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EXCLUSIVE: DisplayBank a leading consumer electronic research Company believes that Sony is about to start a massive TV discount war and that moves by the Company to change their manufacturing partners was a key part of their plan.
They also claim that Sony is not making money from selling the Bravia TV range and that the worst case scenario is that Sony get out of the TV business altogether.
The US research Company claims that Sony “plans to put into motion this May an “aggressive price cutting strategy” for their large LCD TV models. They also claim that competitors like Samsung will be forced to follow the Japanese Company in slashing prices.
The Display Bank report obtained by ChannelNews is normally provided to vendors. It claims that the plan by Sony to discount LCD TV models will force Samsung and second tier makers “to either react or seek out other solutions”. They also say that Sony’s move is expected to vitalise what has so far been a stagnant TV OEM segment.
They say that the price of a Sony 40″ FHD model could fall to below $1,100 in the US and a 46″ model to less than $1,499. In Australia this could translate to $1,800 and below $2,500.
They claim that Sony’s TV business unit is in the red ant that it is this division that is pushing for a radical pricing strategy.
The reason they say is that “Sony used to be the undisputed no.1 brand in the global CRT TV market but today remains a distant second in the LCD TV market behind Samsung Electronics and the South Korean brand’s increasing lead. Faced with this, Sony has two options they say “utilise the immense brand power it has established over the years to reclaim its dominance over the global TV market or give up the business altogether”.
They also say that all TV set makers with the exception of Samsung Electronics are losing money in the LCD TV market.
The report says that Sony invested in LCD operations and new production lines with Samsung Electronics and that they are currently planning to expand its joint investment relationship with Sharp to include a joint TV development.
And with industry experts forecasting increased supply volume in 2009 over 2008, Sony has no choice but to take a stance in the TV market this year.
They also say that if Sony fails to achieve dominance in the TV market this year it might not get any additional opportunity going forward.
The report goes on to say that Phillips’s withdrawal from the US market and Funai’s acquisition of Phillips’s brand licensing rights is only the start and that other brands could follow the same path as Philips.
They also claim that another key factor is that Sony’s price cutting and the impact this move will have on distributors will result in retailers and distributors requesting price cuts from other brands.
Their conclusion to the report says “This price cutting war started by Sony foretells of yet another shoot out within the year.
Which TV makers have the price competitiveness to remain standing in the flat TV market, which TV makers are going to withdraw altogether from the market, and which TV makers are going to focus on regional strategies ? these are some of the questions we should focus on.
One thing is for certain: TV makers will need to establish strategic relationships with panel suppliers in order to survive this war and major TV makers will need to keep their focus on their proprietary brands while increasing the amount of production outsourcing like the CRT TV market of the past. In short, the market will take on the rich-get-richer and the poor-get-poorer structure.
Second tier and local companies will need to pursue strategic partnerships with panel suppliers no matter what the cost and are likely to accept niche markets and production outsourcing as key strategic options”.
To see the report summary from DisplayBank go here
