INS826
Flat-Screen Televisions
12/2014-5869
This case was written by James Costantini, Affiliate Professor of Strategy at INSEAD. It is intended to be used as a
basis for class discussion rather than to illustrate either effective or ineffective handling of an administrative situation.
Additional material about INSEAD case studies (e.g., videos, spreadsheets, links) can be accessed at
cases.insead.edu.
Copyright © 2014 INSEAD
COPIES MAY NOT BE MADE WITHOUT PERMISSION. NO PART OF THIS PUBLICATION MAY BE COPIED, STORED, TRANSMITTED, REPRODUCED OR DISTRIBUTED
IN ANY FORM OR MEDIUM WHATSOEVER WITHOUT THE PERMISSION OF THE COPYRIGHT OWNER.
This document is authorized for use only in Operations by Laura Collingridge, Imperial College London from January 2016 to July 2016.
“Flat screens are everywhere, but no one earns money making them.”1
“I thought turning around the PlayStation business was going to be the toughest
challenge of my career, but I guess not… It's one issue after another.”
Kaz Hira, head of Sony’s television business,
on the challenge of restoring profitability2
“No, I am not feeling the pricing pressure from the big consumer electronics
companies… We have already been aggressive at passing on price reductions. It's
a race to zero... We are here to stay.”
Laynie Newsome, co-founder and vice president of sales, Vizio,
an entrant in the US market3
Flat-screen televisions have become increasingly popular, with retail sales of televisions
growing around 9% per year from 2005 to 2010 to reach $180 billion (see Exhibit 1). Initially
the main technologies were plasma and liquid-crystal display (LCD), LCD emerging as the
dominant technology (see Exhibit 2). More recently, televisions based on light-emitting
diodes (LED) have become popular, and other screen technologies such as organic lightemitting diodes (OLED) are on the horizon. The shift from old-style television sets primarily
based on cathode-ray tubes (CRT) coincided with a more general shift from analogue to
digital technology, in part driven by the adoption of digital broadcasting signals around the
world.4 The appeal of large flat-screens is strong, with peaks in interest around major sporting
events such as the soccer World Cup. Flat-screen televisions have become increasingly
affordable thanks to a substantial price decline over time and rising incomes in emerging
markets. But despite the growing market, the performance of TV manufacturers has diverged.
Globally, Samsung has risen to industry leadership, displacing Sony (see Exhibit 3) which
suffers on-going losses in its television division.5 The competitive dynamics vary across
geographic markets. In the US, for example, new entrant Vizio gained over 10% market share
within a few years of entry.6
Larger & Cheaper Televisions...
In the early 2000s, flat-screen televisions were primarily smaller LCD televisions or larger
plasma televisions. Over the course of the decade, LCD screen producers, in particular Sharp,
Samsung and LG, stood out by making larger and larger screens. For Sharp, construction of a
$1.4 billion LCD plant in Kameyana, Japan, in 2001 allowed cost-effective production of
1
2
3
4
5
6
“Cracking up”, The Economist, 21 January 2012
“New Sony Chief Executive Reveals Fast-Forward Plans”, by Daisuke Wakabayashi, The Wall Street
Journal, February 2012
“TV Makers Confront a Shakeout --- Big Manufacturers Start to Squeeze Smaller Rivals as Sales, Prices
Shrink”, by Daisuke Wakabayashi and Christopher Lawton, The Wall Street Journal, 20 January 2009
“TV makers predict sharp jump in sales”, by Robert Harding, Financial Times, 14 May 2010
“Sony warns of grim picture for TVs”, by Jonathan Soble, Financial Times, 21 December 2010
“Vizio eclipses bigger rivals in LCD TV sales”, by Chris Nuttall, Financial Times, 23 November 2007
Copyright © INSEAD
1
This document is authorized for use only in Operations by Laura Collingridge, Imperial College London from January 2016 to July 2016.
