Analysts: Pioneer's TV Business Was Unsustainable
By Greg Tarr -- TWICE, 2/12/2009
Long Beach, Calif. — Pioneer’s decision this week to exit the television business came as no surprise to market analysts who’ve been watching sales of higher-end Kuro sets get crushed under the pressure of declining flat-panel TV prices and the sputtering economy.
“The brand was not doing well and was not gaining traction with consumers despite their superior quality, mainly because of their higher prices,” observed Riddhi Patel, iSuppli TV systems principal analyst.
Tamaryn Pratt, Quixel Research principal, agreed, and added that the impact on the market will be minimal from a dollars perspective.
“They weren’t selling an overwhelming amount of plasma — period,” she said. “Other manufacturers will have no problem picking up the slack. The biggest issue is the negative PR this and Vizio’s announcement to drop plasma puts on the plasma category that is getting beaten up by LCD.”
But Paul Gagnon, DisplaySearch's North American TV research director, said "Pioneer's exit will leave a big brand hole in the A/V specialty channel that will need to be filled by some brand that can provide some measure of shelter with a premium product."
Overall, Patel of iSuppli said, “In the U.S. market, our consumer research findings show that consumers even in the highest income bracket are fairly price conscious.”
For June 2008, 60 percent of consumers in the $200,000-and-higher income bracket bought a flat-panel TV that was priced less than $1,500, according to Patel.
In contrast to that, in Dec 2008, almost 60 percent consumers in the same income bracket bought a TV that was less than $1,000.
“Now there could be some impact of the economy as well, but, overall, the trend is that if consumers perceive the picture quality of two sets at par, they tend to go with the lower-priced set.”
Retail prices for Pioneer/Kuro-branded plasma sets generally exceed $2,000 for 50-inch models, while Elite models are significantly higher.
“Pioneer accounted for a very small portion of the plasma TV market,” Patel said. “That business will go either to Panasonic or Samsung as these are the brands that have high value and attractive prices. Also, these brands have continued to innovate with the look and feel of the TV and have products that are competitively priced.”
Pioneer’s decision to exit TV came after the company announced last spring that it had stopped manufacturing its own plasma display panels in order to source the components from rival Panasonic.
Ironically, Pioneer said in its financial statement last year that it “believes that displays are indispensable to its product lineup … and will therefore maintain its fundamental strategy for the display business.”
Pioneer started selling LCD TVs in Europe and Japan. It also intended to introduce LCD sets in the U.S. using panels acquired through a capital business partnership with Sharp, which had become Pioneer’s largest shareholder after taking a 14.3 percent stake.
Pratt of Quixel said Pioneer “probably lacked the sheer dollars and cents” to pull the trigger on entering the LCD TV category in the United States, despite Sharp’s support.
“On the surface, it’s amazing to see how that investment [Sharp’s equity stake] has cratered,” Pratt said. “Now they say that it was done for longer-term strategic reasons, and they may make it up by sharing technology.”
As for plasma, until last year, Pioneer remained one of the world’s larger plasma panel manufacturers, at one time producing panels in the 42-, 50- and 60-inch screen sizes at plants in Kagoshima, Yamanashi and Shizuoka prefectures. Pioneer purchased the Kagoshima operation from NEC, when that company exited the business.
After shuttering the panel plants, Pioneer maintained a TV assembly center in Shinzuoka in Japan.
As for whether Pioneer’s decision will be a harbinger for similar announcements by other TV brands, Pratt of Quixel said she wouldn’t be surprised if some other companies “will be making changes soon” as well.
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I am very unhappy to see Pioneer exit the plasma business. They DEFINITELY have the best display performance. LCD is good, but no where near the level of a Kuro panel. Reading the announcement on Pioneer's website that they are going to focus on car stereo, I guess they are hoping to pick up some large OEM deals, because how many guys are going to rip out their decent factory car stereos for some after-market upgrade. Afterall, this isn't the 70's. Maybe they should re-brand themselves under the "Craig" name.
Pioneer should sell the Kuro technology to Panasonic and get royalties for the amazing images their panel produced.
Can't anyone make money anymore? Sigh... Long Live Kuro!
longislandsurfer - 2009-15-2 23:11:00 EST -
It is very sad to see Pioneer pull the plug on it's Plasma manufacturing. I own a Kuro 42" and it is the best I have seen. I guess Pioneer Plasmas will go the same way their home speakers did and we will look back like the Hpm series speakers etc and wonder what could have been!
Wil Morgan - 2009-15-2 06:50:00 EST -
I am very dismayed by Pioneer''s decision to stop producing Kuro
Plasmas.
It was the Best TV in the World and the only flat panel TV that I was
comfortable selling to my clients. The Pioneer Kuro''s performance,
packaging and profitability were unmatchable by any other manufacturer.
I''m sure that the loss of the Pioneer Kuro Plasma will have a huge
negative effect on all the Custom Installation Businesses who''s clients
have always demanded "The Best" products. Without Kuro, there''s no
longer any reason for me, as a Custom Installer, to sell TVs at all.
Glenn Thomas - 2009-13-2 12:44:00 EST -
Tweeter sold a lot of Elite plasmas. With the death of that company, the recent announcement of Best Buy closing 7 Magnolia stores, companies like Pioneer will have a hard time selling their step up gear. Is a Walmart associate going to be able to help a customer decide whether it is worth spending another $1000 on a better TV? Will a MHT associate that was selling computers last week be able to do so? Retail supports manufacturing. Without one, the other can't flourish.
Ex Tweeter - 2009-13-2 09:25:00 EST -
In this global market, brand shrinkage will continue. One can envision new partnerships coming out of Japan. To be as large as Sharp where manufacturing is concerned, and to have so little US marketshare, well something has to give. Other companies need a real partner, similar to Sony / Samsung. For a company that doesn't really make televisions (excellent digital video processors in those LCD's though), yet has strong popularity and decent marketshare- a Toshiba / Sharp venture and/or similar manufacturer relationships could make sense. In fact real opportunities could lay ahead.
One thing for sure, all of these brands cannot thrive in this economy. This is survival of the fittest, and what worked yesterday, does not work today.
Tom Smith - 2009-12-2 18:25:00 EST
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