[Economic Times]
Korean duo Samsung and LG have huge potential to gain in the television business at the cost of the Japanese TV makers like Sony, Sharp andToshiba who are suffering profit losses globally, says a recent study.
As per estimates by global research firm NPD DisplaySearch, Samsung and LG were not compelled to reduce their television prices to be competitive and have been able to avoid selling money-losing products.
Samsung and LG, which account for more than a third of TV shipments and revenues, reported encouraging performance in the first quarter of 2012. LG reported 4.1% operating profit margin in its home entertainment and Samsung reported 5% from consumer electronics, which are led by TV businesses.
NPD DisplaySearch says tight inventory management from the end of last year helped the TV makers save huge marketing expenses when liquidating old models to make room for new models. Premium models, with 3D capability, LED backlights and smart functionality are driving profits.
The report says LG and Samsung can now become more aggressive in capturing share from other brands and increase pressure on Japanese TV brands.
“”Over the past few years, it was seen as an impossible mission to make more than 3% margin in the TV set business, as Japanese set makers experienced increasingly worsening losses.”” says the report.
NPD DisplaySearch says in such an atmosphere, few expected Apple to enter this low margin category with a branded TV product. However, the opinion is starting to change and some in the TV industry, now believe that if Apple enters the TV category it may improve the margin structure as a game-changer, driving innovation and higher margins.