larger screens.7 Each new generation of manufacturing plants tended to enable production of
larger screens (see Exhibit 4), but new plants required substantial investment, running to
billions of euros, and the co-location of key suppliers, such as for glass.8 However, as each
generation of screens matured, prices declined, partly due to screen producers learning how to
cut costs and partly to stronger competition as more and more screen producers started
production. For instance, by late 2007 Sharp, Sony and Samsung were producing high
volumes of 52" LCD televisions to compete with plasma televisions, whereas most generic
LCD manufacturers made televisions with smaller screens of up to 47".9 Year-on-year price
declines (for the same screen size) of 20-30% were not unusual (see Exhibits 5 and 6).10
Screens were a key input to the manufacture of televisions owing to the proportion of cost
they accounted for (see Exhibit 7). Manufacturers that wanted the latest, largest screens early
in the 2000s could secure access to supply by establishing joint venture agreements with
screen producers, such as Sony’s joint ventures to source screens from Sharp and Samsung.11
Plasma screens also increased in size over time, requiring similar levels of investment in plant
and equipment. By the end of the decade, sales of LCD-based televisions had grown much
faster than plasma-based televisions. In the last quarter of 2008, year-on-year sales growth
was 64% for LCD versus 6% for plasma.12
...with Improved Image Quality, Features, Design, Thinness…
However, to the average consumer the difference between similarly large, flat televisions was
not always clear. Commenting on Vizio selling televisions at almost half the price of the
major manufacturers in 2007, industry analyst Eric Haruki from IDC noted that: “The big
boys are keeping their prices fairly high, but the mainstream public is saying 'I just want a flat
TV, and I can't see much of a difference' in quality”. 13 Indeed, “Some call retail displays the
‘wall of death’ because it is so hard for a model to stand out.” 14
In response to this challenge, leading manufacturers of flat-screen televisions made
substantial investments in research and development, mainly to improve image quality,
features, design and thinness. Marketing involved major media campaigns as well as trade
support. Sony, for example, invested $160 million from 2005 to 2007 in its European
advertising campaign.15 Sharp emphasized that screens for its televisions were “Made in
7
8
9
10
11
12
13
14
15
“Sharp Focuses on Manufacturing - A $9 Billion Plant In Japan Will Make LCD, Solar Panels, by Yukari
Iwatani Kane, The Wall Street Journal, 9 July 2008
“Sharp to invest Y380bn in LCD plant”, by Mariko Sanchanta, Financial Times, 1 August 2007
“The Picture Gets Fuzzy For TV Deals --- Holiday Discounting Slows As Supply Glut Dwindles; In LCDs,
Bigger Looks Better”, by Christopher Lawton, The Wall Street Journal, 6 December 2007
“Firms Navigate New Order of LCD-TV Dominance”, by Yukari Iwatani Kane, The Wall Street Journal,
22 December 2007
“Sony, Sharp Form Venture to Make LCD-TV Panels”, by Yukari Iwatani Kane, The Wall Street Journal,
27 February 2008
“Matsushita to build LCD factory”, by Mariko Sanchanta, Financial Times, 18 February 2008
“Sony Unveils New HD TVs for Holiday Push”, by Yukari Iwatani Kane, The Wall Street Journal, 30
August 2007
“Is Even-Higher Definition Next Big Thing for TVs?”, by Don Clark, The Wall Street Journal, 8 January
2008
“Sony Paints in Lavish Hues to Sell LCDs”, by Jorge Valencia, The Wall Street Journal, 3 August 2007
Copyright © INSEAD
2
This document is authorized for use only in Operations by Laura Collingridge, Imperial College London from January 2016 to July 2016.
Japan” at its own factories.16 Some manufacturers provided funding to retailers for special instore displays and service provision, such as dedicated areas or shop-in-shops that might
display of a range of products (not just televisions) supported by dedicated staff.
Manufacturers also sought to provide features that differentiated their products, such as an
emphasis by the major players on 3D, which was expected to increasingly feature on
televisions (see Exhibit 8). Different types of 3D systems were promoted, for instance
Samsung’s active-shutter glasses versus LG’s passive glasses.17 Sony’s involvement with 3D
was extensive, beyond televisions to include working with film studios and providing other
equipment such as cameras.
