Sharp's Share Falls

Kenji Hall

Should Sharp be worried? The latest iSuppli ranking for the fourth quarter of 2006 showed Sharp dropping to fourth place with just 11.4% of the global LCD TV market. (Samsung snagged the No. 1 spot.) The data marked a steady erosion from the first quarter last year when the Osaka company led the pack with 15.2%.

What's going on here? One interpretation is that Sharp's TVs are no longer far superior to the competition. "While its market share had been declining, Sharp had managed to maintain a considerable distance from its competitors," said iSuppli TV analyst Riddhi Patel. "However, this is no longer the case.”Another way of looking at it is, price-conscious buyers can now buy a decent LCD TV at a steep discount to Sharp's offering.

Truth is, Sharp's declining market share is nothing new. Back in October, I wrote about how Sharp's share has gone from 86% in 2000 to a fraction of that now. It was bound to happen, given that the market has expanded exponentially since those early flat-TV days and that there are now dozens of top and discount brands to choose from. In fact, Sharp is selling more LCD TVs than ever and continues to expand its manufacturing capacity.

You also have to consider that the highest-volume LCD-TV size in North America in the fourth quarter was 32-inch screens. Sharp has begun outsourcing TVs in those sizes to Taiwanese makers so it could focus instead on the larger sizes, 37-inches and up. That's where the bigger profit margins are being made. Anything smaller is a commodity.

Sharp execs are the first to admit that they need to take drastic action. They're responding by spending big money on marketing to the tune of more than $170 million this fiscal year. That's exactly what they should be doing. Some might say they waited too long to act. Indeed, it only takes a quick glance at the overall 2006 rankings to conclude that Sharp is losing out the marketing muscle of its bigger rivals. Here are last year's numbers.

2006 Total 2006 Rank
Samsung 14.64% 1
Philips 13.41% 2
Sharp 13.33% 3
Sony 12.74% 4
LG Electronics 7.64% 5

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