More Bloggotage On Circuit City's Bankruptcy

I've just been told by an inside source that at the same time that other video vendors like Sony and Toshiba and Sharp (who is only out $7 million, most of which is probably insured) were pulling back from Circuit City, Samsung was very aggressive in offering Circuit City sweet terms in an effort to hoover up market share from the other brands.

Now they’re on the hook for $115 million. Looks like that cunning plan didn’t pan out as well as they might have hoped.

And while I'm on the subject, what where the cowboys in Hewlett-Packard's national accounts office thinking? Looking at the creditor filing, what's startling is how far out in front HP is from everyone but Samsung, which makes me wonder if they had any risk management at all. There's no way that HP's $119 million in receivables is just 90 days current. Did they just think that they could stem the bleeding at CC by throwing product at them?

It makes me wonder how exposed HP is to other large retail partners, and how on top of the timely collecting of their receivables they are.

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Circuit City Creditor List Published

This just handed to me by one of my contacts: the filing that lists all of beleagured failing CE retailer Circuit City's creditors.

Circuit City Creditors

Get your own at Scribd or explore others:

The stuff you really want to know starts on page 16. But for those of you who are impatient, here's the list of Circuit City's Top Five Creditors:

1. 
   
   Hewlett Packard $118,797,964


2. 
   
   Samsung $115,925,716


3. 
   
   Sony $60,009,803


4. 
   
   Zenith $41,162,162


5. 
   
   Toshiba $17,919,395

Keen CE retail hawks will notice that Toshiba is out less than a third of what CC owes Sony, and a tenth of what HP's holding the bag for. That likely speaks well to Toshiba's risk management, since by all accounts they turned off the tap for Circuit City six months ago, after Blockbuster withdrew their takeover bid.

For that matter, look how comparatively little many CE brands were exposed. Sharp is only owed $7 million, Onkyo $4.2 million, and Klipsch $3.5 million. Peanuts, really. It's a Well Known Fact that suppliers had been tightening the screws for some time, which ultimately contributed to hastening CC's demise.

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Samsung Yanks Hostile Bid For SanDisk

That didn't take long. I'd only just covered Toshiba's defense of SanDisk this morning.

CNet: Samsung withdraws offer to buy SanDisk

Samsung on Tuesday withdrew its $5.85 billion bid for SanDisk, citing an increasing "risk profile." This follows a new manufacturing agreement between SanDisk and Toshiba disclosed Monday and a stiff rejection by SanDisk last month of the Samsung offer. "After nearly six months of efforts to pursue a transaction with no meaningful progress, we are withdrawing our proposal to acquire SanDisk," Yoon Woo Lee, vice chairman and CEO at Samsung Electronics, said in a letter that Samsung released Wednesday in Seoul.

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Over At Marketnews: Trouble For SanDisk, Toshiba Steps Up

Marketnews: Toshiba Shores Up SanDisk Against Samsung Bid

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Then Again, Who Needs A New Disc Format, Anyways? Pt II

It might sound like sour grapes coming from him, but Toshiba CEO Atsutoshi Nishida has been talking trash about why losing out to Blu-ray was really no big deal after all.


ContentAgenda: Toshiba: Who needs next-gen discs?

Come to think of it, you don't even really need DVD players: "Without a next-generation DVD player, PCs become an even more important part of our strategy. We couldn't connect computers and televisions before, but now there is a technology that lets us do that...That means that you can use the DVD player in your computer to watch movies on your big-screen television, and you don't even need a stand-alone player."

Aside from the fact that he's right, my first instinct was to yell "Oh sure, now you say that!"

His declaration that Toshiba will not produce a Blu-ray player is mildly surprising, but would be in-line with an on-line strategy. It will be interesting to see if they keep their promise.

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Toshiba Throws In The Towel On HD-DVD

Old news now, I know, but I was busy yesterday.

Yahoo!: Toshiba to give up on HD DVD, end format war: source

A source at Toshiba confirmed an earlier report by public broadcaster NHK that it was getting ready to pull the plug.
"We have entered the final stage of planning to make our exit from the next generation DVD business," said the source, who asked not to be identified. He added that an official announcement could come as early as next week

"Entering the final stages" sounds ominously like sitting in your bunker, dust in the air kicked loose from the ceiling by the bombing going on over head, staring moreosely at the little pill in the palm of your hand, but perhaps I'm being over-dramatic.

