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Gravity Exerts Control over LCD HDTV Production

December 26, 2007 | Author: Ibex Marketing

This item starts with what has to be one of the strangest press releases ever published in all of 2007. On December 19, Matsushita — the parent mega-corporation of Panasonic — released the following statement, repeated here in its entirety:

The Company has not decided anything in regards to the alliance in LCD Panel Business with Hitachi, Ltd. and Canon Inc.

Maybe it’s like the old Sherlock Holmes story about the dog not barking, but this non-decision seemed a bit strange at the time. All became clear, however, as Matsushita, Hitachi, and Canon have now announced an alliance to cooperate in the production of LCD panels, large and small.

This is important news on a number of counts. First, it shows signs that the LCD HDTV market is continuing to consolidate, as economies of scale are the gravitational force that pulls these larger bodies together. Sony and Samsung have had a long-standing arrangement, and Sharp and Toshiba have agreed to pool their efforts. It makes sense that Matsushita, Hitachi, and Canon would join together to forge their own alliance.

This is also interesting for the individual players in the group. Matsushita — through Panasonic — is the world leader in plasma displays. This new arrangement helps the company hedge its bets; LCDs continue to take market share from plasma at almost all size ranges. Hitachi is hurting, and having a giant friend like Matsushita may offer some welcome protection in the display industry playground.

The competition in the flat panel HDTV market is getting hotter, and not everyone will make it. Choosing up sides and joining forces with some teammates could be an essential step for survival.