Rivals Overwhelm Sony and Matsushita in Digital AV Sector

by News Editor
Published on Dec 18, 2003 12:00 AM



As reported by Japan’s Nihon Keizai Shimbun News, the market strength of Japan's Sony Corp. and Matsushita Electric Industrial Co. has been shaken as competition heats up in the digital AV sectors of plasma-display television sets and DVD recorders. Domestic and overseas rivals have surpassed their profit margins.

Sony announced in late May a plan to release the advanced DVD model by the year-end in order to beat its rivals. As shopping season drew closer, frustration mounted among engineers at Sony Computer Entertainment Inc. who were developing the PSX DVD recorder. One engineer said, ’’We are not ready to release it.’’

Although the company worked on developing the product at an unprecedented speed, it took an unexpectedly long time to verify the functions of the new model, threatening to delay its introduction into early next year.

Sony's electronics division saw its consolidated operating profit tumble 35% on the year in the fiscal first-half ended September 30. In October, the company reduced the device's dubbing speed by half, to 12x and added some other changes to the DVD format. As a result, it managed to release the model on December 13. Such developments indicate that Sony has lost share in the audiovisual market that it once led with the Walkman cassette player.

The days of head-on confrontation between Sony and Matsushita have apparently ended. Going on the offensive against them now are manufacturers which used to be in the shadows of the two electronics giants. Pioneer took advantage of its laser disc technology, on which it spent much time and money during the 1980s, to develop DVD recorders and plasma televisions. The company now enjoys about 30% higher monthly shipments of plasma TVs on a year-on-year basis.

Sharp Corporation, a top seller of LCD-screen televisions in Japan, is enjoying robust demand from the year-end shopping spree. Sharp Vice President Zenpei Tani said, ''Our backlog of orders is equal to several months of output,’’ indicating that production is failing to keep up with demand.

Sony and Matsushita, which cemented their position with cathode-ray tube televisions, are trailing behind their rivals in the move to shift to flat-screen TVs. Sony's DVD-recorder line-up was also weak because of its up-front investment in the Blue-ray Disk, a next-generation optical video-disk format allowing larger storage than DVDs.

Among new entrants in the digital AV market, Canon Incorporated in partnership with Toshiba Corpotation, has developed a surface-conduction electron-emitter display (SED) technology and incorporated it into its large flat-screen TVs. Dell Incorporated, known for its business model that relies on Net-based marketing and a made-to-order/demand approach, has also started selling LCD televisions, putting additional pressure on Japan's established brands.