Pioneer Exits Flat Panel Display And Home A/V Businesses

Despite making arguably the best HDTV display in the business (or perhaps the one I lust after the most) Pioneer has decided to exit the Television business:

From the NY Times:

Surprise! Pioneer has now confirmed the rumors that it previously only responded to tepidly, and announced that the company is quitting the television display business. Instead, Pioneer will try to remake itself as a car-electronics company.

The company will close its British plasma production plant this month, and its American factory this April. It will end all TV sales by March 2010.

Pioneer will also further reduce its employee count; having shed close to 6,000 employees from March through December of last year, it will lay off 6,000 more workers this year, reducing its work force to around 30,000 people.

The company tried to carve a niche for itself by designing and marketing high-end plasma sets. Indeed, Pioneer was generally recognized as the creator of some of the best plasma displays in the industry, characterized by rich, deep blacks, which help create the perception of a very sharp image.

But catering to well-heeled consumers is out of lockstep with today’s realities, causing Pioneer to take what it acknowledged were “drastic restructuring measures.”

I don’t think that today’s economic climate was the real source of Pioneer’s downfall within the TV business, instead it was the fact that they were catering to a niche market that was often quite happy with lower priced displays from Sony (SNE), Panasonic (PC) and Samsung. A consumer looking for a higher-end set could spend $5k on a Pioneer that’s best in class, or they can spend 1/2 of that on a set that is not only very close picture quality wise, but close enough so that they may not be able to tell the difference.

In terms of the company’s exit from the home A/V electronics business, I think the trend Pioneer is/was suffering from is the fact that a lot of people listen to music via their computers, iPods, Mp3 players, etc. Thus making it harder and harder to sell receivers, speakers, etc. Plus there is a lot of cheap gear available these days that punches well above its weight, thus making it hard for a company like Pioneer that has high-end aspirations despite being structured like a mainstream manufacturer.

At the end of the day I find this announcement to be a bit disappointing as Pioneer has produced some great products for the audiophile market over the years, and the exit of another manufacturer from both the mainstream and high-end A/V markets doesn’t exactly bode well for my hobby. For most of this decade high-end retailers and manufacturers have suffered, primarily due to the 1-2 punch of higher quality low end gear and consumers moving towards portability and convenience over sound quality (i.e. Mp3s).

I hope that Pioneer’s announcement isn’t the start of a trend amongst other manufacturers that straddle the high-end and mainstream worlds.

Source:

NY Times: “It’s Official — Pioneer Out of the TV Business” — Eric A. Taub, February 12, 2009

Disclosure: at the time of publishing the author didn’t own a position in any of the companies mentioned in this article; the ideas expressed are solely the opinions of the author and shouldn’t be viewed as financial or investment advice.

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