see if they hold up as the year progresses:
High Dynamic Range – as usual, a hot new technology makes its appearance at the show and quickly becomes a buzzword. HDR Ultra HDTVs were shown by numerous manufacturers at CES; none more prominently as Samsung, who made HDR the centerpiece of their Monday press conference with their S UHD line. Virtually all of these TVs use quantum dot technology to boost image brightness and color saturation, and only one (LG) had an alternative path to HDR with M+ technology.
HDR is a key part of the transition to next-generation television. So are wider color spaces, high frame rates, and increasing resolution. Looks like everyone’s getting into the game, including the Chinese. Interestingly, I saw only one demo of Dolby’s HDR technology in the TCL booth (Vizio also has it), so it appears many homegrown solutions are in the works for HDR displays.
OLEDS Are Back – at least as far as LG is concerned. Seven new Ultra HD OLED TVs were rolled out at CES with sizes ranging from 55 inches to 77 inches, and one of them can flex back and forth from flat to curved surface mode. A partnership with Harman-Kardon should ensure better audio quality than you hear from typical super-thin televisions. (There were even two models featuring bases made from Swarovski crystal!)
With the demise of plasma, videophiles are still looking for displays that can give them the magic combination of deep blacks, saturated colors, and wide viewing angles. Right now, OLEDs are the only game in town, but they’ve proven to be tricky to manufacture with acceptable yields. LG Display seems to have overcome that barrier with these models (which use IGZO TFTs for pixel switching, by the way) and it will be interesting to see the uptake as 2015 winds on.
Super MHL Is Here: The battle for fastest display interface shifts back and forth between Silicon Image and VESA. DisplayPort fired the first salvo with their introduction of version 1.3, raising the maximum data rate to 32 Gb/s and introducing Display Stream compression for the first time. Now, the MHL Consortium has fired back with Super MHL. MHL stands for Mobile High-definition Link, and in its first iteration, allowed transport of 1080p/60 video over the 5-pin micro USB connector found on smartphones and tablets.
But Super MHL is different – it is a full-sized connector with 32 pins and matches the data rate of DP 1.3. The CES demo showed a Samsung 8K display being driven through Super MHL. How would anyone fit this on a mobile device? Does it replace HDMI 2.0? (It’s a LOT faster and uses DS compression, too.) So many questions to be answered…
Talk To Me: Conexant showed a demo of voice control for TV set-top boxes (change channels, bring up program guide, set DVR recordings) that was leap years ahead of their demo from 2013. This system works exceptionally well in noisy environments and can be used to control other devices, such as room lighting, thermostats, and security systems.
Conexant is looking to sell their technology as a system on chip (SoC) to a wide cross section of manufacturers. The trick had been reliable speech recognition in all kinds of high and low noise environments, something that doomed Samsung’s voice control TVs back in 2012. It appears they’ve finally pulled it off, but the focus has shifted away from TVs to set-top boxes this time around.
I’ll Be Watching You: The EyeTribe of Denmark showed an amazing eye tracking and control system at ShowStoppers that can operate tablets and phones and costs all of $99. Yep, you read that right! While Tobii’s impressive demos have focused on laptops and gaming systems, EyeTribe has gone after potentially the biggest market for eye tracking. How many times have you wished you could operate your mobile phone while your hands were full?
Faster Video For All: Giraffic had an intriguing demo of optimizing and speeding up video streaming rates over conventional TCP/IP networks. And it had nothing to do with adaptive bitrate streaming, using H.265 encoding, or AVB protocols. What Giraffic is doing is changing the nature and frequency of HTTP requests. This is the best way I can explain it: Imagine you just sat down with a big piece of chocolate cake and want to eat it as quickly as possible. If you take big bites, you’ll be chewing for a while and some pieces may get stuck in your throat.
But if you start with very small bites (like crumbs) and keep shoveling them in quickly, you’ll finish the cake just as fast – or perhaps faster – than the conventional way of eating. And that’s what Giraffic does – it keeps nibbling at the video stream to ensure continuous delivery, even with 4K content. The company claims they can achieve streaming throughput 200% to 300% faster than conventional video streaming, with no freeze-ups and annoying “buffering” warnings.
4K Blu-ray: Okay, we’ve been waiting for this for some time now. And 4K video streaming has already begun at Netflix and Amazon. But Ultra HD BD is finally out of the gate, although you won’t see it until the fourth quarter of this year. Streaming rates will be on the high side of 100 Mb/s with single and dual-layer discs available. (And yes, high dynamic range will be a part of the equation!) Panasonic showed their prototype of an Ultra HD Blu-ray player at the show. The question is; with all the enhancements coming to streaming, does optical disc matter anymore? Time will tell…
Circular LCD Displays: This was a breakout year for oddball sizes of LCDs, particularly in the Sharp booth where automotive displays were shown. (LG Display also exhibited circular and curved LCD displays.) Given the drop in TV prices and Sharp’s ever-dwindling market share in TVs, the market for automotive and transportation displays may be a better bet, long-term. Especially given the company’s leadership in implementing IGZO TFTs, which are important for brighter displays with lower power consumption and higher pixel density.
