The previous chapter introduced display technologies competing for use in the flat panel television industry. In addition to providing a technological background, it also provided a basis for understanding the nature of technological uncertainty present in that competition. This chapter discusses the television set manufacturing industry and its evolution. The general industry background of industry and firms in it is meant to aid interpretation of the analysis in subsequent chapters of this dissertation. It provides evidence market needs uncertainty was relatively low in this industry during the study period.
The TV set manufacturing industry is large and global in nature. The Japanese TV set manufacturers that are the focal firms of this investigation have played a major role in the industry for many years. This chapter begins by establishing a general background of the industry and Japanese firms in it. It then looks at its evolution at the industry level, including drivers of change such as the digitalization of television.
Japan’s Early Television Industry
The television set industry had a complex beginning, involving many people and organizations. A full discussion of the early developments is beyond the scope of this research, however some discussion of Japanese firms studied is warranted in order to establish the length and extent of their involvement with the industry.
Although early developments relating to television sets go back into the 19th century, it took many years for television technology to develop to the point it was practical and for broadcasts to begin. Early examples of TV sets can be found, but TV sets only became widely owned in the 1950s and 1960s. In the United States, for instance, less than 10% of households had TV sets at the beginning of the 1950s, but by the end of the decade, number was over 80% (www.tvhistory.tv8
Many of the Japanese firms in the television industry have long histories with television and related technologies, as shown in Table 4-1, below. A number of Japanese firms, including Toshiba, Panasonic, and Sharp, were active in black and white TV in the 1950s. The first color CRT was first developed by RCA in 1956, but Toshiba was quick to catch up, building one in 1959 (Nikkei BP, 2004 (Senryaku hen); Nikkei BP, 2007 (OLED hen)). Several of the firms introduced color TVs in 1960. Sony refused to use the shadow-mask color CRT technology that was adopted by the other manufacturers; after a failed earlier attempt, Sony successfully developed Trinitron CRT technology in 1968 (Jojima et al, 2006).
).
8
Note to event timeline: Panasonic was formerly known as Matsushita. MEI and MEW belonged to the Matsushita Group. Matsushita Electric Industry (MEI) was the central firm in the group; Matsushita Electric Works (MEW) was a Joint Venture with Philips making picture tubes, formed in 1952 and dissolved in 2001.
Some of the television set manufacturers had a CRT production capability, but a number did not. CRT production was capital intensive. Many firms considered the CRT to be a key device, i.e., one that gave the maker opportunities for differentiation or cost leadership, in the television business. However, a number of firms never made the investment. JVC, Pioneer, Sanyo, and Sharp did not develop their own CRT production capability9
The coming of color TV in the 1960s was a major technological change, however the combination of CRT technology and analog broadcasting remained stable until the late 1990s. There were some technological developments relating to television, but most of the new technologies had to do with components connected to the television, such as set top boxes, video recorders and players.
.
Other Players in the TV Set Industry
Korean firms Samsung and LG have invested in flat panel technologies and have grown their standing in the television business over the last ten years. Korean firms had historic relationships with Japanese firms, including joint ventures and technology transfers. Samsung and NEC established Samsung SDI as a joint venture to produce
9
Source: In person anonymous interviews, dates: November 4, 2008; March 19, 27, 2009.
CRTs in 1969 (Sangyo Times, 2002). LG and Hitachi set up a similar Joint Venture in 1974 (Sangyo Times, 2002).
These firms began LCD R&D efforts many years behind their Japanese
counterparts, and entered into TFT-LCD production after the market had begun to grow through the laptop computer application. Samsung began R&D on LCDs in 1984 and LG in 1987 (Sangyo Times, 1994). Samsung built a TFT-LCD pilot line in 1991 and its first mass LCD production line in 1993 (Sangyo Times, 1994). LG began mass-producing TFT-LCDs for laptops in 1995 (Sangyo Times, 1995).
Samsung and LG have grown to become two of the largest LCD producers. Samsung has grown to become respected for its advance display research and
development capabilities, technological prowess in manufacturing flat panel displays, and financial strength that has allowed it to make bold investments in LCD manufacturing facilities. Both firms were also CRT-TV producers and their progression of product applications has been similar to that of other firms in the industry.
Taiwan is home to a number of large LCD producers. Taiwanese firms gained their initial LCD capabilities primarily through technology transfers with Japanese firms. Most of the Taiwanese LCD producers are related to computer manufacturers. Unlike many of the Korean and Japanese firms, these producers do not belong to groups with well-known consumer electronics companies. However, their panels are used by a number of TV set manufacturers including famous companies and others.
Several European firms also have long TV set development and production histories. Two have long been major global players: Philips and Thomson. Philips has
long been involved with Asian firms. Matsushita Electronic Works, for instance, was set up as a Joint Venture between Philips and Matsushita to produce CRTs in 1952. Philips later entered into joint ventures on LCD with Hoshiden and LG. Thomson is a French company that purchased the consumer electronics businesses of RCA and GE from General Electric in 1987 (Dow Jones News Service, 1987). In 2004, it set up a joint venture with Chinese firm TCL, and moved its television manufacturing operations to the new firm TTE (Chiu, 2004). Since then Thomson has reduced its stake in the joint venture and is reducing its involvement with consumer electronics in general (Palenchar & Smith, 2007). Both firms had large worldwide market shares in the past, but have been reducing their exposure to consumer television markets more recently.
Changes in the Television Set Industry
The Television set industry experienced only minor, gradual change between the introduction of color TV in the 1960s and the late 1990s when digitalization and new display technologies came onto the scene. There were many years of growth in the industry with no discontinuous technological change during this period. With increasing incomes in much of the world and improvements in production methods, the relative cost of televisions went down for consumers worldwide over the period. Chart 4-1 below depicts the size of the global TV set market. In 1997, the global market was nearly 140 million sets.