OSAKA (Kyodo) Competition to sell thin television sets is overheating as medium-size and venture enterprises challenge the major manufacturers.
The race is for survival before the complete shift in Japan from analog to digital broadcasting in 2011.
At Yodobashi Camera Co.’s Multimedia Umeda in Osaka, about 250 thin TV sets are on display.
“With so many sets, I have a hard time deciding,” said a 73-year-old man at the store.
A 37-inch, high-definition liquid crystal TV set in one corner is priced at 190,000 yen. It is a product of byd:sign Corp., a Tokyo venture enterprise, and more than 50,000 yen cheaper than a similar set produced by a major company.
The Tokyo venture firm has no factory. Its 30 employees plan, design and sell TV sets. Panels and parts are procured from overseas, and production is entrusted to a Chinese company.
Almost no money is spent on advertising, and whenever production costs are lowered, prices are reviewed. Direct selling prices are sometimes reduced three times a year, a company official said.
Selling over the Internet is also favorable, and this year’s sales are expected to increase to 15 billion yen, nearly three times last year.
“There is now no gap in quality with major companies,” byd:sign President Katsumi Iizuka said.
Funai Electric Co. is another company that recently entered the liquid crystal TV market, introducing its first sets in July.
“The market has matured and prices have dropped, enabling many people to buy (liquid crystal TVs). So we have decided on our entry,” said Yoshio Nakajima, vice president of Funai Electric.
The company has grown with original equipment manufacturing of TV sets. Although its name does not appear on the products, the company’s share of TV sets with built-in videocassette recorders has become dominant in the United States, and its entry into the thin-screen segment is likely to pose a threat to Japan’s major electronics companies.
“We are making our products cheaper via mass production,” Nakajima said. “Major companies yielding little profits may come to ask us for original equipment manufacturing.”
But major companies appear to be indifferent to smaller and venture businesses challenging them.
An official at a major brand expressed confidence of winning the battle.
“Consumers intend to use (TV sets) for 10 years. Many of them choose major companies with reliable brand names,” the official said.
According to Tokyo survey company BCN Inc., major firms cannot be complacent because prices of thin TVs are plunging. The per-inch average sales price of a 32-inch liquid crystal TV set dropped below 5,000 yen in August, it said.
“Only Sharp Corp. and Matsushita Electric Industrial Co. are making money,” an industry source said.
The two companies are actually squeezing out minimal profits by compressing production costs at factories built with massive amounts of investment, the source said.
“Prices will be coming down in one or two more years,” said Hisakazu Torii, an analyst at survey company Display Search Japan. “Consumers do not turn around unless prices are lowered, and quality and functions are improved.”
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