'Official' Statement from Pioneer over Plasma TV Future.

[Phil Hinton]

Just received this from Pioneer GB.

Originally Posted by Pioneer Press Release

Pioneer Announces Restructuring Plans for
its Display Business and Measures to Enhance Corporate Value

TOKYO — Pioneer Corporation has announced that at a meeting of its Board of Directors held today, the Company resolved to restructure its display business and implement measures to enhance corporate value, as follows.
I. Restructuring Plans for the Display Business
Displays are positioned at the heart of Pioneer’s home audio/video product lineup and help to enhance the image of the Company’s brands in the Home Electronics business. Pioneer believes that displays are indispensable to its product lineup for these reasons and will therefore maintain its fundamental strategy for the display business—supply premium models with high picture and sound quality befitting the image of its brands at prices matching their added value, while optimizing the scale of its business.
However, we have judged that maintaining the cost competitiveness of plasma display panels at projected sales volumes will be difficult going forward. Accordingly, we have decided to terminate in-house plasma display panel production and to procure these panels externally, after panel production for our next series of models is complete. This move will allow us to transform our business model for displays from vertically integrated, capital-intensive operations to a leaner business model geared to
making value-added product proposals. Pioneer is currently in discussions on the feasibility of procuring panel modules that may incorporate the Company’s proprietary technologies. Details will be announced as soon as they are finalized.
Pioneer plans to review its production structure in conjunction with the
termination of plasma display panel production and to streamline the entire display business to a scale commensurate with sales. We aim to compensate for cutbacks in the plasma display business by driving further expansion in our growth businesses.
This will be done by shifting related personnel and other business resources to the Car Electronics business; the professional sound & visual (Pro SV) business, which involves DJ equipment; and the audio/video product business, including Blu-ray Discrelated products. We will give consideration to retaining employees in the course of this process. Details are currently under review and will be announced as soon as they are finalized.

In fiscal 2008, the year ending March 31, 2008, Pioneer will book an impairment loss on plasma display production facilities. In fiscal 2009, we will streamline the plasma display business and shift resources to our growth businesses. However, these measures are not expected to produce significant benefits until fiscal 2010.
Nevertheless, we believe that these measures will help to restore profitability in the Home Electronics business in fiscal 2010.

II. Measures to Enhance Corporate Value

1. Growth Strategies for the Car Electronics Business
Pioneer’s top priority for maintaining its current level of profitability in the Car
Electronics business is to grow the car navigation system business.
First, Pioneer will bolster telematics functions, which employ mobile phones and the Internet and are expected to become mainstream in the car navigation system field going forward. This is part of efforts to transform car navigation systems into comprehensive in-vehicle information terminals offering much more than merely car navigation in a bid to stimulate new demand. Another goal is to counter growing demand for portable navigation devices. Here, Pioneer will expand its customer base for in-dash car navigation systems by proposing new forms of value not offered by
portable navigation devices. For instance, Pioneer is developing new in-dash car navigation systems with built-in audio/video functions that feature connectivity with peripheral electronics and innovative device operability. We are developing a “light” platform that will support the worldwide launch of these new models.
In OEM car navigation systems, we will concentrate on winning contracts for
assembly line products worldwide for automakers. At the same time, we will grow business in the domestic dealer options market. Through these measures, Pioneer aims to expand the scope of its car navigation system business as a whole.
In car audio/video products for consumer markets, we will compensate for
contraction in developed countries’ consumer markets by actively responding to rapid market expansion in the BRICs nations. Concurrently, we plan to maintain profitability and mitigate any decrease in unit prices by shifting our center of gravity from models equipped with CD players to those with DVD players. We also aim to maintain our market share by vigorously offering new value propositions that cater to various forms of media and networks.
On the development front, Pioneer will work to boost efficiency by implementing reforms of increasingly complex software development processes and by adopting common platforms for OEM products for which orders are growing. These and other measures will help us to maintain profitability as we grow our business.
Through these and other initiatives, we aim to maintain an operating margin of
around 6% to 7% in the Car Electronics business over the medium term.