One expression that seems apt in this case is that it really is all over but for the crying: if anything, the arguments on various HiFi online forums have ratcheted up in amplitude as hardcore fans of the HD-DVD format simultaneously go through the Denial and Anger stages at the same time, telling all who will listen how unfair it all is.

Not everybody is as empassioned though. If you filter out the early adopters and the tech-geek propeller heads, the prevailing sentiment in the marketplace over the course of the format was was apathy. The Stalwart's Joe Wiesenthal displays little sentiment in his HD-DVD player's truncated future:

Truth is, I just can't get too worked up over it. In the 9 months or so, since we've had the device, we've probably watched like 10 titles in HD. Part of this had to do with availability and part of it had to do with indifference.

He's not alone by a long shot. Until the CE industry just plain takes DVD away from people, it will remain "good enough" in the minds of many consumers. Not to say that the day when that happens isn't coming...

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Breaking News: Even Toshiba May Abandon HD-DVD

This just in from CE Pro:

CE Pro: Toshiba Hints at Dropping HD DVD, Report Says

Toshiba is planning to abandon HD DVD in the next few weeks, according to a story in the Hollywood Reporter, which cites “reliable industry sources.”
The Hollywood Reporter quotes Toshiba’s Jodi Sally as saying that recent developments are shifting the company’s outlook.
“Given the market developments in the past month,” she is reported as saying, “Toshiba will continue to study the market impact and the value proposition for consumers, particularly in light of our recent price reductions on all HD DVD players.”

Jason Unger then goes on to say:

We’ve been trying to get in touch with contacts with Toshiba for a couple days now and haven’t had any success, so please consider this a rumor until any official word comes through.

Well, it may just be a rumor, but it's a juicy one!

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Best Buy Favors Blu-ray: When It Rains, It Pours

One of my favorite positive-thinking aphorisms is "you can choose to start your day over." I'll bet right now many execs at Toshiba are thinking the same.

CE Pro: Best Buy to Promote Blu-ray; Who’s Next?

Best Buy has announced that they will recommend Blu-ray as the preferred high-definition format for their customers the same day that Netflixdecided to drop HD DVD from its stocks.
Although Best Buy will continue to stock HD DVD hardware and software, the big-box retailer says that, beginning in March, they will “prominently showcase Blu-ray hardware and software products” both online and in-store (press release).

Reading this, I can't help but think of two things: first that this is game, set and match for Sony and Blu-ray. Second, that Best Buy's decision to actively promote one over the other is a marked contrast from Circuit City's professed format neutrality.

Why is one big box retail chain taking sides, but not the other? It's because they can. By any meaningful yardstick, the big blue box has a lot of clout. Even more than Toshiba, whom I suspect exerted some pressure on Circuit City after those reports of HD-DVD being cleared out began to circulate. Suppliers squeeze dealers, and dealers squeeze suppliers: it's the retail Circle of Life (go re-read my post from Christmas 2006 about the politics of allocating Playstation 3's). In this case, Best Buy is the 800lb gorilla, and Toshiba is ill advised to complain too loudly, lest they see orders dwindle from Best Buy for everything that isn't an HD-DVD player.

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HD-DVD Floundering In Australia

Since last week I was accused of having an "unspoken and insidious anti-Blu-ray bias" (which I'm still snickering over), this seemed like a good time to take HD-DVD out behind the woodshed again.

Sydney Morning Herald: HD DVD prices slashed to revive flagging sales

With one foot in the grave, the HD DVD camp is slashing player prices in a last-ditch effort to revive the ailing format. HD DVD has been eclipsed by its competitor Blu-ray in movie and player sales since the formats launched in Australia.
...
According to market watcher GfK, which tracks Blu-ray and HD DVD sales across all major Australian retailers, Blu-ray accounted for 81 per cent of all high definition player sales in December last year. This was consistent with sales results throughout the year.
But that figure doesn't include Playstation 3, which has a built in Blu-ray player and, according to GfK analyst Sharane Lewis, accounts for 95 per cent of all high-definition players sold to date.
...
Last year, 83 per cent of high-definition movies sold were in the Blu-ray format, with HD DVD making up the remaining 17 per cent. In January Blu-ray's lead dropped slightly to 80 per cent.