In the competition to introduce televisions with the newest screen technologies such as LED
and OLED,18 Samsung was an early mover (in 2010) into LED backlighting, which allowed
for thinner LCD televisions that also used less power.19 By the end of 2011, most US
shoppers wanted an LED television, taking the lead from LCD20 (see Exhibit 9). Sony made
an early investment in OLED screens but manufacturing costs remained high and screen size
small. While continuing to invest in OLED, from early 2012 Sony was displaying products
based on a different technology, Crystal LED Display, that provided better contrast, thinner
frames and lower energy consumption.21 By 2010, Samsung and LG were increasing their
investments in OLED as a potential next-generation screen technology, displaying products in
early 2012 with the aim of starting commercial sales in late 2012.22
...and Link to Online Services…
Input for ‘what’s on’ television came from terrestrial broadcasts, cable and satellite TV,
devices such as DVD players and game machines and, more recently, computers. With the
increasing use of the internet and penetration of broadband came a greater focus on linking
televisions to the internet so that choice of content was through the TV interface, with
corresponding forecasts for the growth of internet-enabled televisions in the future (see
Exhibit 10).
In early 2008, Panasonic announced the sale of internet-connected televisions in the US.
Yoshi Yamada, chief executive of Panasonic Corp of North America, commented: “As
manufacturers, we don't like a commodity-only business. We need to add some value for
16
17
18
19
20
21
22
“Sharp Makes Cellphone Push Into China --- Other Japanese Makers Have Quit the Market; The TV-Set
Connection”, by Yukari Iwatani Kane, The Wall Street Journal, 13 June 2008
“TV set makers jostle to realize 3D vision”, by Jonathan Soble and Song Jung-a, Financial Times, 29
September 2010 ; “Samsung, LG Takes Different Tack on 3-D Glasses”, by Daisuke Wakabayashi, The
Wall Street Journal, 10 January 2011
“TV's Next Big Things: Television-set makers are looking for cutting-edge features to lure consumers;
Here's what's coming”, by Christopher Lawton, The Wall Street Journal, 8 December 2008
“Internet and 3D force TV makers to think outside the box”, by Chris Nuttall, Financial Times, 1 June 2010
“LED-Backlit TVs Now Preferred by More US TV Buyers “, by Lisa Hatamiya, IHS iSuppli Research, 2
February 2012
“Sony Taps New Type of Screen for TV Sets”, by Daisuke Wakabayashi, The Wall Street Journal, 10
January 2012
“Samsung and LG display shared screen vision”, by Song Jung-a, Financial Times, 8 July 2010; “The
future of gadgets is all about simplicity”, Nuttall, Chris, Financial Times, 13 January 2012
Copyright © INSEAD
3
This document is authorized for use only in Operations by Laura Collingridge, Imperial College London from January 2016 to July 2016.
consumers – and anything content-related is adding value”23 Linking to Google’s internetbased television service was one approach leveraged by manufacturers. In 2010, Sony started
to sell televisions compatible with this service.24 By 2012, Samsung, LG and Vizio were
planning to include the Google service in some of their televisions. Manufacturers were not
exclusive in their partnerships: for instance, Sony and Vizio also collaborated with Yahoo on
its service for televisions.25 Samsung also made investments and partnerships in firms
developing advertising for connected televisions, as did other major TV manufacturers.26
Apple was expected to make a move into smart TVs.27
…but Mixed Outcomes for Manufacturers
From the end of the 1990s, when CRT televisions still dominated the market, the competitive
landscape had evolved. Two major players had emerged, Samsung and LG. Samsung invested
aggressively in LCD and plasma technology, starting at the end of the 1990s, and continued to
invest to increase screen size. It leveraged internal collaboration between component
businesses (such as screen production) and finished products, and in sales and marketing
focused collaboration and support, e.g., on large electrical retailers in the US.28
Other players had exited or substantially restructured. For instance, the slower growth in
plasma had put added pressure on some players. In 2007 Funai exited plasma televisions.29
Pioneer, an early entrant into plasma televisions, restructured its TV business by stopping
production of plasma screens: “Our TVs sell for about twice as much as competitors . . . we
had to do something to cut costs,” said President Tamihiko Sudo.30
Panasonic, the leader in plasma, had increased its investment in LCD televisions. In early
2008, plans were for investment of Y300 billion ($2.8bn) in an LCD factory that would start
producing in 2010, while continuing to expand plasma production.31 However, by late 2011,
Panasonic was scaling back output of panels by almost half and closing production lines in
23
24
25
26
27
28
29
30
31
“All eyes switch to 'smart' televisions”, by Mariko Sanchanta and Paul Taylor, Financial Times, 9 January
2008
“Sony warns of grim picture for TVs”, by Jonathan Soble, Financial Times, 21 December 2010
