Meko Blog
Our view of the display industry.
While OLED was, of course, the big story of CES this year, and it seems to me that there are still lots of questions to be answered about the ability of LG and Samsung to deliver high volumes of these new TVs. But my first thoughts were about the content shown on the sets.
The black levels visible on the OLED TVs at CES were great, but to some extent, the high dynamic range of the displays showed that the content is really not as good as the displays now. I have had the advantage of seeing the Dolby 'High Dynamic Range' content that was shown at IBC and I was blown away by the quality of the imagery which had been specially created to demonstrate the capabilities of Dolby's displays. (We assume that Dolby would like to get HDR content captured, stored and broadcast and get licence fees for the use of ip in this process, as it has done with audio).
In Display Monitor back in March 2010, we reported on a talk by Paul Kedrosky, an economist from the US, at the US FPD conference in which he said that 'the function of governments is to delay the inevitable' (and he also said that there could be a major restructuring in the eurozone!). That comment came back to me this week as I have been watching the efforts of governments in Europe to cope with the current crisis. I have heard the actions of the eurozone governments described as 'kicking the can down the road' and that also has resonance!
I shivered this week when I heard that the markets had been negative about buying German government bonds. On the other hand, an understanding by the country that fundamental change in the way that the zone is inevitable might help the zone to get the re-structuring that the zone desperately needs.
I thought of the comment again when I was reading the story this week about the initiative of the Taiwanese government to foster discussions between the panel makers, AUO and CMI. David Barnes, who I often quote in this publication, has pointed out that the development of scale in the LCD industry has not delivered a great advantage to those that have developed the scale. There is an advantage, but it is small and is probably more about the ability to develop technology rather than simple cost saving based on volume.
Last week's big EU meeting of leaders to move a bit further along the road to solving the problems of the Eurozone has been a big topic in discussions, as currencies and their movement really affect the business of our clients. At the moment, the recent weakness of the Euro against the dollar has offset some of the potentially beneficial effects on volume of the recent drop in panel prices. Panasonic's problems in its TV business, reported in this issue, must have been made worse by the strength of the Japanese Yen against the Euro, especially as Panasonic has its own vertical supply chain for PDPs and LCDs in Japan, many of the costs for which will be in Yen.
As I write this blog, the implications of the Euro deal are still being understood and analysed. I do not profess to being any kind of expert on currency. I know from experience of having a purchase ledger in Yen with sales income in Pounds and 100% responsibility for currency purchasing decisions, that probably the most dangerous thing in currency dealing is to think that you are clever in this area.
At one time, I was a great fan of the UK joining the Eurozone. One of my questions to those that opposed the UK joining the Euro, was whether they thought that the US would have been as strong if there had been a different dollar for every state? I'm still a believer in strong European economic cooperation, but the current crisis has really pointed to the answer to that question.
I'm going to pick up on a subject that I have ranted about a lot. Looking back, however, it is actually 11 years since I devoted a whole editorial to the topic.
One of our news items recently was about the ITU adoption of the Japanese Super-Hi Vision concept for 7680 x 4320 Ultra High Definition TV (we reported on the NHK demo at IBC in our show report). That's 33 megapixels, or 16 times more pixels than 'Full' HD displays. It's four times as much as the '4K' displays being used in high end digital cinema projectors and medical displays. Yet still, our industry does not understand the 'power of the megapixel'. Still, we continue to use phrases such as 4K display or 8K display that only highlights the horizontal resolution, not the full resolution.
I have ranted for years about the same approach to screen diagonals. A display that has twice the diagonal (and the same aspect ratio) has four times the screen area. Would Intel describe the clock speed of its CPUs by giving them a number that is the square root of the clock speed? If Intel went from 1GHz to 2GHz, would the company really give customers a number that is just 40% bigger? Ah, we've gone from 1 IntelMark to 1.4 IntelMarks. No chance! So why don't we describe the display in terms of its area? (Let me add, I understand the technical reasons, but I'm talking marketing here. Whenever I have asked this question of display marketeers, I have never been given the correct technical reasons!)
This week has been one for me of 'intimations of mortality', to slightly mis-quote Wordsworth. From the news last weekend that a friend and industry colleague has been diagnosed with cancer, through to the death of Steve Jobs, this week there has been too much bad news. Even between those two items came the news of the death of a guitar-playing hero of mine, Bert Jansch, also from cancer.
Jobs was a passionate man whose philosophy was 'carpe diem' (seize the day), to quote the Roman poet, Horace. The BBC played an extended segment of a speech in which Jobs explained that he tried to 'live each day as your last - one day you'll be right', in its main radio news programme.
To quote George Bernard Shaw, 'Reasonable men adjust themselves to their environment. Unreasonable men attempt to change their environment to suit themselves. Therefore, all progress is the work of unreasonable men'. Jobs certainly met that description.
