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TV price war looms as consumers hesitate

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TVs are about to get cheaper.

Sony Corp. gave up Friday on a goal to profit from televisions this fiscal year, and Panasonic Corp. forecast price drops will deepen this quarter. Earlier, Samsung Electronics Co. predicted "severe" competition for the year-end season, echoing comments from LG Electronics Inc. a day earlier.

Projections from the world’s four largest TV makers signal the industry will fail to capitalize on the biggest sales quarter of the year, with some analysts predicting price declines of as much as 25 percent in 2010. Companies from Microsoft Corp. to Intel Corp. are increasingly counting on corporate demand as consumers are reluctant to shop.

"There’s going to be a price war this Christmas season, and there’s no way around that," said Tsutomu Yamada, a market analyst at kabu.com Securities Co. in Tokyo. "The whole strategy this year is ‘sell earlier and sell for less.’ That makes life miserable for the manufacturers."

TV makers were betting earlier this year that pricier LED TVs with brighter screens or 3-D sets would keep prices from falling the typical 20 percent to 25 percent annually, according to Atul Goyal, a senior research analyst at CLSA Asia-Pacific Markets in Singapore. That bet hasn’t materialized as pessimism has increased recently and shoppers in the U.S. aren’t willing to pay extra for higher quality sets.

"Consumers are saying, ‘I like the product, but I don’t want to pay a 30 percent premium to the other one. I’ll wait,’" Goyal said. "Prices will have to come down. That’s a given."

U.S. retailers such as Target Corp. and Wal-Mart Stores Inc. are sweetening discounts ahead of the holiday season to move merchandise as joblessness hovers near a 26-year high. Target, the second-biggest discount retailer behind Walmart, said this month it would lower prices on more than 1,000 toys to attract shoppers. Walmart responded with its own discounts.

Sony Chief Financial Officer Masaru Kato said Friday the maker of Bravia TVs is forecasting a loss from the business this fiscal year, and the company is bracing for "harsh" competition.

Sales of 3-D sets, projected to account for 10 percent of the 25 million annual TV target, are trailing Sony’s previous expectations, he said.

 

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