“Google Adds LG to List Of Television Makers Using Its Technology”, by Shara Tibken and Don Clark,
The Wall Street Journal, 6 January 2012; “Samsung To Sell Google TV”, by Jung-Ah Lee, The Wall Street
Journal , 10 January 2012
“Samsung participated in a $12 million round of financing for YuMe and partnered with Tremor Video:
“Advertisers Tune In to Web-Connected TV Sets”, by Ty McMahan, The Wall Street Journal, 30
November 2011
“All eyes on Google and Apple's smart-TV battle: Web-ready sets to become key for technology firms: LG
will unveil Android TV at Vegas electronics show”, Juliette Garside, The Guardian, 7 January 2012
“Sony versus Samsung”, Sea-Jin Chang, 2008, John Wiley & Sons (Asia) Pte. Ltd., Singapore, pgs. 55-58
and 76-77
“Firms Navigate New Order Of LCD-TV Dominance”, by Yukari Iwatani Kane, The Wall Street Journal,
22 December 2007
“Pioneer Expects Plasma-Panel Loss”, The Wall Street Journal, 8 March 2008
“Matsushita to build LCD factory”, by Mariko Sanchanta, Financial Times, 18 February 2008
Copyright © INSEAD
4
This document is authorized for use only in Operations by Laura Collingridge, Imperial College London from January 2016 to July 2016.
Japan. Losses were driven primarily by the decline in prices, which accounted for six times
the decline in profits compared to the effect of the strong yen.32
Competitive dynamics varied by geographic market. In the US, Vizio had entered the market
in the early 2000s and by 2007 had 13% market share, with a staff of around 90 (see timeline
in Exhibit 11). According to vice-president of sales, Laynie Newsome, “…it will be difficult
for larger competitors to continuously pass along similar value propositions to Vizio HDTVs
when you consider their massive operating and marketing expenses. We are very lean and
mean, and we make decisions and react to the latest in product development very quickly”33
(see vision, mission and core values in Exhibit 12). By 2009, staff had increased to 300. Sales
grew from $142 million in 2005 to $2.5 billion in 2009 (the profitability of privately held
Vizio is not disclosed).34
Some Asian contract manufacturers had increased their commitment to the television
industry. For instance, Amtran had an equity stake in Vizio. Electronic products maker Hon
Hai moved into TV manufacturing by acquiring some of Sony’s production facilities and
some related technologies.35 Hong Kong-based TPV Technology, the largest manufacturer of
computer screens, aimed to build a TV business, relying on a large manufacturing base in
China as well as around 1,000 engineers on its staff, of which half worked on televisions.36
Starting out as a contract manufacturer, such as to major retailers, TPV expanded beyond
contract manufacturing through a joint venture with Philips. TPV became the majority partner
in 2011 as part of Philips’ exit from the television business.37
During the 2000s, Sony slipped to second place behind Samsung in terms of market share.
Sony had risen to industry leadership in the 1970s based on its Trinitron television
technology. The transition to flat-screen televisions had proved challenging: for the five years
to Q4 2011, Sony’s TV division recorded an operating profit in just one quarter, despite
repeated attempts at restructuring.38 In 2007, Sony blamed poor performance on placing too
much emphasis on rear-projection televisions, which had poor sales.39 In 2008, it sought to
restore profitability by standardising designs and increasing its presence in lower-end
televisions, while still hoping to restore its position as top producer of flat-screen
televisions.40 However, despite sales growth of 33% of LCD televisions in the year to March
32
33
34
35
36
37
38
39
40
“Panasonic forecasts $5bn full-year loss”, by Jonathan Soble, Financial Times, 31 October 2011;
“Restructuring Costs Weigh on Panasonic Results; Electronics Maker Posts Loss Due to TV and Chip
Restructuring”, by Juro Osawa , Wall Street Journal, 1 November 2011
“Vizio eclipses bigger rivals in LCD TV sales”, by Chris Nuttall, Financial Times, 23 November 2007
“Consumer Electronics Show: Vizio Extends Battle Plan --- Company to Unveil Tablet, Cellphone With
Same Strategy as Its Low-Cost TVs” by Yukari Iwatani Kane, The Wall Street Journal, 3 January 2011
“Japan tunes into Taiwanese plants”, by Robin Kwong in Taipei, Kathrin Hille in Beijing and Robin
Harding in Tokyo, Financial Times, 31 May 2010; “China Takes Leading Role in TVs” by Lorraine Luk,
The Wall Street Journal, 10 June 2010
“TPV poised for assault on TV market”, by Peter Marsh in London, Financial Times, 26 May 2008
“Philips Sells Majority of its TV Stake to Focus on New Growth Areas”, Euromonitor International, 19
April 2011
“Sony warns of grim picture for TVs”, by Jonathan Soble, Financial Times, 21 December 2010
“Firms Navigate New Order of LCD-TV Dominance”, by Yukari Iwatani Kane, The Wall Street Journal,
22 December 2007
“Sony plans $18bn BRIC push”, by Jonathan Soble, Financial Times, 26 June 2008
Copyright © INSEAD
5
This document is authorized for use only in Operations by Laura Collingridge, Imperial College London from January 2016 to July 2016.
