Sharp at cutting edge

Success in the large screen display market rests on the ability of vendors to leverage their technological know-how in the ever-popular liquid crystal display (LCD) market.

  • E-Mail
By  Administrator Published  February 28, 2007

Success in the large screen display market rests on the ability of vendors to leverage their technological know-how in the ever-popular liquid crystal display (LCD) market.

US-based industry analyst DisplaySearch recently published figures projecting that LCD panel shipments in 2007 would surpass 81 million units. This lies in stark comparison to plasma display panel (PDP) shipments, which suffered a 4% drop in shipments in the final quarter of 2006 according to the company.

As leading consumer electronics vendors pool their resources, aiming to combine their respective assets, Japanese-based Sharp remains distinct by going it alone in the LCD panel production market.

The company first began production of its 14V-inch LCD thin film display (TFT) in 1988 with its first dedicated LCD plant opening in 1991. Despite having a presence in both the plasma panel display and cathode ray tube markets, the company claims the LCD segment has become its “core business area” since debuting its Aquos portfolio in 2001.

Sharp cemented its claim to the top spot in the Japanese LCD TV market in 2006 claiming a massive 44% market share, in terms of sales volumes, according to a survey conducted by Japan Business News.

The poll also indicated that Sharp’s domestic market share dwarfed its nearest competitors with fellow Japanese companies Sony and Panasonic accounting for 21% and 17% respectively. The company also lays claim to a 15% market share, in terms of units sold, in the global LCD market for 2006.

With figures published by US-based research firm DisplaySearch forecasting that LCD sales will generate a 500% increase in the flat panel display (FPD) market before 2009 - and sales figures totaling more than US$100 billion - Sharp’s decision to invest heavily in the market seems vindicated.

The unveiling of the gargantuan 108-inch LCD TV, the world’s largest, at this year’s CES expo in Las Vegas, USA, underlined the company’s commitment to the LCD market. With only four prototypes currently in existence, the company has yet to finalise plans to introduce the model to the market.

“It was important for us to unveil this product to the public at CES as it demonstrated our expertise and dominance in the LCD category,” says Hiroshi Sasaoka, deputy general manager of Sharp’s business strategy development department. “We aim to leverage our expertise in LCD production to challenge the dominance of PDP technology in the large screen segment,” he adds.

The move also casts doubt on the future of the PDP market – previously the dominant technology in the 50-inch plus segment – as the new model is bigger than any plasma model currently available to consumers. DisplaySearch’s figures also predict that LCD sales will represent 86% of the FPTV market by 2009 with PDPs eventually dwindling to 7%.

“We do have CRT products as part of our portfolio but they only account for a minor proportion of our TV business while LCD screens account for almost 90% in this segment. We expect global consumer demand for LCD TVs to reach 68 million units during 2007,” says Sasaoka. “However, we will also be equipping our future Aquos models with value-added applications such as ‘Quick Shoot’ technology and extending the colour spectrum to include cyan and magenta to enhance response time and picture quality.”

This year’s CES also saw the company pitch its fortunes in the current DVD format battle by unveiling a prototype Blu-ray DVD player. “We see the developments in DVD technology as piquing interest in the flat panel display market and feel that vendors should meet consumer demand for enhanced feature sets,” claims Sasaoka. At the time of press, Sharp was unable to confirm Middle East launch dates for its 108-inch LCD TV or Blu-ray DVD player. The company’s US$1.7 billion Kameyama Plant is the hub of the corporation’s plans to extend its dominance in the LCD market. Opened in January 2004, the plant was the largest LCD production facility at the time and the first to use sixth-generation glass substrates. Sharp recently began shipping LCD panels from its newly opened Kameyama Plant No2 in August 2006 using the world’s first 8th-generation glass substrates and increasing its production capacity to 30, 000 glass substrates per month.

“If this rate of progress continues the new plant will have the ability to manufacture 22 million 32-inch LCD screens on an annual basis by 2008,” claims Takashi Nagakawa, corporate executive director and group general manager of Sharp. “We hope to increase this capacity to 60,000 substrates per month with the installation of a third production line in July, and we expect to eventually have the capacity to turn out 90,000 units a month by 2008. “

The Kameyama plant No 2 boasts the industry’s largest motherglass substrates enabling Sharp to reduce production costs as it becomes less reliant on other sources for its LCD manufacturing process.

“The new facilities will enable us to realise an effective system of producing 46- and 52-inch panels using our 2160mm x 2460mm glass substrates,” says Hiroshi Kusao, divisional general manager of Sharp’s LCD digital systems division. “We are undertaking an aggressive expansion strategy around the world. This has involved an additional investment of US$1.6 billion developing production facilities at our Kameyama plant,” he adds.

The new facility will also enable the company to shore up its position as the industry’s fifth-largest OEM LCD panel suppliers along with industry heavyweights such as Panasonic and Philips sourcing materials from Sharp.

“Sourcing materials from other brand manufacturers is a reality of operating in the modern day markets,” says Tomio Isogai, managing director of Sharp Middle East. “Sharp also sources some materials for its LCD panels as it enhances our company’s profitability in this segment.” Speaking to the press from their company headquarters in Osaka, Japan, Sharp executives trumpeted the advantages of this vertically integrated business model.