Needless to say, I find the Toshiba ad dab smack in the middle of the article to be deliciously ironic.

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Singlehandedly subverting the Format War since 2006

I totally LOL'ed at the first comment posted on this week's CE Pro column "Are Blu-ray, HD DVD Incentives Changing the Format War?" :

Posted by Michael on 01/31
at 10:31 AM
I have been advising and selling my clients DVD Players that upconvert to 1080; because if you persuade them to choose either format which happens to be the format that looses the war the first question you receive is why did you sale me that player?...I followed your advise your the expert.

Does this mean that when either Toshiba or Sony (or both, but right now probably just Toshiba) hold a downbeat press conference, they're going to publically blame me for their problems?

I can only hope.

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Toshiba OLED Master Plan hits a snag

CNet: Toshiba shelves plan to sell OLED TVs in 2009-10

Japan's Toshiba said on Tuesday it had shelved plans to sell ultra-thin TVs with organic light-emitting diode (OLED) displays in 2009-10 because of the cost of mass production. Toshiba will stick to its plans to commercialize smaller OLED displays for cell phones next year, and will watch markets and technological developments to see whether making OLED TVs is commercially viable later, Toshiba spokesman Keisuke Ohmori said.

OLED has been hailed as the Next Big Thing in video technology as far back as the year 2000, yet so far it hasn't really made it past the category of "Nifty Science Project" as opposed to "Major Consumer Technology." It's reminiscent of LCoS (Liquid Crystal on Silicon) technology, which has yet to overcome manufacturing challenges to really be a player.

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Endgame for Blu-ray vs. HD-DVD?

With only 14 more sleeps until Christmas, the HD format war looks to be entering a new, final, and in my opinion, kind-of-desperate phase.

This week's A&B Sound flyer is chock full of HD offers. For example:

*FREE Sharp BDHP20U Blu-ray player with purchase of LC37D62U 37-inch LCD TV, only $1699!

*FREE Toshiba HD-A3 HD-DVD player with the purchase of 32HL57 32-inch LCD TV, only $1199 and NO GST!

*FREE Sony BDP-S500 Blu-ray player with the purchase of KDL40V3000 40-inch LCD TV, only $2299, and NO GST!

Prices so low they're crazy!

In all seriousness, from a retail perspective, these are astonishingly aggressive offers. In fact, were I in the market for a secondary television for a spare room, any one of those deals would make me seriously consider getting off the fence and taking a side, whether for Blu-ray or HD-DVD. For someone as hard bitten and cynical a retail hawk as me to say that speaks volumes for the appeal offers like this provide to the mass consumer.

Is the format war over? Hell no, it's just getting interesting. Who can prostitute give away enough players to reach critical mass for their installed base? Only time will tell.

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A $99 HD-DVD player!? Wal-mart totally goes there

TWICE: Wal-Mart Promos HD DVD Player At $99

Wal-Mart will offer Toshiba’s HD-A2 HD-DVD player tomorrow for $98.97 as part of a “pre-Black Friday” promotion.
The price point represents a dramatic new low for Toshiba’s entry-level model, which was recently reduced to hit a suggested $250 retail and is currently being sold by Amazon.com, Circuit City and Costco for just under $200.
The HD-A2 is a closeout model that is being replaced by the more fully featured HD-A3.
Wal-Mart is also selling three HD-DVD titles for $14.96 as part of its one-day promotion.

There are some cardinal takeaways here to understand the method to Wal-mart's madness:

*In conjunction with other loony prices like a $998 50-inch Sanyo plasma, Wal-mart is effectively buying up the lowest echelons of the shopping public. Unlike Best Buy, Wal-mart has plently of high margin apparel, candy and other goods with which to make the add-on sales, so they really can make it up on volume.

*Toshiba is taking the low road to winning consumer acceptance for HD-DVD, since Blu-ray players all still start at $499 and up. But...

*This promotion tells me that Toshiba was still sitting on tons of closeout HD-A2, and were getting nervous as the rollout for new models prior to Christmas approaches. I'm sure that Toshiba was all too happy to whore out last year's stock to Wal-mart, much to the dismay of other national accounts who are still sitting on inventory.