2008, the TV business remained unprofitable,41 in part due to broader economic conditions:
“Even though we were able to improve our own standing with the restructuring plans, the
market conditions have worsened to the point that it overtook those improvements,” said
Naofumi Hara, a senior vice-president at Sony. “The No. 1 factor is that the economic
environment has gotten far worse than we expected.”42 In 2010, Sony sold part of its
manufacturing plants to Hon Hai, aiming to increase outsourcing of production from about
20% to 50%.43 However, the cost savings, and a 60% increase in LCD volumes, were not
enough to compensate for declining prices.44 Sony exited the panel supply joint-venture with
Samsung so as to purchase cheaper panels on the open market, part of a major shift over time
in sourcing of panels (Exhibit 13).45 In late 2011, Sony re-set its target medium-run sales to
20 million units, half the level planned two years earlier.46 A key driver of the changes during
2011 was the new head of its TV division, Kaz Hirai, who took charge in April 2011. In
January 2012 he was promoted to CEO (with effect from April 2012) to replace Howard
Stringer, who remained as chairman.47
For all Sony’s struggles, even industry-leader Samsung lost money in televisions in 2011,
despite strong growth, and was reportedly considering exit from production of LCD panels so
as to focus on OLED panels.48
41
42
43
44
45
46
47
48
“Sony Profit Is Hit by Phone, Camera Sales --- Earnings Decline 47%, But TVs, Videogames Were Strong
in Quarter”, by Yukari Iwatani Kane, The Wall Street Journal, 30 July 2008
“Sony to Cut 8,000 Jobs, Close Factories --- Electronics Giant's Turnaround Effort Undermined by
Slumping Demand, Holiday Discounts”, by Daisuke Wakabayashi , The Wall Street Journal, 10 December
2008
“China Takes Leading Role in TVs” by Lorraine Luk, The Wall Street Journal, 10 June 2010
“Sony warns of grim picture for TVs”, by Jonathan Soble, Financial Times, 21 December 2010
“Samsung Electronics Ends LCD Venture With Sony”, by Evan Ramstad, The Wall Street Journal, 27
December 2011
Japanese pioneers turn down the volume”, by Jonathan Soble , Financial Times, 3 November 2011
“Sony Taps New Type of Screen for TV Sets”, by Daisuke Wakabayashi, The Wall Street Journal, 10
January 2012; “Sony crowns Kaz the converger” by Jonathan Soble in Tokyo, Financial Times, 4 February
2012
“Samsung Profit Rises”, by Evan Ramstad, The Wall Street Journal, 28 January 2011; “Samsung could spin
off LCD business”, by Song Jung-a, Financial Times, 15 February 2012
Copyright © INSEAD
6
This document is authorized for use only in Operations by Laura Collingridge, Imperial College London from January 2016 to July 2016.
