A senior Sony Corp. executive said Thursday he expects prices of televisions in the U.S. market to fall in the holiday shopping season, underscoring rising concerns in the industry about thinning profit margins.
“TV inventories are still at high levels, so prices are likely to fall,” Senior Vice President Yoshihisa Ishida told reporters.
The industry had hoped that new technology on offer this year, such as 3-D displays, might slow the downward trend in TV prices, which have fallen by more than 20% per year over the past few years. But weaker-than-expected demand in the first half of the year has led to excess product stock, and TV makers world-wide are now under pressure to meet their shipment targets by slashing prices.
But Mr. Ishida said it was doubtful whether lower prices alone could drive a recovery in the U.S. market. “At this point, it is hard to tell whether the market will remain weak or pick up,” he said.
Underscoring those concerns, South Korea’sLG Display Co. said Thursday its third-quarter profit more than halved from the year-earlier period, largely due to weak panel prices as demand for consumer electronics sagged.
Executives at the world’s second-largest maker of liquid-crystal displays by revenue, after Samsung Electronics Co., said the current panel price decline was likely to persist through the fourth quarter. However, Chief Financial Officer James Jeong said the higher inventory level would likely ease toward the end of the year, with panel prices bottoming out in the fourth quarter.
Research firm DisplaySearch says it expects LCD TV shipments in 2010 to grow to 188 million units world-wide, up from 145 million in 2009, as strong growth in Japan and emerging markets offsets weakness in North America.
Another research firm, iSuppli, expects global TV shipments to accelerate in the second half of this year due to aggressive price cuts, even on products with new features such as 3-D TVs.
“Competition is quickly becoming very intense in the 3-D market,” Mr. Ishida said.
The comments come amid Sony’s continued attempts to turn around its TV business, which has been unprofitable for the last six straight fiscal years. The company’s TV business did show black ink in the April-June quarter of this fiscal year, thanks partly to more outsourcing of production.
Despite the tough market climate in North America, Mr. Ishida said Sony’s new Internet-enabled TV sets released last week in the U.S., which run on Google Inc.’s Google TV software, are off to a “better-than-expected” start, though he declined to set any sales targets.
Mr. Ishida said the Internet TVs represent a new business model for Sony. Instead of making money by just selling hardware, the TVs can continue to generate revenue through downloadable software and paid content, he said.
For the time being, such revenue will come mainly though Qriocity, the company’s newly developed content-distribution platform to deliver digital entertainment services such as video-on-demand or music to consumers through its Internet connected devices.
by JURO OSAWA
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