Panasonic stuck with an earlier decision to go whole hog into plasma display panel manufacturing with a gigantic investment (440 billion yen – about $5.5 billion) for its Amagasaki fab starting in 2005. The bet is now costing Panasonic dearly.
The company said this week it will lose almost $10 billion in the current fiscal year as it writes down goodwill and assets while preparing for further restructuring. Panasonic also skipped its dividend for the first time in more than six decades and cut its full-year TV sales forecast by more than a quarter to 9 million sets. Company shares slumped by nearly one-fifth on Thursday, wiping out $3 billion of its market value.
There is some hope, though.
Kazuhiro Tsuga became Panasonic's president earlier this year and issued a decisive order to stop PDP production immediately. That shocked many in Japan.
Panasonic previously had been spreading its own engineering gospel that PDP technology offered noticably better picture quality than LCD, especially in a dark room. Tsuga conducted his own month-long, side-by-side comparison and found little difference in picture quality. Besides, he noted, "most people watch TV with the lights on.”
In the final analysis, it took Panasonic almost a decade – and billions of wasted yen -- to wake up to the fact that PDP was never going to beat LCD.
Sharp management also bought the myth that the success of its advanced LCD panels manufactured in Kameyama fab was assured. It blindly followed an ambitious expansion plan for ultra large-screen LCD panel production. The result? Sharp announced massive second-quarter losses this week and acknowledged “material doubt” about the company’s survival.
Sharp now finds itself on a pace to double it annual net loss to 450 billion yen ($5.63 billion) after taking a $1.1 billion restructuring charge in the last quarter. Its forecasting operational losses totaling 155 billion yen ($1.94 billion).
A rescue deal with Terry Gou, chairman of Foxconn owner Hon Hai stalled over the summer after a tentative deal was reached earlier in the year. Gou had agreed to pay 67 billion yen for a 9.9 per cent stake in Sharp and partial ownership of an underused display factory near Osaka. Now Gou is pressing Sharp to lower its price to reflect a precipitous decline in its share value.
As a result, Sharp is reportedly exploring “other alliances."
Either way, Sharp is running out of time and options. So, too, is Japan, Inc.
The Japanese way of working is: copy a product or invention from the West. Then make it smaller, cheaper and more profitable.
That worked OK in the 20th century. These days, the world is too competitive.
It's not that these Japanese companies are too slow to change, it's that they cannot change. They never had the creation aspect.
Japan Inc. doesn't get software. User interface defines success in the market today with great technology BEHIND it. Motorola's fate was partially to blame because of this. As I say about the Japanese companies which whom I am engaged with at this moment, "Process over Profit."
It appears to me that countries, companies and managers are sometimes, mostly by chance, at the right place and time with a technology. In such cases they may be very successful. Such success indicates their operational skills not their long term technology forecasting "skills." Long term technology forecasting does not appear to be correlated to the countries, companies or managers (Steve Jobs is an exception). Considering long term technology forecasting a "skill" (i.e. learnable) seems unrealistic.
I think most consumers are sensitive to price. The cost of building plasma has never been able to compete with that of building LCD for various reasons. When price and quality are being evaluated together, consumers are willing to sacrifice a bit of quality to a way better price. Lately, I have visited Sony shop and saw a TV with noticeable better picture quality with price of close to $3,000 of a 55" screen.
Product management and development is a bet. You bet that consumers are willing to spend the dollars to own these features and the quality of the product given an economic situation.
As I had a pleasure to work together with guys and gals from other Japanese giant - Toshiba Electronics I noticed one thing: problem with marketing communication. Who the heck did know that Toshiba had the best quality NAND Flash components? Only geeks, so 90% of people decided to buy TLC components from Samsung, cause they offered higher capacity at better price. The same story with plasma TV - the quality was and still is faaaaaaar much better than LCD or LED. But people didn't know it and decided to buy LCD, even though their quality wasn't as good as plasmas. And last but not least - have you ever tried to watched Sharp's LCDs? Who knew that they invented 4th colour for displaying? You can feel the difference after few minutes or hours of watching it. It's so obvious, that both Panasonic and Sharp offer still excellent products, but they didn't know how to communicate it. Maybe it's because I'm the PR guy and electronics geek, but it really hurts when you look at these excellent companies with excellent products in the situation and comments where they are right now.
There is really no right or wrong things to do. If you made it, everything you did must be right. If you lost it, people can find millions of things that you did wrong. Just considering Apple. Apple did it all the wrong ways. Others focus on either software or hardware; Apple wants both. Others go to open systems; Apple insisted its own closed system. On and on. Right or wrong? I don’t know. But it takes a genius to reverse the tide.
maybe this is just a normal round of business cycle for japan inc. same as kodak, xerox,
generally older folks ll get slower in respond time, can't blame em anyway.
just wait for younger gen to pop out.
David Patterson, known for his pioneering research that led to RAID, clusters and more, is part of a team at UC Berkeley that recently made its RISC-V processor architecture an open source hardware offering. We talk with Patterson and one of his colleagues behind the effort about the opportunities they see, what new kinds of designs they hope to enable and what it means for today’s commercial processor giants such as Intel, ARM and Imagination Technologies.