USB Type-C Connectors: VESA had an excellent demo of this game-changing connector, which has a symmetrical design (no need to worry about which way you’ve plugged it in) and can multiplex DisplayPort 1.3 video with high-speed data. USB 3.1 Type-C is seen as the next generation of USB connectors for mobile and portable devices, and by itself, it can move serial data at 10 Gb/s.
SiBEAM Snap Wireless Connectivity: Silicon Image has revived the SiBEAM name (they bought the company in 2011) and implemented their 60 GHz wireless display connectivity into a close-proximity variant. You simply bring two Snap-equipped devices together (like a smartphone or tablet and a matching cradle), and voila – you’ve established a full bandwidth data and display connection that can run up to 12 Gb/s. Plus, the connector can be used for wireless charging.
SI is showing integrated Snap transmitter and receiver chips that would replace USB 2.0 or 3.0 connections. Clearly, they are also targeting USB interfaces that support DisplayPort 1.3 (see USB 3.1 Type-C) and trying to move away from physical display connections. (This was one argument against using MHL to connect to televisions.) But if they’re successful, what happens to MHL? And now that Super MHL has been shown, what happens to conventional HDMI? Stay tuned..
Super-wide, high resolution desktop monitors: Seems like everybody had one of these at the show. HP, Dell, LG Display, Samsung, and others showed 27-inch widescreen displays with “5K” resolution (5120×2880 pixels). These monitors also support wider color gamuts and use 10-bit panels (a necessity, given all the 10-bit RGB images they’ll be asked to display). What’s surprising is how inexpensive these monitors are – HP’s Z27Q version will be available in March for just $1300.
Toshiba Glass: The jury’s still out on whether Google Glass is a hit or a bust (I’m leaning toward the latter). But Toshiba, who recently retrenched their television operations to Japan, is all-in with a line of enhanced glasses that employ a tiny projection module to show images on the lens surface. This has been tried before – Epson’s Moverio VR glasses have tiny QHD LCD panels embedded in them – and it remains to be seen if the public will buy into the idea. They do look stylish, though. (And there’s even a pair of safety goggles in the line.)
I’ll close out this report with a few passing thoughts. First, it’s impossible to miss the trends of mass-produced, cheap consumer electronics that are increasingly showing up at CES. Next, there is hardly any new technology debuting at the show that multiple manufacturers have in short order (and that includes the Chinese).
Whereas voice recognition was big a few years ago, gesture control took its place the past couple of years. But now that Omek (bought by Intel) and PrimeSense (bought by Apple) are absent from the scene, voice recognition has come back. My new Galaxy 5 phone has Samsung voice on it and it works reasonably well. However, it appears that consumers just haven’t jumped on the gesture recognition bandwagon yet.
Remember 3D? I almost got all the way through this report without mentioning it. A few companies still showed it, such as LG, Toshiba, HP, Hisense, Changhong, Ultra D (digital signage), Panasonic, and some gaming companies. Likewise, Google TV was gone this year, replaced by Android TV in such places as the Sony booth. Aside from program guide searches, I’m not convinced that the average TV viewer needs a Google search engine or Android OS on their TV. But I could be wrong.
Remember drones? I almost managed to skip them as well. There were so many at the show, ranging from behemoths that idled in place overhead while we visited tables at Digital Experience to pocket-sized models with built-in cameras that could zip unobtrusively over a crowd under the control of your smartphone. (I’m waiting for the first pocket-sized EMP generators to appear next year – like electronic bug-zappers.)
Finally, after a day full of press conferences during which there was only about 30 minutes of actual, usable news, I’d like to see a temporary moratorium placed on the words “innovation,” “big data,” “stunning,” “cloud,” “ultra” anything, and in the Chinese booths, “happiness.”
The only thing stunning about Vegas is how expensive cab rides have become. True happiness can only be found at Big Daddy’s Barbecue outside the Central Hall (dee-lish!). “Big Data” should be the name of a blues band, or at least the harmonica player. (Maybe Big Data and The Cloud?)
And I’m sorry, but a floor-mounted pet camera and toothbrushes that sync up to video games are not “innovation.” Cute, yes, but no innovative. (Although the self-powered skateboard I saw that can run up to 16 miles might fall into that category…)
4K & UHDTV: Once More Unto The Breach, Dear Friends…
- Published on Friday, 08 August 2014 11:40
- Pete Putman
- 0 Comments
Yesterday, TWICE reported that Samsung, Sony, and LG will partner with Best Buy on a 13-week consumer awareness campaign to increase interest in UHDTV and ultimately drive sales of 4K TVs.
The campaign starts tomorrow and is named “Believing Begins Here.” The Consumer Electronics Association had a part in developing the campaign, which will feature in-store demonstrations of UHDTV at 50 Best Buy locations in 11 major markets, including Atlanta, Boston, Chicago, Dallas, Houston, Los Angeles, Miami, Minneapolis, New York, Philadelphia and Washington D.C.
