This piece of news has been all over the Internet. What is most suprising about LPL’s financial announcement is that LPL is a very large company. In fact, it is the second largest TFT LCD manufacturer in the world in terms of production capacity, right behind Samsung. And with size, I expected the biggest guys to be at an advantage over the smaller guys when it came to profitability. I guess that’s not the case in the LCD marketplace.
I think one of the biggest contributors to LPL’s poor results is not an inventory build up, nor is it a large drop in average prices for panels. The reason why I say that is because all display manufacturers experienced these two conditions to some extent. The big reason? LPL’s inability to find out what the market wants and then to build it quickly and cheaply. LPL was the first to come out with a 13.3″ size for the notebook market. It was a 4:3 aspect ratio. Then Samsung introduced a 14.1″. I think history clearly shows who picked the right size. Then came monitors: LPL chose 18.1″ and Samsung chose 17″. Again, Samsung won. Big time. Now it’s TV time and LPL is betting large on 37″ and 42″ while Samsung has pushed forward with 40″. The winner has not yet been determined, but with the strength of the Samsung and Sony brands at the top with Westinghouse Digital at the lower-end of the price spectrum, 40″ has a lot going for it when it comes to demand for 40″ LCD TV panels coming out of S-LCD. On the other hand, LPL has CMO and AUO pushing out 42″ but nobody to take them. Yes, there is LG, Philips, Spectre, and Syntax. But compared to Sony and Samsung those brand names can’t compete, not in the US anyway.
What does the consumer want? I think if it’s a US consumer, he/she wants a Sony or a Samsung and it’s a 40″ LCD TV. The price should be a bit lower, but sub-$1999 pricing is just around the corner. If LG wants to help out its sibling LPL, it should spend some time building up the LG brand in the US. When LG started to advertise all over the place in the US, I was shocked to see some LG-branded TVs were most expensive than Sony’s! What were they thinking. Make nicely designed products that perform well and for a good price. Then the brand will grow. That’s the model that Samsung has used. In the auto industry, Hyundai is using that approach too. It is no shame to follow the leaders when it could mean fat profits or big losses.