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Panasonic Execs Bullish On Blu-ray

Chiba, Japan — Top executives of Matsushita Electric Industrial, marketers of the Panasonic brand worldwide, made pointed comments about the Blu-ray/HD DVD format war and current CE conditions to the press at the CEATEC Japan 2007 show on Tuesday.

The most direct remarks in roundtable discussions with the press were from Kazuhiro Tsuga, executive officer, who was reminded of his criticism of combination Blu-ray/HD DVD players in the past when he said that Panasonic “would never introduce such a stupid product.” When asked if LG and Samsung’s combi introductions have changed Panasonic’s mind, he joked that they haven’t “like those stupid companies.”

He then got serious and explained, “Fortunately we haven’t changed our mind … we believe that movie studios” will select one format, namely Blu-ray sooner rather than later. When reminded that Paramount has decided to carry HD DVD, Tsuga was adamant, “Everyone knows that big [promotional] money from Toshiba or Microsoft has gotten backing for [HD DVD]. Major studios backing Blu-ray want us to put more money behind promoting the format” and its features “to make the market bigger.”

Tsuga and his Panasonic colleagues all agree that the critical period for in the format battle will be the fourth quarter and first quarter and that “we will do everything we can to promote Blu-ray” during that period in the marketplace and that the format battle will last for at least one more year.

When asked if it will include taking a loss on each sale, Tsuga said, “We will do our best to promote the format … and promote better [hardware] products. HD DVD is only promoted by Toshiba [on the hardware side] but Blu-ray is backed by major brands in the [CE] industry.”

Fumio Ohtsubo, president of Matsushita Electric Industrial, said he saw the immediate future for Blu-ray in home players and not in recording decks in the United States. “There is so much software in the U.S. [movies] that will be introduced in the market from so many movie studios. But Blu-ray recorders will take more time to be accepted in the U.S. compared to Japan. Playback-only units in the U.S. will come first,” adding the cost of recording decks like the ones introduced here might be a consideration.

Toshihiro Sakamoto, senior managing director, member of the board and president of Panasonic AVC Networks company, will be an International CES keynoter at the upcoming 2008 show. He agreed with Ohtsubo that when it comes to Blu-ray, the United States and Japan are two different markets. But in Japan with recorders, “We already won the war [with Blu-ray], no question about it. The player area is very big for the U.S. If we win in the U.S it will be in the player market. This Christmas season will be critical with Blu-ray continuing to increase in sales” vs. HD DVD, Sakamoto said.

Ohtsubo and the other Panasonic execs also discussed general business conditions as the fourth quarter looms.

He noted, “The sub-prime issue is a major headache, but at present there is no damage from our point of view. Our business is still growing in the U.S.”

Concerning the Sharp investment in Pioneer, Ohtsubo said, “As you know, competition in CE is very, very, very severe. In Japan there are eight major players. Recently these players are focusing on their strong points. Japanese players are focusing on what they do best … which is good.”

When asked about the competitive retail market in the United States, Hitoshi Otsuki, managing director of the board responsible for overseas operations, said, “No doubt you have the most competitive market in the U.S. New names are always coming in and out at retail and in manufacturing. Consumers are more choosy … when it comes to doing research on the Web.”

He said, “In general I don’t see much in the way of low prices in the U.S like last year. Hopefully the industry can make more money” than last year during the quarter.