Meko Blog
Our view of the display industry.
Category >> General Displays
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.
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.
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.
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!).
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!
Looking at the news this week, and catching up with the technology news especially, I realised that the display industry is starting to get really interesting again. Since I started in the business, there was promise of flat panels and then a battle between LCD and all the 'pretenders' to the crown of top display. This was clearly won by 'the LCD monster' and I got the feeling that things were going to get boring as LCD dominated.
Now, though, there are some really interesting developments. On the economics front, the potential is for the momentum in the LCD business to start to swing solidly towards China and away from Korea. That means that the Korean makers have to find new ways to stay ahead and clearly OLED is the technology of choice. OLED, after being mainly of academic interest over the last fifteen years, is going to become very interesting indeed. There are developments in quantum dots (QD) that could help extend LCD's dominance by improving backlights, but could also turn into a competitive technology to OLED.
Transparent displays will open up new concepts and designs (especially if OLEDs and QDs develop as some hope). Flexible displays will arrive and there will be a battle for the most dominant zero(ish) power display between E Ink, Qualcomm's Mirasol and perhaps the LiquaVista technology now bought by Samsung.
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