I remember it well. Almost thirty years ago, in my second year in the computer business I was sitting in my car with a colleague who ran the PC division of the company that we both worked for (I looked after peripherals - mainly printers and monitors). We were bemoaning how poor the demand was and wondering how we were going to deal with our shared boss. Then we realised that we had had exactly the same conversation a year before in, if I remember correctly, May.
The reality was that May, and we later realised, Q2 in general, has been weak in every year I have been in the PC business since then. Apart from one year. I can't remember which it was, but it was five or six years ago and business for all our clients was great. I kept asking people why business was so good, but I never did find a reason for that strange year. So, apart from that year, business is always down in Q2.
Part of the dip is because of the seasonality of budget years which tend to end around the end of the calendar year, or the end of March. Either old budgets are spent in November to March, or new budget orders are released in January and April. By the mid to end of May, this pattern has slowed and budget holders try to avoid spending too much in case they need it later in the year. Then comes the summer break. Everybody would say "business will be quiet because of the holidays". In the UK market, that rarely happened, and we often did good business in July and August and every year it seemed to be a surprise.
One of the stories which caught my eye recently is the possible merger of Sony and Toshiba's small panel business to create what would be the largest player in that space in the market.
For Sony and Toshiba, a joint venture would look a reasonable proposition. Both companies have good display technology, especially in polysilicon, and they will each struggle to compete in the long term with the giants of the LCD world if they remain alone.
Also a couple of weeks ago, Sharp said that it was planning to restructure its business by moving more small panel production to larger substrates and reducing its business in the 'commodity' market of TVs of 40" and below. Although a number of commentators remarked on this 'new' strategy for Sharp, to me it seemed to just be a return to the strategy of old. When others were pursuing monitor panels, at the time when G5 and G6 was 'state of the art', Sharp focused on its high value add small panels, exploiting its CGS (LTPS-like) technology, and its large TV panels. At that time, the strategy was known as the 'smile curve' - the profit was at the raised ends, not in the volume middle. It was only with the G8 and G10 fabs, and especially the G10, that Sharp got more into the volume markets and part of this was strongly driven by the success of the firm's TV business in Japan.
I said a while ago that the days when a significant electronics category can be launched without an 'ecosystem' look numbered. The master of building an ecosystem to exploit and develop hardware has probably been Apple with its iPod/iTunes, iPhone/iPad/apps approach to the market.
This week, Apple announced the iCloud, an attempt to unify these services with some online services from the Mac world and bring them all together under one service heading and with 'everything available in one place'. It seems to me that this is a very big deal if Apple can make it anywhere near as good as it promises. This is, of course, not a given. I have been very aware of what Apple is doing since the late 1970s when I had an Apple ][ and was chairman of the UK Apple User Group. Apple, and especially Steve Jobs in his talks, has always painted a rosy picture of how seamless and simple life would be with a Mac, although the reality hasn't always matched up. (A designer friend told me that he loved his Mac because at least when it crashed it gave him a cute cartoon rather than the 'Blue Screen of Death'!)
Nevertheless, the iCloud concept seems to be a very good way of dealing with a fundamental issue of architecture - the choice between distributed files and resources, which works very well if you don't have a connection to the network, and the cloud/remote working model that works so elegantly, but fails when you are out of reach of a network. As someone that travels a lot, I am always conscious of the fragility and cost of the network once you get away from your home Western city (and don't get me started on the robber barons of international network roaming!).
I was musing today, while writing my editorial for Display Monitor, about the general state of the economy globally and the potential for a 'double dip'.
It seems to me (and I'm not an economist!), that what we are currently seeing is a problem with the timing of different parts of the economic system.
To oversimplify: The dramatic collapse in banking caused every business around the world to really look hard at its costs and overheads. Companies cut hard and quickly. Unlike the Great Depression, there wasn't a slow reaction. The global economy and the speed of communication and decision making was impressive. At one level, it was a really impressive example of the execution efficiency of the capitalist system.
One of the overall impressions of the SID this year was that there were few OLEDs on view. As I mention in the main report, published in Display Monitor, I think this is because Samsung is clearly in the lead in developments in this market, but is concerned about giving away too much information to competitors. LG has responded to this by also hiding its OLEDs. That's a shame and might give reporters that are not as close to the market as specialists, such as Display Monitor, the idea that OLED is not important or 'not winning'. It is very important, because OLED is important, or even critical, to the Korean makers.
Samsung and LG are completely dominant in terms of market share in LCD and in all of the FPD market. However, as David Barnes said in his excellent talk at the business conference, there is strong evidence that sheer scale doesn't help you to control a market in LCDs as it does in some other industries, such as semiconductors. I think there are some good reasons for that which may be the result of the industry structure and history, but I'll need another editorial to discuss that!
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