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Glasses-Free 3-D TV Sales Miss Expectations in Initial Month, Toshiba Says

Toshiba Corp., the first maker of 3-D televisions that don’t require viewers to wear special glasses, sold fewer than half the sets it targeted in the initial month of sales.

Toshiba, which began offering the TVs late in December, sold 500 of the 20-inch model at about 240,000 yen ($2,940) each, and even fewer of the cheaper 12-inch set, Masaaki Osumi, president of Toshiba’s Visual Products Company, said in an interview yesterday. The Tokyo-based company, second in Japan in TV sales, had planned to sell 1,000 units of each model a month.

The slower-than-anticipated debut indicates the company needs to offer larger sets to appeal to consumers, Osumi said. Toshiba joins Samsung Electronics Co. and Sony Corp., which began selling their own 3-D models last year, in saying demand has lagged behind expectations, damping optimism consumers will embrace the technology and help TV makers revive profits.

“What the numbers say to me is that if you offer bigger sets, you get a better, more positive reaction,” said the 56- year old executive.

Sony Chief Financial Officer Masaru Kato said in October that sales of 3-D sets, projected to account for 10 percent of the company’s 25 million annual TV sales target, were trailing previous expectations. Samsung, the world’s largest TV maker, said last month that demand for displays used in 3-D sets were “relatively weak.”

Overcoming ‘Mountain’

Engineers at Toshiba, which displayed 56-inch and 65-inch prototypes at last month’s International Consumer Electronics Show in Las Vegas, are racing to overcome a “mountain” of technical problems to market large-screen models to consumers in the second half of the year, Osumi said.

While the 3-D TVs from Samsung, Sony, and Panasonic Corp. use electronic glasses that flicker between the left and right eyes to create the illusion of depth, Toshiba’s technology uses a sheet on the TV screen to angle pictures so that each eye sees a different image. Engineers are having difficulty making the effect work on bigger screens, especially when viewed from the side, Osumi said.

“It’s possible to do this on small screens but when it gets bigger you have to either give up on quality or go with glasses,” said Atul Goyal, a senior analyst at CLSA Asia- Pacific Markets in Singapore. “Samsung and others, they don’t want to push it because they know the technology is not ready.”

Cheaper Models

Shares of Toshiba were unchanged at 514 yen as of 2:20 p.m. on the Tokyo Stock Exchange.

Osumi aims to double the company’s TV sales to 30 million units in the next three years, he said. Toshiba’s TV business will account for about 11 percent of the overall 6.6 trillion yen in sales this year, according to David Rubenstein, a Tokyo- based analyst at MF Global FXA Securities Ltd.

Toshiba isn’t betting its TV business entirely on the success of 3-D. The maker of Regza-brand sets is also launching cheaper, flat-screen models aimed at consumers in developing countries including China, India, and Russia.

Toshiba plans to start production of TVs in India with a local partner this summer, Osumi said. Lower-end sets sold to customers in emerging markets will probably account for half of the TVs Toshiba sells by the year ending March 2014, up from about 15 percent now, he said.

“The price points are lower in those markets, but the margins are three times as high,” said Osumi, who spent eight years as general manager for consumer electronics in Singapore.

Glasses-free 3-D TVs will go on sale in Japan, North America and Europe and the company aims to raise sales to 50,000 units a month after the launch of larger-screen models, Osumi said, declining to specify when the sets would be introduced or how much they would cost.

“There are a lot hurdles ahead,” Osumi. “But make no mistake, we think we can sell these things.”

To contact the reporters on this story: Jason Clenfield in Tokyo at jclenfield@bloomberg.net; Maki Shiraki in Tokyo at Mshiraki1@bloomberg.net.

To contact the editor responsible for this story: Young-Sam Cho at ycho2@bloomberg.net.

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