I can believe LG getting a 4.1% margin, and Samsung getting 5%.
But we need to look at other factors related to the financial markets. If Sony or Panasonic could get that, would it be sufficient?
I remember when Sony dropped its popular Clie line of Palm OS PDAs. The Clie unit was profitable, but not profitable *enough*. Sony top management decided they could get a better return investing corporate funds elsewhere.
A profit margin of 5% might *not* be adequate for Sony, with an expectation by investorss that they could make more money elsewhere. (Where that might be is a good question...)
If I were Sony and Panasonic, I'd be outsourcing manufacturing. But I'd be looking hard at design, and thinking about what what features I could add that differentitated my products, added value for the buyer, and let me charge a higher price with a better margin.
Yes, Sony has been working with Foxconn for some time now; some say that 50 % already made by Foxconn. But it sort of proves the point that outsourcing alone is not going to be the answer for tv biz getting back to profitability.
According to Ken Park, an analyst at DisplaySearch, LG reported a 4.1 percent profit margin for its TV business in the first quarter and Samsung reported a 5 percent margin. How are the South Korean companies able to turn a profit when the Japanese cannot?
It seems inevitable to me that the companies, particularly Sony, will keep putting branded TVs out there at least for the near term. I suspect they will outsource more of the manufacturing to Hon Hai and other contract manufacturers. My understanding is they have been having at least a portion of their TVs built by others for years.
I think we've seen this before, as the Japanese handed US TV makers their lunch. They produced equal or better quality products at prices US manufacturers couldn't match. Korean manufacturers are now doing it to Japan.
The problem for consumer electronics manufacturers is accurately guessing what the Next Big Thing will be, jumping in early, and *knowing when to jump out*. For several years, the market was big screen TVs. In the early days, prices were high, margins were too, and TV makers could make good money as the market got rid of old TVs and got the new big expensive models.
But sooner or later, the demand ebbs as people *have* replaced their old TVs, and as volumes rise, costs drop, prices drop, and margins become thinner, with lowest cost producer winning.
The Next Big Thing that was *supposed* to take up the slack when the big screen TV market was saturated was 3D TV, but that has been underwhelming, to put it mildly.
The question about the Japanese TV makers appears to be "Were they reading the tea leaves? Were they unaware the market was becoming saturated? Did they realize Samsung and LG were in a position to grab the low end of the market, and the high-end was largely filled?" It appears they weren't and they didn't. But in fairness, it's not clear what they could do *instead*. They arguably could have reduced production and trimmed losses, but without the Next Big Thing to build instead, that would have meant shrinking and layoffs, as there would be nothing for the plants that made them and the workers in those plants to do.
I think this raises bigger questions about the future of Panasonic, Sony, et al beyond TV. What *do* they do? What products *can* they make, *in* Japan, using *Japanese* workers, that have a big enough market to be worth addressing, and high enough value to allow charging prices that will let them be addressed profitably?
I think the answers will have important implications for Japan as a whole.
What are the engineering and design challenges in creating successful IoT devices? These devices are usually small, resource-constrained electronics designed to sense, collect, send, and/or interpret data. Some of the devices need to be smart enough to act upon data in real time, 24/7. Are the design challenges the same as with embedded systems, but with a little developer- and IT-skills added in? What do engineers need to know? Rick Merritt talks with two experts about the tools and best options for designing IoT devices in 2016. Specifically the guests will discuss sensors, security, and lessons from IoT deployments.