Let the Christmas Bloodbath begin!

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Samsung unveils 64 gig flash memory chips

BBC: Tiny chips flash memory advance

Electronics giant Samsung has shown off what it claims is the world's most powerful chip for use in memory cards.
The 64 gigabit (Gb) chips could be used to make flash memory, commonly used in MP3 players, capable of holding the equivalent of 80 DVDs, the firm said.
The chips are built using circuits with a minimum feature size of just 30 billionths of a metre (nanometre).
Rival firm Toshiba has said it is also working with similar technology. Both firms will release products in 2009.

Now this, this is a big deal. Not only is it a great leap forward for handheld devices, it's another nail in the coffin of disc formats. *cough* Blu-ray! *cough* HD-DVD! *cough*



If you have to buy hardcopy content (as opposed to downloading it) why not buy it loaded up on one of these?:

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Toshiba opens LCD factory in Poland

Marketnews: Toshiba Opens New LCD Production Plant in Poland

Toshiba Corp. is utilizing Kobierzyce, Poland as the new site for a production and sales company for LCD TVs. Called the Toshiba Television Central Europe Sp. zo. o. (TTCE), the plant will help meet demand for LCD TVs in Europe, a market for which Toshiba says is the largest for the flat-panel TV format.
Toshiba LCD TVs are already being manufactured in Europe at Toshiba Information Systems (UK) Ltd., but the company says that the second plant in southwest Poland (close to Wroclaw) will help support growing demand, and reinforce the company’s presence in the pan-European market. The plant is 223,000 sq. metres, with 40,000 sq. metres dedicated to the building area; and it will employ approx. 1,000 people by 2010. Toshiba targets production of about three million LCD TV units in Europe by FY2009, with the main focus on large sized LCD TVs with screen sizes of 32” and above.

I was trying to come up with some clever smart ass remark about this, but I've got nothing. Still, it's a interesting news story, and Christine from Marketnews has been giving me grief for not linking more of her stories here. No, no, I kid, I kid.

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Execs clueless about HD-DVD forecasts

One of the real joys of the information age is that there is so much data coming at you, from so many different sources, that if you are good at winnowing information out of the noise, it's possible to see behind the spin. I love it when two news feeds feature contradictory stories. I love it even more when those contradictory stories come from the same news feed:

TWICE: HD DVD Players Roll Up Sales
Backers of the HD DVD format reported Monday that recent pricing promotions on Toshiba’s three HD DVD players and continued releases of HD DVD titles have pushed HD DVD sales “significantly ahead in the dedicated consumer electronics player market with 60 percent of all dedicated high-definition set-top players sold.”
...
“Toshiba’s latest promotional efforts are clearly resonating with consumers and showing that price is king when it comes to hardware,” stated Craig Kornblau, North American HD DVD Promotional Group chairman. “Behind the increase in sales for hardware and movies, you’re seeing fundamentally lower manufacturing costs and ease of authoring for HD DVD. That’s the type of model that can scale.”

But wait! There's more!

TWICE: Toshiba Cuts HD DVD Forecasts

A high-ranking Toshiba executive revealed to reporters here that disappointing sales in the United States have reduced the company’s sales projections for HD DVD players and recorders, according to a Reuters’ report.
Yoshihide Fujii, head of Toshiba's digital consumer business, said Toshiba’s electronics group now expects to sell 1 million HD DVD players in North America by the end of calendar 2007, down 44 percent from its previous estimate of 1.8 million unit sales, Reuters reported.

...

Previously, Fujii predicted Toshiba would sell 3 million HD DVD players and recorders worldwide by the end of the business year to March 2008, led by the United States.

Oh dear. Rule number two of spin marketing is to keep your story straight (rule number one is that if you tell a big enough fib, people will believe it).

None of this changes my opinion on the whole Blu-ray vs HD-DVD fracas, which is basically:

*slang for "whatever," for those of you who didn't know.

