Sony and Samsung, two of the world's largest TV makers, have begunenforcing minimum prices on their sets, in an effort to aidbrick-and-mortar retailers and improve margins in the cutthroatHDTV business. Both Samsung and Sony began enforcing the new policy last month, according to The Wall Street Journal . The companies hope the move will stop the slide of HDTV prices,which have fallen 15 percent over the last two years to an averageselling price of $545. In fact, the strategy takes a page out of Apple's playbook, as theiPod maker has strict rules that restrict the prices at which thecompany's products can be sold. |
Apple's policies with third-partyresellers help to ensure that Apple can maintain its margins. Inits last holiday quarter , Apple reported reported gross margins of 47.4 percent. Sony had previously set strict minimum prices for products like itsPlayStation videogame consoles and Handycam camcorders, butenforcing minimum prices on HDTVs is a new policy that industrywatchers say could pose a risk. Because Sony is only joined bySamsung in this strategy, competitors like Panasonic, Sharp and LGcould see their sales grow through continued steep discounts atonline retailers like Amazon.
Low margins in the struggling HDTV business have had a significanteffect, prompting Samsung to spin off its LCD manufacturing business into a separate company in April.Officials at Samsung hope the separate LCD business will merge withSamsung Mobile Display and become more competitive going forward. Sharp was also compelled to sell a 10 percent share in its struggling LCD business to device assembler Foxconn inMarch, after seeing the largest losses in the company's 99-yearhistory. The deal bought Foxconn $808 million worth of shares inSharp Corp., which both companies hope will help create demand forproducts from Sharp's state-of-the-art LCD factory in Sakai, Japan. Industry watchers have speculated that the partnership betweenFoxconn and Sharp could be a strategic move by both companies to attempt to produce panels for Apple's rumoredtelevision set.
It has been suggested that Apple could beinterested in using Sharp's technology to produce Indium GalliumZinc Oxide (IGZO) panels for an anticipated television set. Rumors of an Apple television have continued to pick up steam sincelast year, when biographer Walter Isaacson revealed that Appleco-founder Steve Jobs told him he felt he had figured out the secret to a simpler HDTV. Jobsindicated to Isaacson that he "wanted to do for television setswhat he had done fro computers, music players and phones: make themsimple and elegant." Apple's ability to sell millions of products at marginsconsiderably higher than its competition has been cited as one ofthe main reasons the company could shake up the strugglingtelevision market. And one analysis issued last week suggested thatan Apple television could double the annual spending of the average U.S.
household on Appleproducts to $888 by the year 2015.
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