Sony sees beyond LCD with new super-thin TVs

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Tokyo, Oct 9: Sony Corp's <6758.T> new super-thin TV outshines LCD and plasma models in several key areas like response speed and power consumption, but the next generation technology may not have a big impact on the firm's profits for a few more years.

The model, which will be launched in December, uses state of the art organic light emitting diode (OLED) technology which could dominate the flat TV market from 2010 if prices come down and panels get bigger, analysts say.

''It's full of potential as a next-generation flat TV -- slim enough for wall-mounting and energy-saving enough to be eco-friendly,'' DisplaySearch analyst Hisakazu Torii said.

''I don't see OLED TVs making a big dent on the flat TV industry in five years ... But LCD and plasma TVs will eventually become mature products with little profitability like cathode ray tube models today, creating an pportunity for OLED TVs.'' OLED displays use organic, or carbon-containing, compounds that emit light when electricity is applied. Unlike liquid crystal display (LCD) panels, they do not need backlighting, making OLED TVs slimmer and more energy-efficient.

The OLED TV is suitable for watching fast-moving images such as sports programmes because of its quick response time. It also offers bright colours and a wide viewing angle.

Sony said last week it will launch the world's first OLED TV on Dec. 1, opening a new era for the $82 billion flat TV market.

Just 3 mm thick, the new TV consumes 40 percent less power than a comparable LCD set but only comes with an 11-inch screen and sells for 200,000 yen ($1,704).

The new TV will be offered into a market where some 40-inch LCD models retail for a similar price, capping its near-term prospects.

As the technology becomes more commercially competitive, DisplaySearch expects the global OLED TV market to grow 24-fold to $884 million in 2011 from an estimated $37 million in 2008, far outpacing 15 percent growth in LCD TV demand.

However, the 2011 figure for OLED TVs is less than 1 percent of projected LCD TV revenues of $92 billion for the same year.

Twin Growth Engine

Analysts say it will not be until the end of the decade that the OLED TV business starts giving a substantial boost to Sony's bottom line.

''Any earnings impact from OLED TVs can safely be ignored for the time being as both capital spending and sales will be quite limited.

Sony is not making profit even at its LCD TV business,'' Mizuho Investors Securities analyst Mitsuhiro Osawa said.

At the CEATEC Japan electronics trade show last week, Sony's 11-inch OLED TVs attracted more visitors than Sharp Corp's <6753.T> towering 108-inch LCD TVs and Matsushita Electric Industrial Co's <6752.T> 103-inch plasma models, underscoring strong consumer interest in the cutting-edge product.

But its size and price put off some spectators.

''I cannot pay 200,000 yen for an 11-inch TV. I could buy one when they start selling a 20-inch model below 100,000 yen,'' said 52-year-old Akihiko Murakawa.

A drastic price cut is unlikely any time soon as a Sony executive has said profitability was not a priority in setting the 200,000 yen price, indicating Sony will likely lose money on each set it sells at first.

Despite the OLED TV's obvious drawbacks at the initial stage, companies betting heavily on LCD TVs are wasting no time to cement their leading position.

Sharp, the world's No. 3 LCD TV maker behind Samsung Electronics Co <005930.KS> and Sony, in August announced it has developed the world's thinnest and lightest LCD TV with enhanced picture quality, in a clear rivalry with OLED TVs.

Brisk and continued growth in LCD TV demand is important for Sharp as it plans to spend more than $3 billion to build the world's largest LCD panel plant in western Japan by March 2010.

In the long term, rival makers are right to become concerned about the OLED TV's potential as increasing number of electronics and materials firms are joining the OLED industry, accelerating technological innovation and driving down costs, analysts say.

South Korea's Samsung SDI Co <006400.KS> is already making OLED screens, while a joint venture between Matsushita and Toshiba Corp <6502.T> said earlier this year it aimed to launch TV-use OLED panels in three years.

General Electric Co also has decided to cooperate with Konica Minolta Holdings <4902.T> to jointly develop flexible and thin lighting products using OLED technology.


Reuters
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