Exhibit 1
Televisions and Projectors: Market Retail Value and Volume 2005-2010
Market Sizes | Historic
Categories
Geographies
2005
2006
2007
2008
2009
2010
115,515.7 141,877.1 155,668.7 165,296.2 158,430.2 180,111.1
Retail Value RSP World
Asia Pacific
29,404.3
34,532.4
39,521.4
44,704.4
52,810.4
73,160.7
- US$ mn 28,236.9
37,270.6
45,802.2
47,922.1
44,383.2
42,581.5
Current Prices - Western Europe
North America
22,271.9
28,117.2
30,360.9
34,019.9
30,596.2
27,345.4
Year-on-Year
8,778.4
11,604.1
11,083.6
12,859.0
12,484.1
18,022.8
Exchange Rates Latin America
Middle East and Africa
19,863.8
20,611.6
16,884.7
11,216.9
8,081.0
8,485.5
Eastern Europe
5,386.1
7,708.7
9,350.5
11,580.6
7,138.0
7,179.5
Australasia
1,574.3
2,032.4
2,665.5
2,993.3
2,937.3
3,335.6
Retail Volume '000 units
World
Asia Pacific
Western Europe
North America
Latin America
Middle East and Africa
Eastern Europe
Australasia
293,250.1
85,119.5
53,685.3
55,862.1
22,711.0
59,020.4
15,082.3
1,769.6
317,771.7
87,197.0
60,877.6
58,705.9
27,031.5
64,109.2
17,304.7
2,545.8
320,592.8
91,523.0
68,158.7
60,889.6
24,650.7
55,438.2
16,387.6
3,544.9
347,794.3
95,626.4
71,344.0
99,415.8
24,365.8
35,068.4
17,470.7
4,503.1
340,401.1
109,411.4
76,564.2
91,801.9
21,737.2
22,922.8
12,728.7
5,234.9
345,885.3
132,300.0
74,305.1
76,319.1
25,030.7
19,746.7
12,030.5
6,153.2
Source: Euromonitor International
Exhibit 2
Total Revenues by Type of Display
Source: DisplaySearch
Copyright © INSEAD
7
This document is authorized for use only in Operations by Laura Collingridge, Imperial College London from January 2016 to July 2016.
Exhibit 3
Brand Shares (by brand) for Worldwide Retail Volume in In-Home Consumer
Electronics (home audio & cinema, televisions, projectors & video players) in %
Brand
Samsung
LG
Sony
Panasonic
Philips
Bravia
Sharp
Toshiba
Skyworth
JVC
HiSense
TCL
Vizio
DirecTV
Tata Sky
Pioneer
Other
Total
Company name (GBO)
Samsung Corp
LG Corp
Sony Corp
Panasonic Corp
Koninklijke Philips Electronics NV
Sony Corp
Sharp Corp
Toshiba Corp
Skyworth Digital Holdings Co Ltd
JVC Kenwood Holdings Inc
Hisense Group
TCL-Thomson Electronics Corp
Vizio Inc
DirecTV Inc
Tata Sky Ltd
Pioneer Corp
Other
Total
2005 2006 2007 2008 2009 2010
7.8
8.6
9.4
10.4
11.5
12.3
6.5
7.2
7.3
7.5
7.7
8.2
11.5
10.5
9.6
8.0
7.6
7.9
5.7
5.8
6.0
7.7
7.6
6.9
6.2
5.7
5.4
0.6
1.1
1.8
2.5
2.9
3.9
2.3
2.2
2.0
1.9
2.4
3.4
3.4
3.4
2.9
2.5
2.6
2.8
0.5
0.6
0.8
1.0
1.5
1.8
1.8
1.5
1.3
1.2
1.2
1.3
1.1
1.2
1.2
0.9
1.4
1.2
1.2
1.4
1.2
0.1
0.2
0.4
0.6
1.0
1.1
0.5
0.6
0.7
1.4
1.3
1.1
0.0
0.1
0.4
0.8
1.0
1.4
1.4
1.4
1.2
1.1
1.0
55.6
54.0
54.2
46.6
44.0
40.4
100.0 100.0 100.0 100.0 100.0 100.0
Source: Euromonitor International; case writer calculations
Exhibit 4
Television Shipment Volume Mix by Size of Screen,
2004 to 2009 and Forecast to 2014
Note: Size of screen in inches; 1 inch = 2.54 cm
Source: DisplaySearch
Copyright © INSEAD
8
This document is authorized for use only in Operations by Laura Collingridge, Imperial College London from January 2016 to July 2016.
