The HDTV Fallout

Could the long-awaited HDTV shakeout finally be happening? Once considered one of the most technologically savvy consumer electronics companies in the world, Royal Philips Electronics says it’s getting out of the TV-making business in the U.S. and Canada. Philips essentially is ceding its business to Japan’s Funai Electric Co. for a song. In exchange for unspecified royalty payments, Funai will get to sell its sets under both the Philips and Magnavox brands. Philips will retain the rights to its brand in its European stronghold and in developing markets. It’s another sign that the consumer should do a little research before buying to avoid unpleasant surprises once getting the set home. Indeed, the Funai licensing agreement poses some interesting questions about whether the implied quality that comes from buying a brand-name set translates into the real thing. Unrelenting pricing pressure and weaker-than-expected TV sales so far this year are forcing manufacturers to churn out a slew of sets with major components made by other companies. Pioneer, Samsung and Sony reportedly are outsourcing production of smaller models to third-parties, while LG Electronics and other manufacturers are purchasing LCD screens from Sharp. The industry consolidation likely will accelerate this year as the biggest manufacturers—Panasonic, Samsung, Sony and Sharp launch new sets at competitive prices to compete with Vizio, Westinghouse and Olevia brands that have sold well at warehouse clubs and to cost-conscious consumers. Squeezed in the middle are such brands as Hitachi, Toshiba and Mitsubishi.

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