Pioneer Stands By Its Plasma

Rumors that Pioneer would end production of plasma TV panels and begin buying them from other companies raised eyebrows in the electronics industry this week. But according to Russ Johnston, Pioneer's executive vice president of product planning and marketing, those who see Pioneer's move as a bellwether of plasma's demise will have to save their schadenfreude for another day. (No, he didn't actually use the word "schadenfreude" - journalists have an exclusive on that one for another two years.)

Here's what Johnston tells Sound & Vision about the future of the company's acclaimed Kuro TVs, and of plasma TV in general:

Pioneer has announced that it will cease production of plasma TV panels and will start sourcing them from other manufacturers. Why? Last year, we repositioned our brand into the premium space. We didn't want to make our plasma TVs less expensive; we wanted to make them better. We made this decision because we didn't want to break from that product strategy. We can dramatically lower our fixed expense by sourcing our panels from a third-party supplier.

Can you tell me if that third-party supplier is Panasonic, as the rumors have it? There's been a lot of speculation over the last couple of weeks. I think mainly that comes from us investigating all the potential suppliers. It's easy to find out that someone's looking [for a new supplier]. Yesterday, when Mr. [Tamihiko] Sudo [president of the Pioneer Corporation] was asked by the press, "Is it multiple suppliers?" he answered, "Matsushita" [parent company of Panasonic].

We hear that you'll be sharing your technology with Matsushita. Does that mean Matsushita will be making the equivalent of a Pioneer Kuro panel? The number-one goal is to make sure we can maintain our differentiation, and specifically our Kuro difference in the marketplace. We understand that the module [plasma panel], the processor, and the filter are the key components. Our performance isn't solely built around the glass or the module. We're still making the entire video circuit and processing, and also the color filter strategy and technology is coming from Pioneer. Those are the key elements that we can maintain exclusive to Pioneer.

We will have some specification requirements for our module, and I'm sure that they will learn a few of our trade secrets, but none of those decisions have been made. We're far enough into the discussion with Matsushita that we're confident we will have them as a third-party supplier for modules in 2009.

A lot of people regard the Kuro as the best TV ever made. Can we expect to see the Kuro in Pioneer's line a year or two from now? Oh, yeah, that's our main focus, it's our primary passion. We wouldn't be in this business if we couldn't maintain that. After two years of going through this, our consensus was, we can maintain that difference even if we do source the module from a third party.

You're going to hear from everybody on the Matsushita side, "We can make a Kuro panel." They may learn some things on one of the core elements of the panel, but they're not going to have the others.

Plasma has gone down in market share relative to LCD, and that trend is continuing - and it's had something to do with this decision. Can you speculate on the reason why plasma is declining relative to LCD? We're not in the TV business; we're in the home theater market space. That's from 50 inches to as big as 70 inches. Plasma dominates that size range. Obviously, LCD is suited for 42 inches and below. We can show you how it performs in our size space, and what our extreme difference is. When you get above 70 inches, it's probably projectors that are better for that [viewing] environment.

Since you're saying projectors are better than plasma for sizes above 70 inches, might we see a Pioneer projector sometime soon? We are going to maintain focus on PDP because of the size range for home theater. We have aligned with Sharp to bring LCD to the marketplace; retailers are asking for that premium-brand second-room television. We are filling out our display lineup. At some [size] point, plasma technology is not suitable. So to answer your question, we will be in that space, and we'll probably have more to talk about in May.

So you don't see plasma going away then? Absolutely not. We would have a much different announcement today if that were the case.

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