Exhibit 5
Monthly Price Declines for Large-Sized LCD Panels in 2011
Source: HIS iSuppli Research, February 2012
Exhibit 6
Evolution of Average Selling Prices and Total Cost (to design, produce and ship),
2006 to 2008, for Two Sizes of LCD Televisions
Source: DisplaySearch
Copyright © INSEAD
9
This document is authorized for use only in Operations by Laura Collingridge, Imperial College London from January 2016 to July 2016.
Exhibit 7
Example of Price and Cost Breakdown for 32” HD LCD Television in 2008
Source: DisplaySearch
Exhibit 8
Forecast for 3D Television Sales
(a) Unit volume forecast for whole world
Source: DisplaySearch
(b) Unit volume forecast for selected countries
Source: Euromonitor International
Copyright © INSEAD
10
This document is authorized for use only in Operations by Laura Collingridge, Imperial College London from January 2016 to July 2016.
Exhibit 9
Consumer Preference for Type of Television Display at Start of Purchasing Process
Source: HIS iSuppli Research, February 2012
Exhibit 10
Forecast Proportion of Televisions Shipped with Internet Connectivity,
by Geographic Region
Source: DisplaySearch
Copyright © INSEAD
11
This document is authorized for use only in Operations by Laura Collingridge, Imperial College London from January 2016 to July 2016.
Exhibit 11
Vizio: Timeline of Company Development
VIZIO, Inc. was founded in 2002 by William Wang with the idea that everyone deserves to own the latest technology. Mr.
Wang's first two employees, Laynie Newsome and Ken Lowe, were honoured as co-founders, and eight years later are still hard
at work taking entertainment freedom by storm.
2002
* Founded in October of 2002 under the name V, Inc.
* With a total of 3 employees, they provided consulting services to Gateway, Inc.
2003
* Launched the VIZIO brand
* Launched Plasma monitor and DVD up-convert line at CES
* VIZIO signed on with Costco Wholesale to sell VIZIO products
* Total of 5 employees
2004
* VIZIO expanded their product offerings to include LCDs, Plasmas, DVD and DLP
* Total of 25 employees
2005
* VIZIO’s 50” Plasma was ranked CNETs Top Holiday Tech gift
* VIZIO signed on with Sam’s Club to sell VIZIO products
* Grew to 41 employees
2006
* VIZIO’s 32”LCD and 42” Plasma HDTVs are ranked Best of CES
* Expanded distribution to Circuit City, Sears, BJs and Kmart
* VIZIO launched its first TV advertising campaign
* Total of 62 employees
* Shipped a total of 750,000 HDTVs
2007
* VIZIO 60” Plasma HDTV ranked BEST of CES
* Q2 VIZIO achieved the rank of being the #1 shipper of HDTVs in North America
* Throughout the year, VIZIO continued to remain among the Top 3 HDTV manufacturers in North America
* Recognized by INC Magazine (INC 500) as one of the fastest growing privately held companies
* VIZIO signed on with Walmart
* Grew to 85 employees
* Shipped a total of 2,900,000 HDTVs
2008
* Launches 30 HDTV models, several of which include 120Hz, and adds a 50” Plasma with HQV Technology to the mix
* VIZIO expands its portfolio of products to include HDTV accessories (HDMI) and LCD computer monitors
* Launches the High Performance XVT Series (Extreme VIZIO Technology)
* Maintain its position as being one of the Top 3 shippers of HDTVs in N. America
* Recognized as the #1 Fastest Growing CE Company by Inc. Magazine
* VIZIO becomes the official sponsor of NBC’s broadcast of the Olympic Games
* Receives Wal-Mart Supplier of the Year Award
* Expanded distribution in to Canada
* Total of 100 employees
* Shipped a total of 3,500,000 HDTVs
* Total revenue exceeds 2 Billion Dollars
2009
* VIZIO continues to add new innovative products to their portfolio such as Blu-ray® players, Home Theater Sound Bars with
Wireless Sub, Motorized Wall Mounts and more.
* VIZIO launches 40 new HDTV models with sizes ranging from 19” to 55” and including the top technologies such as VIZIO
Internet Apps their version of the internet connected TV, 240Hz LCD models and the latest TruLED technology which delivers
the ultimate HD experience with less impact on our planet.
