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Industry Reacts To Panasonic’s Plasma Exit

New YorkPanasonic in Japan confirmed last week that it will end the production of plasma display panels in December, sparking competitors and retailers to brace for a possible surge in last-minute demand.

Panasonic, which had three plasma display factories still operatiing in Amagasaki, Japan, said in a statement out of Osaka that it has now stopped business operations at two of those three facilities, with the last ending operations by the end of March 2014.

Panasonic blamed severe price competition in the global market brought on by “the Lehman Shock in September 2008” for impacting the big-screen flat-panel demand and profitability.

Tamaryn Pratt, principal with Quixel Research, said the plasma display market has been on the decline in the United States since its peak of 4 million units a year in 2010. This year the category, which has just Samsung, LG and Panasonic participating, is expected to reach 2 million units.

She said that the death knell for plasma came about two years ago when 50-inch LED LCD TV outsold all other big-screen sizes and display types.

“This is no big surprise. We’ve been talking about this happening for the past two years,” Pratt said. “That fact of the matter is that for the past year, Panasonic has been selling just as many, if not more, LED LCD TVs.”

But she added, “It’s still sad, since they were at one time the behemoth of the plasma TV industry, and it is a gorgeous technology. But the time has come, and the dollars and cents no longer work out for them.”

Pratt said that after commanding the spot atop the plasma market for years, Panasonic had fallen into a virtual tie with LG for second place, with Samsung taking over the No. 1 position in the U.S. plasma business.

Both Samsung and Panasonic had delivered flagship plasma models this year that achieved new highs in black-level and brightness performance, wowing experts, who continued to point to plasma over most LCD technologies for top picture performance.

Steve Panosian, Samsung plasma product market management director, said, “It’s a disappointment that Panasonic is closing its plasma factories and it’s going to have an impact on the plasma segment. Consumers looking for a great picture at a great value will have less to choose from for next year.”

Panosian said Samsung will “have to assess its offering and determine what our strategy will be for the plasma lineup from entry FullHD to our step-series flagship product (F8500-series plasma sets), which we are in the process of placing with our key retailers today.”

Panosian said Samsung plans on continuing its plasma business in 2014.

“What’s interesting is the plasma high-end flagship-series TV actually showed growth year over year in 2013, driven by enthusiasts seeking the best of class picture performance,” Panosian offered.

Similarly, LG Electronics issued a statement saying it “has previewed our 2014 line for key retailers, and we plan to introduce new LG plasma HDTVs at CES 2014.”

Regarding industry inventory pipeline fill of plasma products by all manufacturers, Panosian said levels “appear to be mixed. We know there are retailers with healthy inventories, and we also know there are some retailers having a hard time getting their demand addressed. The plans we had in place were good, and in some cases we were being approached for upside, but that was being driven by some of the shortages in mid-screen-size LED LCD and also shortages for the two other plasma manufacturers, and mainly in the HD [720p] segment.”

He added that Samsung now expects “a surge in the higher-end products for those anticipating the last chance to buy the best-of-class plasma TVs.

Quixel’s Pratt noted she didn’t expect a need for “any special sales to clear out Panasonic plasma inventory … I don’t see them dumping plasma at blowout prices and potentially injuring its LCD business.”

Robert Zohn, proprietor of specialty retailer Value Electronics in Scarsdale, N.Y., which conducts annual shootouts of the best performing flat-panel sets (often won by Panasonic plasma models), said he was sad to hear of Panasonic’s decision.

“I was hoping for one more Panasonic PDP line for 2014,” Zohn said. “Specialty stores recommend PDP (plasma) to most clients, and A/V enthusiasts prefer to buy PDP.” He added, “I’m excited to see Samsung advance in PDP this year with their flagship F8500 series.”

For the short term, Zohn said recent talk of Panasonic’s pending departure from plasma production “has spiked a moderate increase in sales for VT60s and ZT60 [series modes].” He said the same thing happened in 2009 when Pioneer announced the exit of their PDP business. “Many other enthusiasts see this as the time to buy Samsung’s F8500 series, because they prefer the brighter image.”

Zohn added, “I am very happy that Samsung and LG are committed to PDP, and for those remaining players in PDP, this will be a nice bump in their sales.”