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The Honolulu Advertiser
Posted on: Sunday, March 19, 2006

Japan dominates market for flat-panel televisions

By YURI KAGEYAMA
Associated Press

Tomoo Yoneta, manager of Yodobashi Camera Co., speaking about TV sales at his store in Tokyo's Akihabara electronics district, says he expects solid sales to continue for some time: "Japanese con-sumers feel products are more reliable if they're made in Japan."

ITSUO INOUYE | Associated Press

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TOKYO — Just five years ago, Japan's electronics makers were in a sorry state. Profits were sinking as less-expensive Asian rivals grabbed market share — and prices for everything from computer chips to DVD players dropped.

These days, they've found a savior: the flat-panel TV.

Big names such as Panasonic, Sharp and Sony barely are able to keep up with demand as millions of consumers around the world junk their bulky cathode-ray-tube sets for sleek and thin TVs that feature large, cinema-quality displays.

As screens get bigger and bigger, so do price tags and profits.

The new sets helped Panasonic parent Matsushita Electric Industrial Co.'s profits jump 39 percent in the October-December quarter, while flat-panel sales helped drive Sharp's earnings up 26 percent during the same period.

Sony Corp., which until recently lagged behind its TV rivals, posted a 17.5 percent improvement after its liquid-crystal displays sold briskly over the holidays. Now, it's forecasting a profit for the full fiscal year ending March 31, reversing a previous prediction for a loss.

The switch in TV technology is an opportunity that only comes once in several decades, said Fumio Ohtsubo, Matsushita's incoming president.

Matsushita is the world leader in plasma TVs, while Sony has surged from behind to become the world leader in the other major technology, LCD TVs, overtaking Sharp Corp., according to DisplaySearch, a unit of the market research firm NPD Group.

"We have been a big success because we chose early on to focus on and invest in plasma display panels," said Masaaki Fujita, director of Matsushita's plasma display panel TV business. "People are really moved when they see the quality of the images in our TVs."

This isn't the first time the TV has lifted Japan's fortunes. In the 1960s and early 1970s, Matsu-shita and Sony rose to global prominence largely through booming sales of their reliable, inexpensive televisions.

Now, once again, Japanese electronics companies are proving through flat-panel TVs that they can deliver both quality and value — not unlike automakers Toyota Motor Corp. and Honda Motor Co., said Yuichi Ishida, analyst with Mizuho Investors Securities.

"Japanese people are notorious for being picky about quality, and so Japanese electronics makers are getting tested in the toughest market in the world," Ishida said. "That's why they gain that competitive edge."

Well-to-do shoppers like Yoshiki Inoue, recently seen strolling through a sprawling store in downtown Tokyo, aren't looking for bargains but for quality, even for status symbols, and they're willing to pay more for brand power.

"I buy what I like that fits my budget," said Inoue, looking at an $8,500 Panasonic 65-inch plasma TV. "I have to feel that the products are good."

Inoue, 58, who runs his own construction business, says he isn't dead set against non-Japanese brands such as Samsung Electronics Co. of South Korea. It's just that he hasn't seen anything from them so far that he's liked, he said.

The results are showing up in the electronic makers' bottom and top lines.

In the fourth quarter of last year, Matsushita's profits jumped to $424 million, largely on the back of booming flat-panel TV sales, as quarterly sales jumped 4 percent to $20.6 billion.

Growing sales in flat-panel helped send Sharp's profits up $226 million. Sales for the quarter rose 12.5 percent to $6.3 billion.

Unlike Sharp and Matsushita, Sony was an exception among the Japanese in falling behind in flat-panel TVs, which proved disastrous for its books.

Its fortunes have improved dramatically since it started selling LCD TVs developed and made under a joint venture with Samsung.

Especially telling of Sony's brand power is that it is beating Samsung in global share of LCD TVs.

Sony reported a $1.4 billion profit for the quarter ended Dec. 31, up 17.5 percent from the same period a year ago, as its LCD TVs sold briskly during Christmas.