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Sony Out of Samsung LCD Joint Venture

Sony is reportedly selling some or all of its share of the Sony-Samsung LCD joint venture, which started years ago, when LCD was booming. Both companies started working together in 2004 as Sony realized that Samsung had advanced manufacturing and great intellectual property in that field. Sony brought cash that was crucial to build more and more advanced plants optimized for large TV displays. Each company contributed $1.8B to the venture.Despite all these efforts, Sony’s Television business has yet to turn a profit, and with LCD prices falling, Sony has probably figured out that it should better be on the demand-side as a customer, than a supply-side as a joint manufacturer. While this may lower the cost for Sony and free some cash, this effectively means that Sony is out of the LCD manufacturing technology race, and although it may continue to do research and development, it would have a hard time to ramp up a production line that could rival Samsung and LG.

So, how will Sony add value to its TVs? There are a few solutions, like using software as a differentiator, or enabling PlayStation Network (PSN) features only on Sony televisions. In my opinion, software may do some good, but ultimately, people buy televisions for their image quality and design. It is just simpler to spend $100 on a box to get a smarter TV.

Also, keeping PlayStation Network only on Sony TVs is a mistake. Basically, this artificially cap the potential of PSN, while not helping the TV business at all. Sony should do its best to build quality and attractive TVs at a reasonable price (the typical Sony “problem”), and unleash its PSN service through apps and services.

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