Message from the President Jun.2007

a monthly magazine for our employee Jun.2007

Thinking about the Market
- What We Can Learn from Flat-Panel TVs

The newspapers tell us that the per household take-up rate of flat-panel TVs in Japan reached 30 percent in March this year. Predictions are that given a current total world TV market of approximately 200 million, the proportion of flat-panel TVs will outstrip cathode-ray-tube TVs this year or next. Some five years ago, when flat-panel TVs first began coming on to the market, we were told that if the price didn’t drop below \10,000 per screen inch, their uptake would be poor, but in some quarters it’s now said that the competition to achieve \1,000 per screen inch has been engaged. For the consumer, it’s pleasing to be able to buy high-quality products cheaply, but for the people involved in development and production, the competition is fierce and bitter. At the same time that I’m amazed by the cheapness of the prices of a whole range of products every time I go to an electrical discount store, I find myself thinking about how the engineers and manufacturers must feel.

There’s a famous story about a certain Japanese manufacturer in the latter half of the 1990s, when there was nothing but cathode-ray-tube TVs, that held the top global market share of a product known as a flat-screen TV (a TV where the surface of the cathode ray tube is flat), but moved into flat-panel TVs too late. The reason is supposedly that in developing the panel that’s the core component of the flat-panel TV, the manufacturer judged liquid crystals and plasma to be transitional rather than the most likely technologies, and put all their effort into developing a panel that was a step ahead, using organic electroluminescence, or EL. The reality, however, is that in no time at all liquid crystal and plasma TVs had overtaken the market.

This case reminds us how difficult it can be to predict technological trends, market changes and consumer trends. What we should learn from this example, however, is not that it’s difficult to predict the future, but that it can be dreadful to experience success.

I’m sure that holding the top share of the global market in the latter half of the 1990s was in itself a trap. The manufacturer no doubt thought that as it held the top market share, there was no way it could lose to another manufacturer; that because it was at the leading edge of cathode-ray-tube TVs, being front-runner in next-generation TVs was a foregone conclusion; and that as it was unlikely that low-price liquid crystal or plasma was readily achievable, all it needed to do was storm the market with a new technology that surpassed liquid crystal and plasma before those technologies became price competitive.

Or so I could surmise, but it’s not uncommon that the greater one’s experience of success, the more that experience of success obscures one’s view of one’s surroundings. For example, manufacturers who braved new markets with liquid crystal and plasma may have been gambling on the ongoing survival of their companies. When an entire company shares a sense of the risk that if a product isn’t a hit, the company may fail, people and companies find extraordinary strength. Put another way, just because you are the best now is no guarantee you’ll be the best in the future.

It must be pointed out, though, that the manufacturer that was slow to get into flat-panel TVs didn’t remain defeated. The company formed a partnership with a South Korean manufacturer to produce liquid crystal panels, and has rallied to such an extent that last year it became No. 2 in the world market. At the same time, it has announced it’ll launch the sale of its favored organic EL super-flat panel TVs next year. Or, there are companies that are preparing to launch an offensive with the new Surface-conduction Electron-emitter Display (SED) technology. In every sense, winners and losers are changing places and positions, and we can expect ever fiercer and more competition to continue.

But I’m not only talking about other people. As a company, we can’t afford to lose our heads over nor luxuriate in our position as top company. We must coolly and constantly keep a lookout for changes in the market, and enhance our own capabilities.
I would comment that from time to time when I’m conducting new graduate interviews I hear things like, “One day I’d like to design a motor vehicle,” or “I want to work in the development of liquid crystal TVs.” When I pursue the topics further, however, the reasons I’m given are because Japan’s automobile manufacturers are winning on the world market, or because liquid crystal TVs sell well.

Human beings always have a tendency to think mostly of things that are happening before their eyes in the moment and that they can see with their own eyes. We need to be aware that making the effort to turn our eyes to the future and not just the present, and striving to see what we ourselves can’t see, is what gets good results. 

June, 2007