Is the TV in early retirement? Judging by the moves of some electronics multinationals, it would seem so. The Sony giant soon it will cut 6% of the workforce, but it won't be the first time: in the last seven years more than 15% of the multinational giant's employees have left the production lines.
Not only Sony: Panasonic and Sharp also restructured their management plans after losses in the screen sector drove their accounts into the red. Now the new president of Sony, the Japanese Hirai, is preparing to mow down five thousand employees in the television sector.
What is behind these dynamics? It is not just a question of the economic situation, even if the latter plays an important role in western outlet markets. In the West, the trend of households to reduce debt is generating a sharp contraction of the market even in the hi-tech sectors.
An analysis by IHS then reveals a rather negative picture for the future. In the New Continent, a sharp decrease in television purchases is expected in 2012: -5% compared to 2011, and until 2015 there would be no recovery in the market. But so far it is an analysis limited to the US territory. If these forecasts are cross-referenced with the retrospective – and global – data provided by Displaysearch, a company specializing in the analysis of the screen market, we have confirmation of the fact that there is more at stake than a simple economic downturn: in the 2011 shipments of televisions worldwide decreased, for the first time since 2004. The decrease is not very strong (-0,3%) but significant if we consider that historically the television market has embarked on ever increasing trends, driven by technological advances and ever-rising productivity.
According to Paul Gagnon, director of NPD Displaysearch, the unsatisfactory level of purchases was caused by excess inventories in early 2011 and by the fall in Japanese demand following the expiration of the tax incentives for appliance replacement. Furthermore, forecast errors on sales have increased inventories, damaging the profits of multinationals forced to reduce prices to find outlet demand.
Meanwhile, the Asian market continues to occupy the majority share: 21% of the total, while the North American market, in second position, has won 20,5% of shipments, becoming the only one to record growth on an annual basis.
In a sector in which Samsung excels, growing by 18% in 2011, the three Cinderellas Sony-Panasonic-Sharp close the ranking with a drop in market shares of 34%, 19%, 30% respectively, data that explain the movements within the Sony production lines and on the boards of Panasonic and Sharp, management movements aimed at making production chains more efficient but also at "punishing" those responsible for forecasting demand analysis that are not exactly optimal.
But there's more. Technological progress has rapidly ousted CRT televisions from the market, giving rapid input to the replacement of old appliances which has guaranteed stellar profits to multinationals in high-income countries, where TV has not been considered a luxury item since the years 60s. Particularly in emerging economies, in countries where cathode screens have never represented a mass product, the race for replacements has not occurred: most families are still in pursuit of the first television, and per capita incomes will have to go up for a long time before many cores can afford a latest generation ultra-thin.
Then there are rapidly developing usage habits: if the living room with a large screen continues to be the meeting point of the average family, technological progress is eroding the market shares of smaller televisions - usually those for bedrooms or kitchens - in favor of tablets and laptops.
