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The ultimate rewards for the winners in the global TV wars could be vast, as viewers upgrade their old cathode-ray tube sets to flat panels and as broadcasters gradually shift from analog broadcasting to higher-quality digital. Japan has already begun digital broadcasting, and all broadcasts will be digital by mid-2011. In the U.S., every new TV will be required to come with a digital tuner by July 2007, and in Germany digital broadcasts will commence in time for the 2006 World Cup soccer tournament.
During this sea change, Sharp intends to use Aquos as the product that burnishes its reputation as a top-tier global brand. International business already accounts for about half of Sharp's revenues, with buoyant sales of its high-end TVs in the U.S. and Europe driving those gains. The company has also benefited abroad from the launch last fall of a worldwide branding campaign, including ads produced by Wieden+Kennedy, an agency that's famous for managing Nike's advertising. Since the spots began airing, brand recognition for Aquos in the U.S., according to market-research surveys, has jumped from 30% to 57%, say Sharp executives. Sharp's global TV sales have risen 20%, to nearly $4 billion, and the company expects an additional 30% increase this year.
As limping behemoths like Sony have discovered, staying ahead in electronics is a relentless challenge. A host of new technologies could disrupt LCD's emergence just as easily as LCD has begun to supplant cathode-ray tubes. Even against existing technologies, Sharp faces a formidable battle. Junzo Masuda, director of iSuppli, a market-research firm in Kyoto, says the real test is how Sharp's big-screen TVs ultimately fare against plasma display panels (PDPs), the dominant type of large-screen, flat-panel displays. Sharp may have better technology, but Masuda wonders whether the company can reduce costs enough to defeat the makers of PDP sets, which are significantly cheaper. "There is a real price battle going on," says Masuda, as Sharp jockeys for position. Sharp executives downplay such claims, saying the market is big enough for sellers of both types of large-screen TVs to prosper.
However the contest between PDP and LCD plays out, Machida and his team are--for now--relishing their moment in the sun. Hisakazu Torii, a director of research at DisplaySearch, a consultancy in Tokyo, says Sharp's foresight in LCDs has completely transformed the TV business and Sharp's position in the corporate landscape. "Sharp can sell its TVs for $200 to $300 more than Sony, which is a total reversal of the old situation," he says. Sharp's international-business director, Toshishige Hamano, agrees, saying, "In the long history of the electronics market, all companies have their moment of prime time. And for Sharp, I think this is our moment." --With reporting by Jamie Miyazaki/Tokyo and Michiko Toyama/Osaka