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Sony Leading, Not Dominating, TV Field

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Times Staff Writer

Sony Corp. has regained its spot as the nation’s top manufacturer of television sets, but the electronics and entertainment giant is finding that being No. 1 just isn’t what it used to be.

For 30 years, Sony’s Trinitron sets defined the state of the art for color televisions, and Sony held as much as 50% of the high-end market some years. But as the popularity of flat-panel TVs took off in the late 1990s, the Japanese company was slow to embrace the technology, raising questions about whether it could compete in a new era of home entertainment.

“Everybody recognizes we were late to that party,” said Stan Glasgow, president of Sony Electronics Inc.

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In its effort to catch up, Sony in 2004 joined with archrival Samsung Electronics Co. to build a liquid crystal display plant in South Korea to make the glass for the TV sets. A second $2-billion plant is expected to start operations in fall 2007. It will enable both companies to increase production.

Sony will need the added capacity for its Bravia line of TVs, which were introduced last September and quickly became the best-selling liquid crystal display TV. In an intensely competitive industry crowded by low-cost manufacturers and computer makers, though, Sony commands a modest 28% share of the overall market, according to research firm NPD Group.

That’s still good enough for Sony to start touting itself as the LCD leader, which the company has done in earnest in its advertising. The campaign is intended not only to pitch Bravia TVs, analysts said, but also to demonstrate Sony’s reemergence as a technological leader.

Although famous for its Betamax video recorders and Walkman portable music devices, Sony has faltered in recent years as rivals such as Apple Computer Inc. invade niches it once dominated.

“It’s about positioning for the holiday and positioning for the long term,” said Tamaryn Pratt, principal analyst for Quixel Research in Portland, Ore.

Pratt said sales of LCD televisions would ultimately replace old-fashioned cathode ray tube, or CRT, sets in most American homes. As prices have fallen, the sales pace has quickened. In the second quarter, 2.1 million sets were sold nationwide, more than double the 885,000 LCD TVs purchased during the same period last year. This year, Quixel projects that 10.2 million LCD TVs will be sold, up from 4.6 million sets in 2005.

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Sony won’t say what percentage of its TV sales come from the United States, the largest television market in the world.

“We’re looking for the lifeblood of the future here,” Pratt said. “That’s why we have the Sonys duking it out and all the other manufacturers are making sure they are grabbing some space in the home.”

Perception can be as important as price as shoppers get ready to make a big-screen TV purchase. Pratt said her surveys revealed that consumers were willing to buy a less-expensive, lesser-known brand for a child’s bedroom or other less-visible spot in the home. But when it comes to buying a big-screen TV for the living room, brand cachet still counts.

“We know that’s very important, this branding position,” said Pratt. “Sony does have a lot of muscle there.”

That’s also important because no single manufacturer will end up dominating the entire TV market. Different companies may emerge as leaders in particular types of digital TV technology -- or even different screen sizes, said Ross Rubin, NPD’s director of industry analysis.

“With a technology like LCD, you’ve got a lot of partnerships and quite a few commodity products in the marketplace,” Rubin said. “You’re going to continue to have a few big brands in LCD, but we’re seeing a lot of low-cost entrants from Chinese manufacturers and house brands as well. There’s room for a lot of players because over the next few years, LCD is going to strongly and aggressively cannibalize the CRT market.”

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Sony managed to claw its way back to the top by eliminating a confusing array of TV product offerings, abandoning certain businesses -- such as plasma TVs -- and focusing its development and marketing efforts behind Bravia.

The company examined the market and determined that purchasing decisions were heavily influenced by women, who were just as motivated by aesthetics as by pixel count. So Sony concentrated on design and developed features such as color bezels that frame the set in different colors so the TV fits with various room decors.

And it invested heavily in consumer education, devoting a portion of its website to explaining the differences between various TV technologies.

This summer it launched an ad campaign, “Sony’s Baseball HD Challenge,” which encouraged viewers to visit retailers and watch a few innings of a game in a side-by-side comparison of plasma and LCD TVs. That was designed to address widely held perceptions that LCD televisions are more susceptible than plasma displays to glare from fluorescent lights.

“This is a paradigm shift. People are replacing the primary sets in their homes,” said Mike Fasulo, Sony Electronics’ chief marketing officer. “This is going to be a growth opportunity for years to come.”

And as Apple demonstrated with its belated entry into the digital music market with its iPod player and iTunes Music Store, being the first mover isn’t always an advantage.

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“They do have a clear lead compared to a year ago,” said Richard Doherty, an analyst at market research firm Envisioneering Group in Seaford, N.Y. “By paring their catalog, they have leapt to the lead.”

In a sign of just how high the stakes are, Sony even took the unusual step of trash-talking the competition -- aiming mainly at personal computer manufacturers such as Dell Inc. that have adapted their PC screen technology to the living room.

“We’ve never done that before,” Glasgow said. “We released newspaper ads that said some people can find components in the cheapest possible way and assemble an LCD TV. Sony designs TVs with the brightest minds in the world. It was inferred against the Dells of the world, but we never mentioned the companies’ names.”

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dawn.chmielewski@latimes .com

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