The HDTV Fallout

Posted by: Cliff Edwards on April 8, 2008

Could the long-awaited HDTV shakeout finally be happening? Once considered one of the most technologically savvy consumer electronics companies in the world, Royal Philips Electronics says it’s getting out of the TV-making business in the U.S. and Canada.
Philips essentially is ceding its business to Japan’s Funai Electric Co. for a song. In exchange for unspecified royalty payments, Funai will get to sell its sets under both the Philips and Magnavox brands. Philips will retain the rights to its brand in its European stronghold and in developing markets.
It’s another sign that the consumer should do a little research before buying to avoid unpleasant surprises once getting the set home. Indeed, the Funai licensing agreement poses some interesting questions about whether the implied quality that comes from buying a brand-name set translates into the real thing. Unrelenting pricing pressure and weaker-than-expected TV sales so far this year are forcing manufacturers to churn out a slew of sets with major components made by other companies. Pioneer, Samsung and Sony reportedly are outsourcing production of smaller models to third-parties, while LG Electronics and other manufacturers are purchasing LCD screens from Sharp.
The industry consolidation likely will accelerate this year as the biggest manufacturers—Panasonic, Samsung, Sony and Sharp launch new sets at competitive prices to compete with Vizio, Westinghouse and Olevia brands that have sold well at warehouse clubs and to cost-conscious consumers. Squeezed in the middle are such brands as Hitachi, Toshiba and Mitsubishi.

Reader Comments

SD

April 9, 2008 11:17 AM

One relevant thing to note is that as the TVs go digital - quality seems to be pretty much equal across brands.

Most HDTV sets have a resolution of 1080p - and there is no significant content at that resolution. Most satellite and cable HD channels are at 1080i/720p; essentially half the resolution of 1080p.

So the TVs have exceeded the required image quality for most of the content.

Chris

April 9, 2008 2:31 PM

While market consolidation is very real, it's not necessarily a bad thing. It was inevitable with the expansion of smaller companies (specifically Vizio) with leaner staff and tighter execution and delivery cycles getting into the market in a big way selling direct to the warehouse stores. Vizio's products are cheaper because they buy parts on the spot market (leftovers from other manufacturers). This doesn't mean they're necessarily bad, but they can vary in quality as they get their parts from different suppliers. It's difficult for the larger Japanese companies to compete on price alone as their manufacturing costs are generally higher than those of their Chinese and Korean competition (but, one would assume their quality may be higher as well).

But I disagree completely with SD's comment above that quality of digital sets is equal across brands. There are huge variations across brands (even within brands) in terms of color reproduction, contrast (black level reproduction) and picture artifacts. Cheaper brands generally have inferior pictures (but not always). But there are even bigger picture variations across technologies - I would take a 1024x768 pixel plasma set over just about any 1080p LCD set, hands-down. LCD just still hasn't caught up to plasma yet in most areas of picture quality that matter.

Just as the number of megapixels in a digital camera is only one element that contributes toward picture quality (and not even the most important element) so number of pixels is just one element that contributes toward TV picture quality. The technology and the "glass" used, and the quality of the video processor or scaler built into the set has a much bigger impact on picture quality than the absolute number of pixels.

And, BTW, 1080i and 1080p resolution are effectively *the same thing* - a 1080p/24 signal sourced from film or HD Video can be exactly represented in a 1080i/60 broadcast using HD inverse telecine processing. The only way you can get the full 1920x1080 pixels out of a 1080i satellite, OTA or cable broadcast is by using a 1080p panel with a good video processor to reconstruct the progressive image embedded within.

HD

April 9, 2008 6:37 PM

VIZIO does not buy left over parts on a spot market; it would be impossible to supply their volume of TVs in the way. VIZIO products are less expensive because they are lean.

JF

April 12, 2008 1:37 PM

SD is wrong. Chris is (mostly) right.

TV quality varies a lot from manufacturer to manufacturer. Look for dark, neutral blacks on LCD TVs. And look at bright scenes, like winter sports, on plasmas. Plasma TVs choke off the brightness on these scenes to keep their power supply size reasonable.

Where I disagree with Chris is on plasma being better than LCD. Fall asleep at the end of a movie and you risk burn in. TVs generally last over ten years. Burn in lasts forever.

Also, based on EPA tests, plasma TVs consume 30% more power on average than LCD TVs.

Squeezebox

April 16, 2008 2:17 PM

A reasonable price for a 27" television is $200.00. Until the competition drives prices down to that level, most people will hang onto their old sets.

cknoettg

August 24, 2008 8:05 PM

While I partially understand the author's concern, I think he is wrong to worry about Philips' sell-off to Funai. If you take a good look at Philips' televisions produced in the last few years, there is a good portion of these "Philips" sets manufactured in China. The switch to Funai will most likely result in higher-quality, Japanese-made televisions.

Developer

October 5, 2009 2:32 PM

The Prices must get cheaper, then the customers will follow.Developer

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Bloomberg Businessweek writers Peter Burrows, Cliff Edwards, Olga Kharif, Aaron Ricadela, and Douglas MacMillan, dig behind the headlines to analyze what’s really happening throughout the world of technology. Tech Beat covers everything from tech bellwethers like Apple, Google, and Intel and emerging new leaders such as Facebook to new technologies, trends, and controversies.

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