2. Restoring Profitability in the Home Electronics Business
In the Home Electronics business, Pioneer is focused on improving profitability by expanding sales of audio/video products linked with displays and by growing sales of Blu-ray Disc-related products.
Pioneer will reinforce its range of network and wireless-compatible audio/video
products linked with displays. Our goal is to create home environments where people can freely manipulate digital content piped into their homes over networks. We also aim to develop displays that are next-generation wall-mountable TVs by wirelessly connecting displays and various source devices. Pioneer also aims to expand business by incorporating new value proposals into each new product—proposals based on video and audio analysis technologies cultivated through extensive research into high
picture and sound quality.
With regards to Blu-ray Disc-related products, Pioneer will concentrate internal product development on Blu-ray Disc players, which are expected to find growing adoption worldwide. Meanwhile, we will use joint development and outsourcing to enhance our lineup of Blu-ray Disc recorders and other products. Furthermore, we aim to grow external sales of Blu-ray Disc devices through package sales that combine such devices with platforms for Blu-ray Disc players and recorders.
In the Pro SV business, Pioneer will drive even greater business expansion by
augmenting its lineup of DJ equipment and moving into new categories of video and audio equipment.
Through these initiatives and the aforementioned restructuring plans for the
display business, Pioneer aims to improve profitability in the Home Electronics
business, moving it back into the black in fiscal 2010.

3. Strategy for the Speaker Business
The speaker business makes effective use of technologies and expertise accumulated by Pioneer over its entire 70-year history. We are trying to expand this business as a whole by focusing on growing not only the car speaker business, where we boast a dominant market position, but also speakers for home use.
In home-use speakers, we aim to ensure profitability while expanding sales by
supplying value-added products. Efforts will also focus on moving into new product categories in business-use speakers.
Turning to speaker unit sales to external customers, Pioneer will work to increase its external customer base to ensure consistent and stable growth in speaker units for mobile phones. In fields such as speaker units for flat-panel TVs, Pioneer will develop and boost sales of proprietary speaker units.
Reforming the operating structure is a priority, too. We will pursue economies of scale by concentrating speaker development and production at Tohoku Pioneer Corporation, which is now a wholly owned subsidiary of Pioneer Corporation. We will also apply our expertise in home-use speakers to car speakers. In this way, we hope to rapidly reap benefits from our business integration with Tohoku Pioneer.
By working hard on these and other initiatives, we aim to grow our speaker
business roughly 1.5-fold over the medium term to become the world’s leading speaker manufacturer in terms of both quantity and quality.

