Meko Blog
A short description about your blog
Last week saw a number of interesting stories - I noted the completion of the Philips deal with TPV, the Dell acquisition of Wyse and the official launch of the Samsung LCD business - but there were more. The real meaning of the Samsung launch of its display business will become apparent over the rest of this year as re-alignments in that company's display business are completed. The Dell acquisition of Wyse may be significant in the longer term, but has echos of the HP acquisition of Neoware in 2007 which suggests that it is not that revolutionary and is seen widely as a defensive move by Dell to react to HP. So, this week, I'm going to come back to the topic of Philips and TPV.
TPV is unique among the large electronics companies that we deal with, in that it is not an electronics company - it is a large display company - and not only that, it only supplies (as far as I know) direct view displays - there are no projectors in its line up. Even more clearly - today all of its displays are based on LCDs (although that could change in the future, I think).
There are lots of small display companies and a few medium-sized ones, but, excluding LCD panel makers, I struggled to think of another large company that is in the design, engineering, assembling and marketing business, that is solely focused on displays, as TPV is. That could be regarded as a weakness, but I have to confess that I see that as a sign of strength.
I must say that I felt something of an anti-climax after the Apple announcement last week. After all the hype, there was a thought that there might be something really revolutionary but, in the end, the announcement was the upgraded iPad that we had all been expecting. It would be a mistake, however, to just say it was 'just an upgrade'.
My attention was drawn to the news, reported by the FT, that LG and Samsung are starting to see competition in their home market of Korea from store brands and low cost brands. Although the companies do not rely on their home markets for volume to the same extent that the Japanese brands do, but still the firms want to dominate their base. The FT points to a 'project' sale of 32" sets made by TPV and sold through E-Mart. The development and sale of lower cost sets puts pressure on the big brands who are trying to sell premium Smart and 3D TVs.
As we reported in Display Monitor, Samsung is now at 34% of the market in Europe - a very strong position and the first time, we believe, that anyone has had that kind of dominance. I also think that Samsung will find it harder and harder to increase its share. Once this level of dominance is reached, brands often have strong resistance to further penetration by the very channels that have delivered that success. Large retailers will resent the degree of control that such a brand would effectively have over the business and smaller retailers will not like to sell the brand because the retailer wants to differentiate itself from others.
For Samsung's TV business, that means real difficulty in achieving growth in revenues. The firm can try to move its customers up market to higher specifications, but that has the danger seen in Korea, that the premium is simply too much for some consumers. The company can also try to expand geographically and we recently reported on the firm's plan to try to get into the Japanese market, where it has had no presence at all historically (Display Monitor Vol 19 No 1). It can push its products in the developing world, but we know that the largest market, China, wants its own TV business to grow and develop. And I have said many times, engineering beats science, economics beats engineering, but politics beats economics.
While going around ISE earlier this year and looking at the latest innovations, I got to thinking about the Sony inorganic LED TV shown at CES (but not at ISE). For those that missed the news, Sony showed a very good looking 55" TV set based on inorganic LEDs (rather than OLEDs) and reports since the show have suggested that the display was made by wiring together individual R, G, B LEDs. The set, called 'CrystalLED', was highlighted as a technology demonstration.
I had a think about the panel at ISE as we were talking to a number of suppliers of the large inorganic LED displays and they have always told me that the cost of these displays is proportional to the number of LEDs, so the cost goes up dramatically as the pitch gets smaller. That got me thinking about the costs of the Sony display. Let's assume that the great performance would allow Sony to sell the 55" set at a premium and at a panel price of, say, $600 - a significant premium on the current price for 55" LCD panels.
So Samsung has decided to spin-off its LCD business into a wholly-owned subsidiary of Samsung Electronics and to orient its business towards OLED displays.
When I first heard the rumour about the split, I found it hard to believe that the company would let its LCD division float alone. However, it turned out to be a 'two stage' process of separating the LCD business from the Electronics group and then combining it with SMD (the OLED group in Samsung) and S-LCD, the company that was a joint venture with Sony, until Sony sold back its share recently.
Part of the reason for a two stage process is that SMD is an 'affiliated company' to Samsung Electronics, as it was a joint venture between Samsung SDI, which combined SDI's AMOLED, module assembly and small LCD business and the OLED group within Samsung's LCD business. A complication is that Samsung SDI, which also was the recipient of Samsung's solar panel business last year, has always been a separate listed company and was built up on CRTs, PDPs and batteries. Although its largest shareholder is Samsung Electronics (at just under 20%), it has over 100,000 shareholders in total.
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.
Copyright © 2012 Meko. All Rights Reserved.
|
|
|
Blog
Latest Blog Comments