Pioneer To End Plasma Production

It’s official. Pioneer confirmed the rumors today and announced that the company will cease production of plasma panels. Pioneer was one of the few remaining plasma manufacturers, along with the giant Matsushita (parent of Panasonic). Pioneer had already announced plans for a joint venture with Sharp in order to get a supply of panels for LCD HDTVs. Pioneer is expected to get its plasma panels from Panasonic (which recently announced plans to aggressively expand plasma production capacity). Some reports indicate that Pioneer may redesign its existing plasma production plants to be used for HDTV assembly.

This is a dangerous move for Pioneer on a number of counts. First, we see strong signs that the companies most likely to survive HDTV industry consolidation are the ones that control their own production of panels. A consistent and affordable supply of panels will be critical to success. Pioneer has an added problem; the company has built its reputation on having the highest quality products at a premium price. If consumers view them as remarketers of the same Sharp and Panasonic panels that they can get in those brands, will they still be willing to pay extra for Pioneer? It’s as if Cadillacs started rolling off Chevy assembly lines using Chevy parts; would people still pay more for the nameplate?

Clearly Pioneer had to do something, as the company was bleeding red ink by the barrel. It remains to be seen if this change will be enough to keep them in the game.