What brand of TV would you buy right now? You have only 10 seconds to answer, no Googling or Lifelines.
Would it likely be SHARP, SONY, LG, VIZIO, or SAMSUNG? Can you articulate a good reason, apart from price, to pick one of the above over the others? Do you remember in the years 1999-2000 when people were paying up to $10,000 for large plasma-screen TV’s? I do and I was not one of them.
Do we even know who makes these magnificent sports-bar sized, YUGE in fact, flat screens ? Keep reading.
WSJ and Useful Business Information
Yesterday morning, I was surprised and honored with the opportunity to drive one of my best friends since childhood to the ER for what turned out to be kidney stones and, thankfully, not an emergency appendectomy. We are both 49. He works in the financial industry and reads the WSJ every day. Despite self-diagnosing his pain level at 15 on a 1-10 scale, he brought his WSJ with him to the ER, which I immediately began reading after he got his morphine IV and fell asleep.
It turns out, I really enjoy the WSJ, I just don’t make time for it (or blogging) lately with a busy trial, litigation and trademark prosecution caseload. Pretty much every article was useful to inform of world events, business realities, etc. I was particularly drawn to an article entitled, “TV Snag Blunts Foxxconn’sPlan for Sharp,” which discussed how SHARP, a premier Japanese electronics maker with a 104-year history, has been bought by Foxconn (Taiwan).
Foxconn is known for contract-manufacturing of well-known brands Apple, SONY and Nintendo. During its recent financial difficulties which apparently led to the sale to Foxconn, SHARP sold off regional rights to sell TV’s under the SHARP brand to competitors. Despite its new ownership of the well-known SHARP company and (most of the) brand, Foxconn did not acquire rights to sell SHARP TV’s in the U.S. That right is held by its rival, Chinese based Hisense International, which licensed the right to sell SHARP TV’s in the U.S. until the year 2020.
Low Margin TV Profits
The WSJ article goes on to state that companies like to hold on to lower margin TV sales because it keeps their name prominently displayed in homes across the world where families watch TV together. A loss leader perhaps (?), not really, but similar. Despite these alleged low margins, there is value somewhere because Hisense is (allegedly) not willing to sell off its 3-4 year term to Foxconn (at any price?). Sounds like good posturing by Hisense. We’ll see.
Who’s on First?
Are you confused yet? Hisense, a competitor to SHARP, wants to maintain the SHARP branded TV sales in the U.S. at a low margin in order to build its competitor’s brand? Maybe Hisense is using marketing packets in the product units to direct customers to its other products?
Surely Hisense’s SHARP TV’s sold in the U.S. are required to adhere to certainly QC standards, as required by the Lanham Act. Could Hisense sabotage the SHARP brand by producing an inferior product? Consumers would likely just buy new TV’s instead of seeking warranty repairs. Where is that damned receipt? I see a lot of 2-3 year old flat screens on the side of the street for trash pick-up when walking the dog. Remember, this is the throw-away generation.
Essentially a brand says to you (or you say to yourself), “I liked that last experience,” and you see no need to reinvent the wheel or to spend excessive time researching what should be a moot point. If your last ACME product lasted for many years and performed as expected (or better), and the customer service was good, then you come back to ACME, right, just like Wiley Coyote? The brand is supposed to help us make good consumer decisions based upon past experiences and the reputations of the companies involved.
The notion is that a brand represents a single company that achieved success based upon core values and organic growth, such as KOHLER‘s midwestern Wisconsin values, hard work ethic, etc.. Kohler is now a worldwide company having acquired dozens of other brands, built world-class golf courses, etc. They have the bold look.
However, as shown by this article, competitors are making and selling products under each other’s brands. Can you imagine your grandfather finding out that his Chevrolet trucks were actually manufactured by Ford, or vice versa?
In the electronics industry, a short product life cycle, and / or rapid technological advancement and resultant product obsolescence make it so that we don’t expect big purchases to last 10-20 years anymore. The differences, if known or knowable by a consumer, in product quality and performance are so minor that price has become the main consideration.
Of all the above brands, weren’t we at one time led to believe that SONY was always a premium product? Could that still be true for an electronics industry that has moved so far beyond selling tape decks, receivers, turntables and furniture sized speakers? Ah, the 1970’s and 1980’s, good times indeed, spinning records and dubbing vinyl (or later CD’s) to Maxell and TDK cassettes for in vehicle use and / or sharing (with close friends only).
Have TV’s Become Fungible?
So what is the point of this blog? Well, perhaps TV’s have become fungible or almost fungible. Have brands (in electronics) become illusory facades of by-gone beliefs that a brand of products were designed and built on common principles, common property and under the same management?
If this is true, then so-called “venture capital” would start a new TV brand and sell it in Sam’s, Wal-Mart, Costco, etc. without a known brand name and under-cutting the big brands with a similar or better warranty, right? Well, that ain’t happening, is it? Why not? Would any of those retailers make a deal to allow such sales on their valuable floor space? Would you buy the ACME TV next to the SONY, SHARP, LG, or SAMSUMG? Would you by the Hisense?