Once upon a time, Japanese companies like Sony, Panasonic, Toshiba and Sharp were the giants of the consumer electronics business. Years of ascendance of Samsung, LG and now Chinese manufacturers has resulted in a significantly shrinking consumer-electronics market for the premium Japanese brands.
An analysis of DTC’s historical worldwide market-share estimates for digital TVs is a case in point. In 2008, the four biggest Japanese brands (Toshiba, Sharp, Sony and Panasonic) owned 35% of the DTV market share. Today, they account for only about 11%. (Note: In this analysis, DTC calculates the market share without Sharp and Toshiba for our estimated 2016 DTV shipments as the Sharp TV business is now owned by Hisense, and Compal now licenses and markets the Toshiba brand.)
These brands haven’t fared any better in the smartphone market, which is dominated by Apple and Samsung. The four brands combined took 11% of the global smartphone market in 2008, and DTC estimates they will represent only about 3% in 2016.
Although these brands are experiencing different levels of consumer-electronics shrinkage, most are in retreat. Panasonic, following huge losses in 2013, scaled down the mobile phone and TV operations and began shifting its focus to home appliances and automobile-related products. Sony, now concentrating on higher-margin products, once was one of the most valuable CE brands in the world. And in 2014, Sony Corporation had a large organization restructure which impacted its TV business.
These Japanese companies should continue to be consumer electronic leaders, given their technological ability and overall scale. But they are not. Why?
Samsung and LG started built market share outside of South Korea by selling lower-end products, ultimately increased their brand recognition. They later put R&D dollars into offering higher-quality products. Today, they are now the giants of the global CE market.
Chinese brands, such as Hisense, are following in the footsteps of the South Korean brands as they reach outside of their borders with low-price products that help them gain brand recognition and a space on big-box stores’ retail shelves. The purchase of a respected international brand (Sharp) by Hisense may help to convert Hisense to more than a low-end brand in a shorter amount of time.
Look for companies like Sony and Panasonic to mostly compete in the high-end of TV sales, assuming they stay in the business. Otherwise, they’ll likely join the ranks for RCA, Toshiba, Philips and JVC by licensing out their brands to squeeze the last value out of their brands.