THE FRONT LINE: MARCH 4, 2008
Pioneer To Stop Manufacturing Plasma Panels
Caught between a rock and a hard place, Pioneer did the only thing they could. But what does that say about the future of their brand?
According to a report in yesterday’s (March 4) Asahi Shimbun newspaper, Pioneer Corporation will pull the plug completely on plasma panel production and instead buy its panels from industry giant Matsushita Electric Industrial Company, parent of Panasonic.
Pioneer, which has waded through oceans of red ink the past three years since buying NEC’s plasma factories in 2004, expects to post a $169.3M loss for its most recent fiscal year, which ends on March 31.
Two years ago, Pioneer racked up over $700M in losses, much of it attributed to plasma display panel manufacturing, marketing, and sales operations. Last year wasn’t quite as bad as the company managed to trim that number to about $56M, but they couldn’t stem the tide for fiscal 2008.
Despite the rave reviews for the company’s new KURO plasmas (and they are some of the finest HD displays ever produced), Pioneer’s retail prices remained too high for mainstream consumers. Amazingly, as other plasma manufacturers saw their market share increase by substantial amounts in 2007 — Panasonic was up 48% year-to-year, LG up 113%, and Samsung SDI up 95%, according to DisplaySearch — Pioneer’s piece of the pie declined 39% from 2006, and their Q4 ’07 share was a measly 3.2%.
That’s just not enough to sustain a high-volume fab, plasma or LCD. The company predicted back in June of 2007 that they expected to sell over 160,000 KURO plasma HDTVs over the next year, a figure that sounded wildly optimistic at the time (and eventually turned out to be).
A week ago, Pioneer announced it would stop producing 42-inch panels and outsource that screen size to either Matsushita or Hitachi. Apparently, there was a subsequent meeting of the minds and the decision was made instead to go “cold turkey.”
This decision will shut down Pioneer’s Izumi PDP line, and remaining lines will be used to assemble PDP panels into finished HDTVs. Matsushita’s huge size and manufacturing capacity means Pioneer can buy the glass for far less than it cost to manufacture in-house.
Concurrently, Pioneer will also be introducing LCD HDTVs in smaller sizes (a smart move), using ASV panels from Sharp Electronics.
So, what does this do to the Pioneer brand? The company still has strengths in auto electronics, specifically car audio systems and speakers. AV receivers and DVD players (red and blue laser) also remain in the line. Thus slimmed down, Pioneer would be in a better position to survive the current economic recession (yes, it is a recession) and perhaps even thrive going forward.
And here’s another bonus: If Pioneer will license the KURO patents and intellectual property to Matsushita (and there’s no reason they wouldn’t), we could see an eye-popping Panasonic plasma HDTV line for 2009. Coupled with new advancements in green technology, plasma would surely be positioned for a strong run over the next decade.