4. Progress on Business Alliance with Sharp Corporation
As part of a comprehensive business and capital alliance formed by Pioneer and Sharp Corporation in 2007, the two companies are conducting joint product development by making effective use of each other’s resources in their respective fields of expertise. The overriding goal is to enhance the corporate value of both companies.
In the field of flat-panel TVs, for example, Pioneer is taking part in Sharp’s
development of acoustic systems for ultra-thin, flat-panel TVs. By leveraging its acoustic technologies built up over many years, Pioneer aims to develop acoustic systems employing ultra-thin speakers that still achieve outstanding sound quality for supply to Sharp. Furthermore, Pioneer will be supplied by Sharp with LCD TVs based on its superior technologies. We will launch these LCD TVs first in Europe this fall and steadily expand our lineup of LCD TVs. Plans also call for engineers from Pioneer and Sharp to team up to develop LCD TVs that carry on the legacy of the Pioneer “KURO”
series in terms of high picture and sound quality. This project will give Pioneer access to Sharp’s extensive expertise in LCD TVs, while promoting joint development of digital tuners, platforms and technologies for realizing high picture quality. The goal is to develop value-added products and raise the efficiency of development activities at both companies.
In the optical disc field, Pioneer and Sharp have agreed to join forces to expand their respective Blu-ray Disc-related product businesses. This step takes the alliance beyond merely supplying existing products such as DVD players and DVD recorders to each other. Joint development of pickups and drives for Blu-ray Disc players/recorders, will bolster the two companies’ vertically integrated business models spanning devices to end products. Cost reductions resulting from more efficient development and volume growth will in turn contribute to business expansion.
Here too, Pioneer and Sharp are resolved to build even stronger ties by efficiently conducting joint development.
In car electronics fields, Pioneer and Sharp plan to jointly develop products based on Sharp’s “only one device” concept. The two companies will make a point of enhancing device operability to propose new kinds of automotive passenger cabin environments. We also plan to propose new forms of value by linking Sharp’s AQUOS™ mobile phone concept with our car navigation system technologies. We want to use these joint development projects to drive further business expansion at both companies in the car electronics field.
The concrete achievements of these initiatives will be showcased at CEATEC
JAPAN 2008 this fall and at various product presentations.
Note: “AQUOS” is a registered trademark of Sharp Corporation.
5. Outlook
Pioneer will make a group-wide effort to steadily implement structural reforms of its display business, while expanding its Car Electronics business, improving profitability in its Home Electronics business and growing the speaker business. Our aim is to improve our operating results and ensure stable earnings growth. Through the business alliance with Sharp, we will utilize each other’s resources and promote joint development in each of our businesses, in order to develop new products and
businesses and improve the efficiency of development activities.

I suppose the important facts here are that Pioneer will not stop making Plasma TVs or indeed fold the 'Kuro' brand as they are looking at sourcing panels where they can introduce their own technologies. So unlike some lazy journos out there declaring the end of plasma, looks like it is simply a business reshuffle and they intend to continue. It is a shame that the TV market is so price driven that it has called a halt to Pioneer being able to develop their own panels, but lets see what their engineers come up with when using out sourced panels.
And in their tie up with Sharp we will get to see the first LCD models in Europe first this Autumn.

[grumps]

I am glad that they will continue to bring to the Market "Pioneer" screens otherwise consumers would have few choices for premium Plasma screens. Hopefuly they will still be able to turn out a quality product even if they do not manufacture the panel itself.

[Justin@UH]

So to clarify - does this mean the PDP models Pioneer release later this summer (`08 range) will still be their own glass, with models released in `09 being outsourced glass?

[Phil Hinton]

Originally Posted by Justin@UH

So to clarify - does this mean the PDP models Pioneer release later this summer (`08 range) will still be their own glass, with models released in `09 being outsourced glass?

Thats my interpretation.

[David Mackenzie]

I'll be interested to see what Pioneer can do with LCD. Back when I was first looking for an HDTV, Pioneer were my first choice but I had to settle for Sony once I discovered Pioneer didn't make LCDs. (Plasma screen sizes were above my budget at the time).

[Jonstone]

How many plasma panel manufacturers will there be once pioneer cease production and start buying in someone elses glass?

Who will they source their panels off then in the future?

It is true that the electronics behind the panel can make a big difference to the overall quality of the image produced but it is widely acknowledged that panasonic panels are amongst the best of the rest and these sell at a very competitive price with fairly decent processing.

How are pioneer going to distinguish their bought in panels in a way to justify charging a premium for the product. Lets say for example that they do buy their glass in from panasonic, who is going to be willing to pay substantially more for what is basically the same panel? Can they really improve the electronics behind the screen enough to warrant a premium price.

For me, this does signal the beginning of the end for pioneer in the plasma market, I really can't see any future for them in trying to produce a premium product, and charge accordingly, using another manufacturers panels

[David Mackenzie]

How are pioneer going to distinguish their bought in panels in a way to justify charging a premium for the product. Lets say for example that they do buy their glass in from panasonic, who is going to be willing to pay substantially more for what is basically the same panel? Can they really improve the electronics behind the screen enough to warrant a premium price.

