Posted by: Kenji Hall on September 20, 2007
Can someone reading the tech-industry tea leaves tell me what the Sharp-Pioneer alliance, announced today, means? One company makes solar cells, flat liquid-crystal-display TVs and next-generation DVD players. The other specializes in plasma TVs, high-end home entertainment equipment and car navigation systems. Where’s the synergy?
According to their announcement, the two plan to collaborate in developing next-gen DVD players, home network products, car electronics and TV and PC monitor technology. They’ll also forge a capital bond: Pioneer will issue $350 million worth of shares to Sharp and Sharp will become Pioneer’s biggest shareholders. The only thing I can think of is that this is a first step in a large-scale acquisition or merger of some of the two companies’ divisions. A couple of years ago, Sony announced a collaboration with Konica Minolta in digital single-reflex-lens cameras, which led to its buying Konica Minolta’s entire SLR business. So it’s conceivable that Sharp and Pioneer are preparing for a similar handover.
That should be a relief for Pioneer, which has struggled for some time. It will end up with cash from the deal with Sharp. Before the announcement, a Sharp spokeswoman told me this was going to be “the biggest announcement for the electronics industry this year.” She may have been exaggerating just a tad. But I don’t doubt that this is big news for Japan’s electronics industry. Analysts have been saying for years that there isn’t enough business to sustain a dozen healthy Japanese tech companies all making the same stuff. Maybe the shakeout is finally happening.