The timing of this campaign is no coincidence. National Football League pre-season games have already started, and the first NCAA college football games are scheduled for August 28. And as we all know, nothing sells big-screen TVs like football!
The demonstrations will take place between 11 AM and 3 PM each Saturday for the duration of the campaign. According to the TWICE story, these three major TV brands (and hopefully others to be added later) “…have chosen the last remaining big-box CE specialty chain as their showcase.” (I’m sure HH Gregg and Frye’s would dispute that last statement!)
Does this bring back memories of the stumbling, awkward effort to promote 3D TV five years ago? It should, except there’s a difference this time around. For one thing, there aren’t any eyewear issues, because there’s no eyewear. Assuming BB does a good job with 4K content selection, anyone who happens to wander by the demo can easily and quickly check it out.
For another, there’s aren’t any “exclusive” 3D Blu-ray deals tied to specific manufacturers and TVs, a strategy that amounted to shooting one’s self in the foot back then. Throw in the battle between passive and active 3D, the eye disorders and vision issues almost a quarter of the population experiences, and a paucity of interesting 3D content readily available to viewers, and the obituary for 3D TV was quickly written.
This time around, Best Buy has decided to emphasize 2K/4K upconversion as a “future-proof” advantage of 4K TVs and will have adequate demos of 2K-to-4K program material to make their point. And to attract potential customers, the usual manufacturer promotions and sweepstakes/drawings will be conducted. Prizes include a 55-inch Sony, Samsung, or LG UHDTV with installation and Geek Squad service plan included. (By the way, a 55-inch Samsung 4K TV can be taken out of the box and up and running in about 5 minutes, based on my experiences at InfoComm during my 4K / UHDTV class.)
The television industry clearly has a lot more at stake in 2014 than it did in 2009. TV shipments have declined for two years in a row, and TV prices are collapsing with each quarter. (You can easily buy 60-inch LCD sets for less than $1,000 now, and LG has already dropped a 55-inch 4K “smart” model to less than $2,000.)
For some manufacturers like Panasonic, the TV business has been de-emphasized in favor of commercial electronics products and even beauty aids and appliances. (Panasonic now sources a lot of its LCD TV glass on the wholesale market from Taiwan and China.) For others like Mitsubishi, the business of manufacturing and selling TV is “history” as their profits slowly but inexorably evaporated to nothing.
One fact that Best Buy and its partners can’t really explain to consumers is the changing dynamics of the LCD panel and television components supply chain. Thanks to an aggressive push by Chinese manufacturers into the television business and an emphasis on 4K, we will soon see ALL TVs larger than 55 inches move exclusively to 4K glass, just as we saw the migration from 720p/768p glass to 1080p about 6-7 years ago.
The good news is; 2K-to-4K upscaling is comparatively easy, as my colleague Ken Werner has pointed out in a previous Display Daily. Some manufacturers are even building upscaling chips into HDMI interfaces and cables! So the Best Buy demos should be effective if they start with strong 2K content.
But there are always unanswered questions. Best Buy now sells Vizio TVs, and according to Vizio’s timetable, they will have a full range of heavily discounted UHDTVs available this fall, starting at $999 for a 50-inch TV and going all the way to $2,999 for a 75-inch set. In the key sizes of 55 and 65 inches, the prices will be $1,299 and $2,199, respectively. How does that price war help the Big 3? And why should Vizio have anything to do with this campaign when they can simply sit on the sidelines for a couple of months and then swoop in and capture sales based on their brand recognition?
More devil in the details: We still don’t have a 4K Blu-ray standard, and every month it is delayed lets more wind out of the BD sails. According to a recent Home Media story, consumer spending on streaming, downloads, and optical discs was flat through the first six months of this year, to the tune of $8.6B in the U.S.
The “details” show us that digital spending (downloads and streaming of movies and TV shows) increased by 17% ($3.6B) over the same time period in 2013. Meanwhile, spending on optical discs (DVD and Blu-ray) continues to drop, falling 8% ($3.3B) in the Y-Y comparison. Additionally, rentals of optical discs dropped 14% ($1.7B) compared to the first six months of 2013. Brick and mortar store rentals took an enormous hit of 33%.
Breaking out the Blu-ray category, the story says that Blu-ray disc sales were up by 10% during Q2 ’14, with new theatrical releases up 18% in the same time period. But that’s not enough to offset the overall decline in interest by consumers to buy or rent optical discs. (No numbers were provided for Blu-ray sales revenues.)
Will 4K suffer the same fate as 3D? Not a chance. As I just pointed out, many of our big screen TVs will employ 4K panels exclusively in the not-too-distant future. The infrastructure for 4K streaming is being built and the sales and rental numbers show consumers increasingly prefer that delivery format to accumulating a pile of discs.
I plan to check out the 4K demos myself in “secret shopper” mode and will have a report in a future DD.
Of Phablets and 4K
- Published on Friday, 30 May 2014 08:52
- Pete Putman
- 0 Comments
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.)
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…