It would only help up to a point, but their video processing would have to give them the edge. If you look at Sony and Samsung in the LCD category, they use the same panels but (in the past) there were marked differences in how both looked and performed.

[LicensedTaximan]

Well even though they will be out sourcing later on at least the products will have the benefit of their technology....phew.

[Jonstone]

Originally Posted by Lyris

It would only help up to a point, but their video processing would have to give them the edge. If you look at Sony and Samsung in the LCD category, they use the same panels but (in the past) there were marked differences in how both looked and performed.

I don't think the market that will pay the extra for the same panel with better processing is large enough to sustain a full product range with sales levels that would make this viable long term for pioneer (or medium term for that matter) so I do believe this is the start of pioneers withdrawl from this area of the market

[Timbo21]

So we are not likely to see their totally black Kuro.

I can't imagine they could do it without a specialist panel.

[albani]

Hi,
As it seems that Pio in a headche and confuse!!
On the orher hand Pio must have to look their sale "prices"(under
consumer basis!!!!)

Pio KURO extremely qty units and world accepted this point and no doubt
But just one point isn't enough!!
KURO is excellent OK but the how is the prices

Well you can tell......quality is more price,or if you want the best qty
than you should be paid!!

OK but customers not given any permission for KURO to sale this units easy!
High price or extremely high price!
So in this respect all(global)Pio sales dramaticaly come down!!!

So we do not talk about Pio Qty,but have to talk about their price strategy
as well!

Best qty=high price>>>no this rule not belong to TV world!!
Its not such a Rolly-Royce Car!!

There is something different points in some of special buss.
PDP&LCD is a special buss.!!!
Bye

[sirdonlad]

hey timbo! i dont recon there will be any problems in outsourced panels- i had a loewe aconda 32" crt a while back and it had the best picture i ever saw (untill recently). when the power supply went tits up, i butchered it and i found that they used an lg tube! i started wondering why i hadnt just bought an lg...

[Timbo21]

Originally Posted by sirdonlad

hey timbo! i dont recon there will be any problems in outsourced panels- i had a loewe aconda 32" crt a while back and it had the best picture i ever saw (untill recently). when the power supply went tits up, i butchered it and i found that they used an lg tube! i started wondering why i hadnt just bought an lg...

I think Loewe adds a high contrast panel to most of their screens as well. Undoubtedly way better than LG, and their top screens really have great black level and contrast. Definitely some the best LCD screens out there.

IIRC, Pioneer panels are not just about the electronics, but the panel is physically different to Panasonics. I suppose it's whether they can customise them?

T.

[Timbo21]

The other thing is I think Pioneer should rethink their policy on wall brackets & pedestals.

The LX608D pedestal is around £430 for a rather simple bit of plastic, and the wall brackets, which are simple fixed designs are also expensive.

I can tell you they have lost a few sales for charging such a ridiculous price for the PDKTS30A.

But Pioneer are not alone. Panasonic also charge something in the region of £700 for the pedestal stand for their 65" plasma . This is also made of plastic.

When people are used to getting these free with their LCD's, it doesn't go down well.

They might have some real justification, but they would do a lot better if they made them from wood, and/or incorporated the price into the TV.

Unfortunately people feel they are being conned, and some just walk away out of the principle of it.

[pinecooler]

Pioneer are having to give up producing their own panels because it was too expensive to carry on doing it in house.

By outsourcing i can only assume that due to economy of scale the price to produce a single panel should be greatly reduced. Just look at the sony samsung deal, shared R&D costs, shared equipment costs and as a result they can bring prices down.

I can only hope that pioneer are able to really benefit from this by reducing prices at the storefront.

I'm sorry for all those elitests out their who would dread to see pioneer becoming a mass market product, but if they want to keep pioneer in the plasma game then that is what will have to happen.