TV Biz Breakthrough Still Unclear for Sony
By Kim Yoo-chul
Staff Reporter
Will Sony's last-minute card for survival in the television business be enough to inject fresh vigor into the struggling Tokyo-based company?
Responses are mixed.
Some say Sony's strategy change in TVs into cost-cuts and profitability will pay off in the long term, while others say the policy shift will benefit South Korean TV makers such as Samsung Electronics and LG Electronics by strengthening their TV leadership.
"It seems interesting that Sony has officially surrendered in the market share war with South Korean rivals. Personally, the success of Sony's measures depends on the partnership with Samsung," a high-ranking executive of Samsung Electronics told The Korea Times, Sunday.
Sony Vice President Hiroshi Yoshioka recently said the company aims to turn to profit on its TV business by cutting costs and introducing products with advanced features.
By pushing massive restructuring plans, Sony is set to ship TV sets incorporating regional needs to emerging economies as a way to boost TV sales.
"Sony will introduce high-value-added products, such as better picture quality, rather than lower-priced products," according to the head of Sony's TV business.
"Sony would be unable to compete with foreign manufacturers in cutting prices due to the yen's appreciation," he said, adding the global sales of LCD TVs for 2009 will fall from the previous year to around 15 million.
In the first quarter, the global LCD TV market share of Sony plunged to 13.1 percent. Samsung Electronics leads the industry with a 21.5-percent share, followed by LG Electronics with 13.3 percent, market research firm DisplaySearch said.
Analysts said the moves by the Japanese company have widely been expected since the Consumer Electronics Show (CES) held in Las Vegas, the United States, early this year.
"Sony is forecast to suffer losses for six straight years. For the company, survival is the top concern. Since the CES, I have predicted Sony's policy changes and the clarification of giving up long-time market share war with Korean players," the Samsung executive said.
After Sony confirmed it will focus on products with better picture quality and high-value-added gadgets, rather than lower-priced ones, the main focus has shifted toward a partnership with Samsung Electronics.
Sony Chairman Howard Stringer paid a rare trip to the Samsung-Sony LCD joint venture in South Korea's provincial city of Tangjeong to participate in the opening of a new LCD manufacturing line that cost $1.5 billion to build.
At the event were Samsung's key executives ranging from group heir apparent Lee Jae-yong, CEO Lee Yoon-woo and Samsung LCD head Chang Won-kie, who cancelled his scheduled trip to San Antonio for an annual display show.
"For Sony, maintaining the partnership with Samsung is truly important. Sony has been in talks with Samsung for the next-generation of 11th mother-glass LCD panels, while it needs a stable channel for better procurement of LED chips for LED TVs," another Samsung executive said.
"Speculation had been high over the Samsung-Sony relationship after sensitive reports such as LG Display's approach to supply panels. Stringer's visit has been interpreted as a measure to mend souring ties to meet Sony's own needs for business restructuring," he added.
Industry watchers say a partnership with foreign rivals is one of the keys for Sony to succeed as better outsourcing can't be realized with weak strategic tie-ups.
Samsung buys half of its LCD panels used in LCD TVs from the S-LCD joint venture, while Sony has taken the remaining portion since 2004.