The end of the Pioneer Kuro line of TVs represented a true tipping point in the TV industry, one preceded by long-gestating momentum from opposing forces. The recession and LCDs tipped over plasmas for good, and the slope downward will be quite steep, and fast.
Last week, Pioneer announced it was killing off its critically acclaimed TV business by March 2010 and will concentrate on car and audio/visual systems. It was a dramatic fall for a company that just one year ago had CES abuzz with its newest plasma TV, the so-called “Ultimate Black” Kuro.
The Kuro’s tech was impressive because it reduced light emissions from black areas of the screen to such a degree that at its maximum brightness, the contrast ratio was “almost infinite.” The result was a plasma display with the most vibrant, colorful images yet.
But even at the hype’s peak, problems in the plasma industry were apparent.
Plasmas were at their most popular from 2004 to 2006, a period that saw them overtake rear-projection TVs as the top big-TV format. But they had a tough time offsetting their lowest average prices with high sale volumes. The spectre of LCDs also prompted many customers to hold off on making a purchase. By February ‘08, soon after the recession had officially taken hold, premium-quality Pioneers seemed out of touch. Most critically, LCDs were sporting features long the domain of plasma: bigger screens, greater contrast ratios, thinner and cheaper sets. LCD picture quality still failed to reach plasma levels, but to average consumers, the difference was no longer obvious.
Fast-forward to the start of 2009, and LCDs were outselling plasmas 8-to-1 globally, and the dominating the best-selling lists on Amazon.com.
Pioneer tried a last-ditch partnership with Panasonic to create a version of its plasma TVs, contributing its own “secret sauce” to keep the Kuro tech flowing, but that effort appears to be over.
The slumping demand is already having consequences: Projected losses of $1.41 billion in 2008-09 (following a loss of $203 million in 2007-08) and a nearly 50 percent drop in operating revenue have set the scene for 10,000 jobs cuts and the closing of U.S., UK and Japanese facilities. But Pioneer’s not the only TV maker suffering. They’re all taking it on the chin, regardless of display type.
Both Hitachi andVizio had to end the bleeding by shuttering plasmas to concentrate on LCDs. And not even the usually flush holiday period buoyed TV companies to a safe financial landing: Sony, Panasonic, and LG all posted lower quarterly profits.
Component suppliers have similarly been unable to escape the pain. As Om noted in recent posts, screen manufacturer Corning posted fourth-quarter 2008 revenues of $1.1 billion and still had to let go of 3,500 jobs.
Pioneer’s decision to end its plasma production was more complicated. It bought out NEC’s plasma business in 2004, used it as an OEM for its glass, but was recently forced to shutter the unit. Now, the only plasma manufacturers left standing are Panasonic, LG, and Samsung, all of which make their own components.
Panasonic is in good position to benefit from Kuro’s death. Most of the Pioneer engineers who came up with Kuro switched sides and are now working for Panasonic. In addition, recent demos have shown that Panasonic plasmas are nearing Kuro quality. Already in possession of the biggest plasma market share in the world (at more than 35 percent), the company will be able to build a diversified product line using plasma TVs as a premium screen type that appeals to a niche that still wants them. Add to that the fact that it receives significant revenues from selling its glass to other companies, including JVC and Fujitsu, and it appears that it’ll be able to keep plasmas afloat longer than any other company. Panasonic will inherit the burdens of the difficult economy and the LCD challenge, but once plasma is no longer economically feasible, its own LCDs will have likely caught up in picture quality. In fact, ultimate black contrast tech is already getting closer to LCDs. So it’s only a matter of a few years (maybe even less) before plasmas finally die out.
As for Pioneer, not all is lost. Reps say that the plasma TVs only accounted for 14 percent of its business worldwide, and patents for the Kuro technology will provide a profit for awhile. But any positives are bittersweet. The legacy of the Kuro TV will be that it was another best-in-class technology that was humbled by the force of the economy and the competitive market.
Original article by:
Jose Fermoso
