All
great empires fall, undone by a familiar pattern of hubris, over expansion,
internal decay, strategic blunders and the rise of mightier competitors. The
consumer electronics industry is littered with its own empires and while their
fall doesn't involve pillaging and Earth-salting (at least, not yet), their ebb
and flow does remind us of the geopolitical empires of old – with a twist. For
unlike ancient empires that succumb to history, electronics empires can come
back from ruin.
The
most prominent example, of course, is Apple, which stumbled to near irrelevancy
only to be rejuvenated by the return of its founder.
Today,
all eyes are on the Japanese TV titans Sony and Panasonic. From a position of
unrivaled strength in the 1980s and 1990s, these two empires have been
crumbling. Fast. The TV divisions of both are bleeding red ink profusely,
hampered by an unfavorable exchange rate, a sharp drop in domestic demand, and
the surging success of South Korean rivals Samsung and LG. Sony lost 80 billion
yen on TVs in 2012, curbing its sales forecast by two million units. It has
suffered losses in its TV business for four straight years.
Panasonic,
which placed a huge and ultimately losing bet on plasma technology, has fared no better with the company CEO musing openly about
dumping its TV business as a “last resort.”
Yet
both firms have insisted that their TV divisions will rebound. Unlike other
Japanese competitors such as Mitsubishi and Hitachi, who have shuttered
production in Japan and curbed investment in TV technology, both Sony and
Panasonic remain committed.
The
question is: are they throwing good money after bad or do these once powerful
empires have an opportunity to rise again?
There’s
reason for, at a minimum, some guarded optimism. For one, the Japanese central
bank has embarked on an aggressive move to devalue the Yen, which would make
Japanese products more price-competitive with Chinese and South Korean rivals. Second,
the TV market is nearing another upgrade cycle with the coming of OLED and
4K/Ultra HD technology.
Both
Panasonic and Sony are investing heavily in OLED and 4K display technology and
the consumer TV market, while sagging, could be rejuvenated as prices for these
displays drop into consumer-friendly territory (likely in 2015 and 2016) and
more 4K content trickles onto the market.
Of
course, Samsung and LG see this OLED/4K wave coming as well and has been also
been ramping up their investment and research into these technologies. Their
powerful market positions clearly give them a leg-up as the new technology wave
reaches the shore. Still, the transition from HD to 4K and from LED to OLED
cracks open a new, and perhaps final, window for once mighty empires to reclaim
some lost territory.
