Tuesday, October 15, 2013
ANALYSIS: Japan Gadget Makers Don't See Big Picture
TOKYO (Nikkei)--Japanese electronics manufacturers appear locked in on the current market for gadgets, missing an opportunity to reinvent themselves for the long term.
- At CEATEC Japan 2013, Sony promoted 4K electroluminescenceTV.
If their exhibits at CEATEC Japan 2013, an international IT and consumer electronics trade show held in early October in Chiba Prefecture are any indication, they remain wedded to an outdated version of the industry's future, showcasing mostly 4K and 8K ultra high-definition TVs.
Earlier this year, Apple Inc. CEO Tim Cook said watching TV is "still an experience that is too much like 10 or 20 years ago."
Connect The Dots
It is a matter of time before TVs without Internet connectivity become outmoded. This is clearly no time for TV makers to be fixated on pixels.
Samsung Electronics Co., the leader in the global smartphone market, displayed cutting-edge products that underscore its ambition to remain on top in the post-smartphone era. The South Korean electronics giant exhibited its Galaxy Gear smartwatch and YOUM flexible screen based on organic electroluminescence technology.
There is speculation on Western stock markets that Nokia Corp. of Finland, which recently sold its mobile phone business to Microsoft Corp., will merge its remaining telecommunications infrastructure business with Alcatel-Lucent, a French-American maker of mobile phones and telecommunications equipment.
The explosive growth of smartphones in recent years has sharply increased global data traffic. The next generation of mobile devices, whatever they may be, will continue that trend. To meet soaring demand for data-carrying capacity, Nokia executives may have calculated that a telecom company requires the size and technology to compete with the two biggest market players: Ericsson of Sweden and Huawei Technologies Co. of China.
Life On The Margin
IT and electronics firms are trying to position themselves for the Next Big Thing. Global smartphone sales seem certain to keep growing briskly for the time being, but there is little doubt prices will start falling sharply, just as happened earlier with LCD TVs, whose prices are sliding by around 30% per year. Profit margins on smartphones are set to become extremely thin.
Manufacturers are searching high and low for another big money maker. Haier Group Co., a Chinese manufacturer of home appliances, took an investment of 3.4 billion yuan (54 billion yen) from U.S. private equity firm KKR & Co. Zhang Ruimin, the company's CEO, has pledged to use the money to develop "smart home" and audio-visual devices with Internet capability.
Haier, the world's largest maker of washing machines and refrigerators, bought Sanyo Electric Co.'s white goods operations from Panasonic Corp. (6752). KKR, meanwhile, has decided to purchase Panasonic's health care business.
Haier and KKR may be planning to use the businesses they have purchased from the Japanese companies to develop new types of Net-enabled appliances.
There is, of course, no guarantee the bets Samsung, Nokia and Haier are making will pay off, but the biggest risk to electronics companies facing radical changes in technology and market trends is to do nothing.
--Translated from an article by senior Nikkei staff writer Yasuyuki Onishi
(The Nikkei, Oct. 14 morning edition)