Cable Technology Feature Article
Sony Puts OLED on Ice in Favor of 4K LCD
By Tara Seals, TMCnet Contributor
Facing financial struggles and looking to protect its 4K TV lead, Japanese consumer electronics manufacturer Sony is taking the axe to one of its more advanced product lines: OLED TV sets.
Japanese newspaper Nikkei reported that Sony has decided to put the development dollars into 4K UltraHD LCD sets instead—a market in which it dominates. Sony sets accounted for more than 20 percent of the value of all 4K shipments in 2013, and the company is planning to release eight more 4K models this summer. In all, 4K will account for close to half of the company’s total offerings in the large flat-panel TVs.
The upped focus on 4K LCD could be a smart move considering that Samsung (News - Alert) has already overtaken Sony in 4K in North America, while cheaper Chinese competitors like Skyworth and TCL are claiming the lead in their home market. OLED uses a higher-contrast color palette than the industry-standard LCD panels, with deeper blacks that really make regular HD really pop and make the 4K resolution more visible from farther away—but it’s expensive to bring to market and Sony needs commercial product now.
“Sony maintained the top shipment share of 4K TVs outside of China, which is a position they have held since the second quarter of 2013, but one which will be challenged significantly this year by low-cost competitors from China and elsewhere,” said Paul Gagnon, director of global TV research for NPD DisplaySearch.
Sony has also faced considerable competitive headwinds in the OLED arena: LG and Samsung have been moving steadily in the OLED space, making it difficult for Sony to catch up.
For instance, at CES (News - Alert) this year, Samsung showed off a 55-inch curved OLED TV with regular HD resolution of 1080p. It costs $9,000 in the U.S. And, it showed off a UHD OLED prototype that the company said showed off its “technology leadership.” To date there have been very few UHD OLED movements however, because the technology is difficult to implement.
That implementation difficulty is taking its toll in the broader industry: Growth in the OLED display market has been slower than expected due to very few breakthroughs in AMOLED use, and manufacturing costs that are still higher than those for LCD screens. According to the latest NPD DisplaySearch Quarterly OLED Materials Report, due to ongoing delays in OLED TV shipments, OLED material revenues are expected to reach just $795 million in 2014, a significant decline from previous forecasts of just over $1 billion.
Among the various OLED technologies, AMOLED is getting more attention from display manufacturers, as the flat panel display (FPD) market matures and revenue growth slows. AMOLED displays have been adopted mainly in mobile phones, but the AMOLED industry is now attempting to penetrate into televisions, tablet PCs, and other large-area display markets, and OLED material is expected to be one of key factors for this transition.
“The OLED material industry and related investors are justifiably worried about where the OLED material market is headed in the near future,” said Jimmy Kim, senior analyst for display materials and LED for NPD DisplaySearch. “If OLED TV shipments increase, the larger average unit area and lower yield rate will increase the overall consumption of raw materials for OLED TV panel manufacturing.”
Taking a risk on OLED is likely something that Sony can’t do right now. Despite its status as a household name, Sony’s TV business has struggled in general, lacking profitability for years as South Korean giants LG Electronics (News - Alert) and Samsung Electronics have dominated the innovation curve. Beginning last year the company embarked on a strategic initiative to return its TV unit to the black—something that happened last August when it managed to finally realize a quarterly net profit after 12 straight quarters of decline in the TV division.
"The biggest issue for us in 2013 is to turn around the electronics business and put it back into the black," said Masaru Kato, Sony's CFO, at the time. “We think this result is an adequate first step."
Sony has thus been shedding unprofitable businesses and has said that it will take steps to cut costs in order to further turn its TV business around. Nikkei reported that this includes plans to slash labor expenses for consumer electronics products by more than 20%.
Nikkei said that Sony will reassign the people now working to develop OLED TVs to other tasks, including development of 4K-related products.
Edited by Maurice Nagle