* #1 Shipper of LCD HDTVs in N. America Q1
* #1 Shipper of LCD HDTVs in United States Q2
* VIZIO is the official Sponsor of Super Bowl XLIII
* VIZIO HDTVs can be found on more store shelves than SONY in July 2009
* Over 160 employees
2010
*As CEA member, VIZIO¹s first CES booth promoted their VIZIO Internet Apps™ connected HDTVs and key platform partners
Yahoo!, Twitter, vudu, & Facebook
*2010 CES announcements included eleven categories in addition to TVs including High Definition Blu-ray DVD Players™,
Copyright © INSEAD
12
This document is authorized for use only in Operations by Laura Collingridge, Imperial College London from January 2016 to July 2016.
wireless HD Internet routers and VIZIO Internet Apps™ enabled entertainment systems, HD home theater sound, HD Personal
Home Theater headphones, and portable razor thin LED LCD HDTVs.
*With 50 TVs including XVT, M and E lines of TVs, VIZIO offers models for every room in the house and every type of buyer. 35
of these 50 new TVs utilize LED backlighting.
*Signs 3-year endorsement deal with music and film star Beyonce´ Knowles-Carter days before she wins a record setting 6
Grammy Awards
*”Forge” Super Bowl Spot featuring Beyonce´ and integrated communications yield nearly 1 billion impressions
* Tier one Donor to Greensburg GreenTown charity to help rebuild the Kansas town after a devastating tornado
*Supports Hoag Hospital Irvine Grand Opening with LCD HDTVs throughout the hospital
*VIZIO Operation Freedom gathers over $13,500 with 2,750 pounds of essential goods for U. S. Troops overseas
*Wins Inc. 500/5000 award for 4th consecutive year
*Deloitte Fast 500 award winner
*OCBJ Best Private Companies award winner
*OC Metro "10 Most Trusted Brands"
*Home Theater Magazine Top Picks Award
*Moves VIZIO tech support and direct sales expands to new offices in Dakota Dunes, SD
*Wins ThePerfectVision Recommended 2010 - XVT473SV
*XVT553SV named Editors' Choice by CNET and was Highly Recommended by HDTVSolutions.com
*196 employees total (includes 76 South Dakota and 3 international)
Beyond 2010 and well into the future:
VIZIO has made great strides in providing Entertainment Freedom For All™ and will continue to build this principle through
2011. With the explosion of 3D TV, we currently have many exciting new developments to reveal at the Consumer Electronics
Show and throughout the upcoming year. While staying true to our roots in vision and value, VIZIO is excited to continue and
grow our brand within the U.S. and beyond. VIZIO: Taking entertainment freedom by storm!
Source: Company documents from www.vizio.com accessed 10/02/2012
Exhibit 12
Vizio: Vision, Mission and Core Values
VISION
VIZIO’s® vision is to be the industry leader in consumer electronics by consistently delivering the
latest technologies at the most affordable price.
MISSION
Where vision meets value™
Visionary Products – VIZIO® understands the consumer electronics market and designs products
customers’ desire.
Visionary Technologies – VIZIO® selects the right technologies, brings the best to market, and
delivers them at a price everyone can afford.
Visionary Business Model – VIZIO® lowers cost and increase efficiency by creating and
orchestrating mutually desirable global partnerships.
CORE VALUES
Believe in the Vision. VIZIO® was founded on Faith, a belief that it can become the leader in
consumer electronics. The VIZIO® team embodies the Vision and the Passion necessary to
consistently deliver the latest technology at the most affordable prices.
Create Value for our Customers. Success is dependent on VIZIO’s® ability to do things faster and
more efficiently with fewer people than the competition. VIZIO’s® team achieves Success by giving All
they have each and every day!
Show Respect toward our Partners. VIZIO® achieves its goals by creating synergistic partnerships
with its suppliers and customers. VIZIO® Honors and Respects its partnerships daily and continually
seeks new ways to Collaborate.
Lead through Teamwork. Being the industry leader requires both individual leadership and
collaborative teamwork. VIZIO® team members lead by example and work together as a team to
achieve the company’s goals.
Source: Company documents from www.vizio.com accessed 10/02/2012
Copyright © INSEAD
13
This document is authorized for use only in Operations by Laura Collingridge, Imperial College London from January 2016 to July 2016.
Exhibit 13
Sony’s sourcing of LCD panels
Sources: Press articles
Copyright © INSEAD
14
This document is authorized for use only in Operations by Laura Collingridge, Imperial College London from January 2016 to July 2016.