Sharp Taking the Low Road to Regain Share of TV Market
June 19, 2017
 
As we have noted in the past, Hon Hai has ordered Sharp to stop supplying display panels to Samsung Electronics and Hisense in order to concentrate on producing for the Sharp brand.  Sharp, the TV brand has increased its sales goals from 10m units to 14m units, which is over 2.5 times last year’s unit volume while the TV market is expected to be flat to down a few percent.  How Sharp expects to generate that kind of growth in a lackluster TV market, has been unexplained, but Sharp seems to be using a strategy of lowering prices.
 
 
Figure 1:  Sharp 4K TV Ad in China 

Source:ofweek
 
 
There are very few 70” TVs offered at Best Buy for less than $1500, actually only one manufacturer offers 70” TV, Vizio and the best price for such a set is $1200 (Full HD), while 4K sets of the same size are $1700.  In China, where brands strategize on gaining market share, Sharp’s  70” is available for $1100, with incentives that lower the price by  $75, which according to the Chinese press, is the lowest price in the world (unconfirmed).  Obviously Sharp is using price and incentives to attract consumers, and is likely settling for somewhat lower margins in order to meet its aggressive volume goals. 
 
 
Figure 2:  TV Panel Pricing 2014 - 2017

​Source: SCMR LLC
 
This is a clear departure for Sharp, which has always been a premier brand in Japan, but one that could spell trouble for an already troubled retail TV space.  TV margins are already compressed as panel prices have been increasing for a number of quarters, the opposite of the price declines that are inherent in the TV set business, and while brands have been forced to accept these higher panel prices, it has been nearly impossible for higher set prices to be passed on to consumers.  Brands have shifted their focus away from generic TV sizes and products and moved toward premium and ultra-large sized TV products to recapture some margin, but if Sharp is prepared to squeeze its margins even further on a premium 70” TV, it could erode the premium margin going forward. 
 
In another action to dismantle the old strategy, which included licensing its brand name for TVs sales in the U.S., Sharp filed a lawsuit against Hisense in the San Francisco Superior Court alleging the Chinese company willfully manufactured subpar Sharp televisions in an attempt to devalue the brand as a future competitor. The suit also alleges that Hisense misrepresented the actual picture size on several Sharp models, and exaggerated the brightness of one television set by 35 percent in its marketing materials, which harmed consumers who paid money for a certain level of performance, as well as hurting Sharp’s reputation. In addition, the suit claims the Hisense-manufactured Sharp television sets “emit excess radiation, in violation of FCC standards,” violations which “have harmed and have the potential to create continuing harm to the California public, as well as Sharp’s goodwill and brand equity in its products, including but not limited to televisions.”

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