The company also used the occasion to outline its plans to introduce a raft of new features on its Aquos models. “There are a number of technical features we will add to the impressive array of key technologies on our Aquos models in the near future,” said Nagakawa.

The company unveiled plans to increase the colour spectrum on its future Aquos models to include cyan, magenta and yellow in addition to the conventional RGB display. “There is no question that LCD is becoming the dominant format in the FPTV segment. Sharp’s aim with this new factory is to prove that LCD is the undisputed flat-screen technology,” says Toshihiko Fujimoto, CEO of Sharp Electronics.

However, industry pundits speculate that while the improved efficiency of the Kameyama plant will undoubtedly drive production costs down; profit margins in the LCD segment are likely to diminish accordingly.

Many vendors are faced with the problem of balancing consumer demand with the effects of market saturation. Sharp aims to counter this trend by focusing on the high-end segment of the FPTV market.

“The price of LCD TVs will keep falling as the volumes keep increasing,” concedes Isogai. “We face fierce competition from entry-level brands entering the market resulting in us having to bear minimal margins in order to capture market share in the lower tiers of the market.

“We have to inspire our channel partners and customers to upgrade to our premium products where we experience healthier profit margins,” he adds.

“This requires further investment on our behalf as it commands us to offer increased support for our channel partners in the areas of sales support and service centres.” The company claims that enhancing its brand equity among customers is vital to its channel strategy in the Middle East – a goal it hopes to achieve by shoring up its regional presence.

“Sharp is not just seeking to increase market share, the image of the brand is even more important,” maintains Isogai. “In order to attain this, we will place more focus on our training and service activities. We began to demonstrate our intentions to the Middle East market by ending our five-year absence from GITEX at the 2006 event. This presented us with the opportunity to address the needs of our channel partners in the region and demonstrate our commitment to the region.”

The company also cites research asserting that growing consumer demand for LCD TVs across the globe will outstrip that of the Japanese market in the next 12 months. Anticipating this demand, the company recently announced plans to expand its manufacturing capabilities with the opening of a plant in Poland and the construction of a second plant in Mexico to service the European and American markets.

But with such a strong domestic presence and a clear courtship of the ‘mature’ markets of the American and European markets, what are the company’s plans in the Middle East? Sharp recently unveiled plans to implement a new branding strategy in the Middle Eastern and African markets before the end of 2007.

“It’s important for us to demonstrate our commitment to the region,” said Tomio Isogai, managing director of Sharp Middle East. In terms of business goals, Sharp is eyeing a sales volume of US$500 million within the coming three years, enabling it to gain a 10% market share across major categories including flat panel display TVs, domestic appliances and audio segments. Sharp’s regional developments also include building closer cooperation with El-Araby factory in Egypt for local assembly of LCD TVs. The company also plans to reopen its offices in Saudi Arabia and South Africa within three-to-six months and is currently considering opening an office in Iran.

“It has been our belief that to be a powerful brand in a geographic region, we must be committed to making long-term investments there,” says Isogai. “Sharp is currently in negotiations looking at establishing collaborations with local manufacturers to start local assembly of CRT TVs in several parts of the region,” he added.

“In addition, we have started to initiate direct marketing campaigns in conjunction with our dealers as well as working closely with them on product customisation to meet the needs of our partners. This has involved providing sales training and increased provisions for after-sales service support.” Sasaoka also attributes Sharp’s eco-friendly factory and products as a major reason for the brand winning such favour with Japanese consumers; placing it at the centre of its current marketing drive. However, he concedes that environmental factors are less of a concern for consumers in the Middle East.

“We are aware that Sharp’s status as an environmentally friendly company may not be as strong a marketing asset as it is in Japan,” says Sasaoka. “But we are aware of the rapidly changing attitudes of consumers in the Middle East and firmly believe that this point will become an important consideration in the near future.”

Isogai highlights that pursuing an ‘ethical’ business strategy is at the very core of Sharp’s values as decreed by company founder Tokuji Hayakawa.

“Sharp’s target is to become the number one brand in terms of customer satisfaction and environment conservation. Sharp Corporation has set its goal to have zero global warming impact by 2010,” says Isogai.

“This is in keeping with Sharp’s fundamental belief of contributing to the global community by bringing pioneering electronic goods to market and establishing a reputation for sincerity as well as innovation.”

Sharp’s ability to leverage its expertise in the domestic LCD market has led it to declare its Kameyama Plant No2 as “the world’s most technically advanced production facility for LCD TVs”. Its strong presence in the developed markets of Japan, America and Europe contrasts significantly with its performance in emerging markets across the Middle East and Africa. However, Sharp’s efforts to engage local consumers is indicative of a renewed determination to recapture its Middle East ‘glory days’ before the company self-admittedly “failed to create a suitable product portfolio” resulting in its Middle East market share dwindling to under 5%.

If Sharp can successfully foster healthy channel partnerships and gain a more sophisticated opinion of the regional market surely it can go some way to achieving its local target of reaching sales volumes of US$500 million by 2010 and doubling its regional market share to 10%.

Add a Comment

Your display name This field is mandatory

Your e-mail address This field is mandatory (Your e-mail address won't be published)

Security code