Several PC makers have already branched out into the growing market, slapping their brand name on flat-panel televisions. Now some of the old guard of the electronics industry are jumping into the same waters, prompted in part by the idea that strong brand-name recognition will help their high-end TVs, personal video recorders and DVD players to sell.
With flat-panel TV sales booming, a range of manufacturers--including old-time electronics makers--is entering the market.
While the potential market is large, there are already several companies selling flat-panel TVs, and prices are dropping. Like the PC market, many of the entrants will ultimately be weeded out.
Westinghouse exited consumer electronics in the 1990s to concentrate on the manufacture of industrial equipment, such as parts for nuclear power plants, said Douglas Woo, president of Westinghouse Digital Electronics. But in 2002, the company created a 15-employee digital electronics unit to make televisions and similar products, with the first TV sets going on sale in November 2003. The shift came about because Westinghouse realized its name still rang positive notes with consumers, according to Woo.
"The brand had unaided recognition close to 90 percent, and in the 18-to-35 (age group) it had over 70 percent," Woo said. "There is going to be a huge turnover in the players in the TV industry."
Similarly, Polaroid licensed its name in 2002 to the Petters Group, a holding company from Minnesota, which said it would work with an Asian manufacturer to offer a line of home entertainment products under the name "Polaroid electronics." The company launched a DVD recorder-player in July last year.
Another company betting on its brand name is cell phone maker Motorola, which once manufactured cathode-ray tube sets. It announced in January that it plans to sell a range of liquid-crystal display (LCD) televisions in China, where the Motorola name has a strong identity.
From a numbers perspective, the market for high-end sets is very attractive. In 2003, only 4.1 million LCD TVs and 1.1 million plasma TVs were shipped, according to research firm DisplaySearch. In 2008, it expects LCD TV shipments to rise to 47.8 million and deliveries of plasma TVs, which are generally larger devices, to climb to 12 million.
For now, the margins are also fairly high. A 15-inch LCD TV might fetch $700 at retail while a nearly identical LCD monitor for a computer might sell for $350, even though the two products cost about the same to make, according to David Mentley, an analyst at iSuppli/Stanford Resources. At retailer Best Buy earlier this month, for example, Samsung advertised a 17-inch widescreen high-definition LCD TV for $1,199 and a 17-inch PC monitor for $479.
"They are almost double the price," Mentley said. "There is going to be a lot of price pressure."
Larger televisions, which rely more often on plasma ortechnology, can carry even higher margins.
History suggests that success won't come easy. A similar gold rush attracted , Zenith and other established brands to the emerging PC market in the 1980s. Some did well for a while: A group of Israeli entrepreneurs used low prices and the old brand to turn that company into one of the biggest PC makers in the world. Still, the ultimate winners were companies such as Dell, Gateway and Compaq, which didn't even exist before the PC came along.
Another smaller burst of euphoria took place in the late 1990s, when Salton and others came out with.
"There's no reason to think the world needs more brands," said Barry Young, a senior vice president of DisplaySearch, which analyzes the display industry. "We already have 20 brands for LCD TVs" worldwide, he added.
While cracking the market for PCs and Internet appliances proved tough, succeeding in televisions could even be tougher, because they also function as pieces of furniture.
"They (consumers) think of a TV as a more personal item, for better or worse," said Stephen Baker, an analyst at NPD Group. "Nowadays, it is really easy to build them. The big problem is everyone can build the damn things, but not everyone can sell them."
Westinghouse Digital Electronics' Woo agrees, adding that the company's brand won't be the only selling point for its products. Westinghouse has struck a partnership with Taiwan's Chi Mei Electronics, one of the larger LCD contract manufacturers, and with a number of U.S. retailers, he said.
Woo added that the Westinghouse unit won't stray too far into the budget television segments, where price competition is growing, or into the extreme segments, where the sets measure 80 inches diagonally, Woo said. It will concentrate on LCD televisions and on devices in the 26- to 30-inch range, he said. Companion products will include personal video recorders and DVD players.
The company will face competition from PC companies that are also diversifying into the TV market. Gateway became one of the first of the nontraditional TV makers to dive in when it launched a $2,999 42-inch plasma TV at the end of 2002. Within a year, it was the leading seller of plasma TVs. Last year,came out with a line of flat-panel TVs of its own.
Companies from other sectors find their way into market eased by Asian contract manufacturers, which help produce the sets that carry the big-name brands. While some flat-panel TV sellers, such as Samsung, have their own LCD and plasma-screen factories, others get their glass--or complete monitors--from Korean, Chinese or Taiwanese manufacturers such as.
These companies have had the technical ability to make TV screens and sets for a couple of years, but demand has really started to climb in the past year.
For Westinghouse and others, using contract manufacturers helps to greatly reduce the need for independent research and development or capital equipment outlays. However, it also means that the companies need to find some way other than economies of scale to gain a competitive advantage.
Many have used price. The price tag on a 30-inch LCD TV has declined from around $5,000 to $2,500 over the past year. Style and design will also increase in importance for consumers, according to Baker and several PC executives.
Woo, though, said that would-be TV giants also need to solidify and tighten their channel links. He would not elaborate on Westinghouse's relation with manufacturer Chi Mei, but said it extended well beyond the traditional supplier-buyer relationship. (Often, buyers will invest in manufacturers to assure a supply of goods.)
At the moment, Westinghouse is expanding its retail alliances. It sells TVs through regional U.S. specialty retailers, but is also in negotiations with a national U.S. retailer, Woo said.
Woo also asserted that although Westinghouse is new to monitors, the management of Westinghouse Digital is not. He, along with most of the other people behind it, came from monitor maker Princeton Graphics.