Andy Sim's Blog

Andy Sim male Former Senior Tech Writer

Andy is a self-made geek with a penchant for good music and a hearty pint. His domain includes swanky TVs, notebooks and networking gizmos.

Big Screens, Small Returns

As 2011 unfurled, I expected falling LCD prices to affect global TV profits, but I sure as hell did not anticipate the situation to slump into the red. And who would have guessed that colossal names in the industry, such as Sony and Panasonic, would be scrambling to keep their businesses afloat?

In reality, dipping sales has compelled some of the major TV companies to rethink their business strategies, and maybe even resort to downsizing their television manufacturing divisions to revitalize their operating interests. And it won't be wrong to assert that slim profit margins have a part to play in the current TV crisis too. On a good day (or bad day, depending on perspective), it is possible to find a 42-inch Full-HD LCD TV going for less than S$800 these days. It does make you wonder about the bare little TV makers wean from these conservative premiums, doesn't it? 

Things are looking grim for the HDTV landscape, judging from DisplaySearch's extract of their quarterly forecast. A notable decline in the demand for televisions worldwide is evident, at least in established markets like Europe, America and Japan. Besides, the analytics firm anticipates that global TV shipments would hover at 248 million units, which is pretty much the same numbers attained last year. And if you could peruse the following chart, the obvious drop in projected flat-panel TV growth between 2010 and 2011 appears to be heading towards another free-fall. 

This downslide can be attributed to lowered business targets from TV makers, according to DisplaySearch. To make matters worse, economic woes in Europe and North America have since influenced consumers to take a cautionary approach when buying big ticket items like HDTVs. As things stand, it is clear that the lure of 3D TV and Smart platforms aren't enough to revitalize mass interest in the goggle box. 

In a recent Reuters' report, Sony's TV business is apparently destined for its eighth consecutive annual loss, and I reckon nothing short of a miracle can save them. We are looking at a quarterly loss of 27 billion yen for Q2, compared to a profit of 31.1 billion yen made in the same quarter last year. 

To turn things around, the Japanese company has decided to split its television business into three divisions: LCD TVs, Outsourcing operations and Next-generation TVs. Rumor has it that Sony also has intentions of selling their share in the S-LCD joint venture with Samsung.

Over in LG's camp, the Koreans may defer an investment plan to build a new LCD plant in China, based on a report published by The Chosunilbo. This is partially due to the company's operating loss of 492.1 billion won in the third quarter, which makes it their fourth straight quarterly loss as well. 

As for Panasonic, the AV titan reported they've suffered a staggering annual net loss of 420 billion yen, due in part to massive restructuring efforts and weak sales demand in the States and Europe. To mitigate this, Panasonic may step up plans to downsize its workforce in their television and semiconductor arms.

Restructuring aside, this raises the question on the possible tricks TV manufacturers can conjure to resurrect the industry. Some makers, like Toshiba for example, are toying with the idea of 4K (or Quad-HD) displays.

This mega resolution might make sense if you have the right content to match, like Japan's "Super Hi-Vision" for example. Currently, NHK is working with the BBC to test out this technology in a run up to Olympics 2012. While it certainly won't achieve mass adoption over the next few months, you might want to know that this format actually packs a whopping broadcast resolution of 7680 by 4320 pixels.

Other makers, like LG for instance, can also benefit from high-resolution displays since this would ensure that each eye would receive a 1080p image from their Cinema 3D TVs, instead of the current half-resolution process. 

The year is coming to a close with Christmas just around the corner. While I doubt Sony and Panasonic can effect any immediate changes to lift the gloom before the festive season; on my part, I'd like to wish them and all TV makers a more optimistic and profitable year in 2012.

Things can only get better, or so I hope.

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