Note: Electronics sector does not include Sony’s game business. Source: Sony Annual Reports.
Firm Level Analysis – Tier Two Focal Firms
Hitachi
Hitachi is large, highly diversified firm known as a technological powerhouse. Japanese observers consider the firm to have top-notch technological development capabilities but accompanied by a bureaucratic management culture.
Hitachi has long been involved with the consumer television set market. The firm began producing TV sets in 1956 (Hiramoto, 1994). It also started LCD development early. Although its first formally announced project began in 1971, it was performing R&D prior to that time (Numagami, 1999).
Along the progression of LCD technology, Hitachi was at or near the forefront of development from the 1970s until around the year 2002, when the firm stopped investing in new plants on its own. Hitachi frequently supplied other firms with LCD panels for use in products applications it didn’t make itself (e.g., watches and calculators) as well as applications it did not have major market share in (e.g., laptops). Hitachi invented and holds patents on In Plane Switching (IPS) mode for LCD; this technology has a strong reputation based on its wide viewing angle and speed (See Chapter three for further detail on IPS). It is preferred by numerous Japanese television set producers.
In addition to being a key player in LCD, Hitachi was also an early developer of PDP, beginning R&D in 1970 and developing grayscale PDP technology in 1973 (Hitachi web site5
5http://www.hitachi.co.jp/New/cnews/9808/0820.html
Unlike most other firms, Hitachi invested in both PDP production and LCD production. Hitachi built its PDP production through a JV with Fujitsu, and built its LCD production capability on its own (this capability was later moved to a JV). Although highly respected for its technology in both cases, an informant from a competing firm suggested Hitachi did not invest enough in building production for either PDP or LCD, and as a consequence was unable to fully exploit its capability in either.
In addition to PDP and a-Si LCD, Hitachi has performed R&D on a wide variety of other display technologies including LTPS LCD, LCOS, FLCD, OLED, FED and DLP. Although not all of these could be considered suitable for television applications, this still indicates Hitachi’s portfolio of technology options was broad and included many competing technologies.
Evidence of Option-like investments
Hitachi started basic R&D into LCDs and PDPs around the same time, as shown in the Hitachi option ladder in Figure 5-6 below. However, in the case of LCD, Hitachi invested in a rapid series of increasingly expensive higher commitment options,
beginning TFT-LCD production early on compared to other firms (see the following chapter for timing comparison between firms). The company then paused for a number of years before investing in the more expensive, higher volume production lines.
PDP efforts at Hitachi, on the other hand, exhibited a long period of limited and inconsistent investment in basic R&D, followed by a series of larger investments, including establishment of production under the FHP JV with Fujitsu. Although the options paths Hitachi followed for LCD and PDP were very different, by the time the flat
panel TV market was becoming significant Hitachi had considerable positions in both LCD and PDP technologies. Investments in PDP were primarily aimed at TV
applications, although Hitachi also sold PDP monitors. Early LCD production was not focused on TVs, with the exception of the IPS Alpha JV and its generation 6 line (see Hitachi Panel Production and Lines, Figure 5-7).
In addition to a-Si LCD and PDP display technologies, Hitachi also invested in LTPS and LCOS. LTPS LCDs are more difficult to produce than a-Si at the same time they offer more opportunities to differentiate. Japanese firms have invested in this technology to insulate themselves from swings in the crystal cycle for a-Si LCD. Investment in LTPS was a way for Hitachi to increase the option value on existing LCD production infrastructure up to the fifth generation.6
Hitachi’s OLED efforts are limited to R&D and do not exhibit high levels of investment. Although on the increase, Hitachi’s OLED patent output is much lower than that for LCD (see Chart 5-7). Recently, the cost of Hitachi’s OLED development has been reduced through moving the effort to a joint venture. Given the suitability of LTPS production for use in AM-OLEDs, this effort may increase the option value of existing LTPS production capabilities.
Hitachi produced CRT based RP TVs; LCOS can be considered a way to continue inside the RP TV space with an
improved display technology, thereby increasing the value of past investments in RP TV production and distribution.
6 Subsequent generations are not suitable for LTPS adaptation. Source: In person