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SED Postponed, bad news for an emergent display technology

This is a bit of a setback:

TWICE: SED Postponed Indefinitely
Tokyo — Toshiba and Canon sent out official notices Friday that they have postponed the launch of surface-conduction electron-emitter display (SED) TVs, which were originally planned to launch in the fourth quarter of 2007.
In a statement, Toshiba said “the decision is based on information provided by Canon, indicating that Canon will not be able to provide SED panels to the original schedule.”
Canon said Friday that “prices of flat panels are declining more rapidly than expected.” The company said it has to institute new production techniques to improve mass production efficiency.
Both Canon and Toshiba said they could not give a specific timeframe for the launch of SED TVs at this time.

This isn't the first time that a nascent display technology has had hiccups in it's development. LCOS (Liquid Crystal On Silicon) was proudly trumpeted, and then quietly dumped by Toshiba, Hitachi, Hewlett Packard, and a couple of others because of manufacturing problems, before finally becoming a viable technology. I wouldn't write off surface-conduction electron-emitter displays just yet (for one thing, I think that they're neat!), but if it becomes a breakout technology, it's not going to be this year.

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Toshiba bribing customers to take an HD-DVD player home

So it begins:

TWICE: Toshiba Offers HD DVD Rebate
Toshiba is running a one-month promotion issuing an instant, in-store rebate on select HD DVD players that will bring the purchase price on the entry model down to $299.99.
The effort will coincide with the HD DVD Promotional Group’s new national marketing and retail campaigns launching this month in support of the Warner Home Video HD DVD releases of “The Complete Matrix Trilogy” and “Letters from Iwo Jima,” and the Paramount Home Entertainment HD DVD release of “Flags of Our Fathers” on May 22.
The Toshiba in-store rebate promotion begins this weekend (May 20). Consumers buying a Toshiba HD-A2 model player will receive an immediate $100 instant in-store rebate, the company said.

Okay, lets go over Value-added Marketing 101 again. You can sell on price, or you can sell on value. If you paint a beautiful picture for the customer of how much value your product has, what it will do for them, and how great it will make them feel, the customer will pay full price for it.

If you can't or won't tell a story that connects with customers, you will have to discount to make a sale. You lose. You lose money, you lose prestige, and you lose the customer's respect. You are no longer the gatekeeper to a wonderful promised land of consumerism, you're just a doormat, and the customer knows that he can walk all over you.

Toshiba should ask GM, Ford or Chrysler what paying customers to buy your product does to the bottom line.

This will end badly.

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Toshiba Had A Very Good Year

I know that the old adage is "Good News is No News" but Toshiba deserves a tummy rub for their Fiscal 2006 performance. Besides, I had to gargle with some positivity to get the bile out of my mouth after covering Circuit City this morning.

TWICE: Toshiba Posts Higher Annual Sales, Income
By Staff -- TWICE, 4/27/2007 12:44:00 PM
Tokyo — Toshiba reported consolidated net sales and consolidated operating income had double-digit increases for its fiscal year, ended March 31.
Consolidated sales were $60.2 billion for the year, a 12 percent increase, while consolidated operating income rose to $2.19 billion, a 17.8 percent gain. Net income for the year was also up dramatically to $1.16 billion, a 76 percent gain that included an increase for sales of securities in affiliated companies.
In digital products, net sales increased 11 percent to $23.8 billion with an operating income of $133.8 million, 24 percent lower than the previous year. PC sales were up due to overseas sales growth, and Digital Media Network business reported higher sales of TV and portable digital music players, Toshiba said.
In the fourth quarter, ended March 31, consolidated net sales were $18.3 billion, up 16 percent, while consolidated income was $1.16 billion, up 9 percent.

I've always liked Toshiba, and think it's a shame that they don't get more respect in the marketplace. Consumers have always treated them like an also-ran behind Sony and Panasonic which is unfair. They are a major manufacturer with a distribution model as big as any other Japanese brand. And they make great electronics. In all my years in retail CE, there's only three brands with whom I have never had to resolve a service issue: Toshiba, Hitachi, and Panasonic.

Their modest success is due to never having over-reached themselves trying to be number one. They just put their head down, mind their work, and focus on assembling a quality product, and getting it onto shelves in a timely manner. They know how to keep their eye on the ball, and at the end of the quarter or the year, it's the number at the bottom of the P&L that matters.

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Toshiba turns the heat up on HD-DVD

Just got this in my email:

It’s Official: Toshiba Cuts HD DVD Pricing

By Greg Tarr and Alan Wolf
New York – Toshiba made official its long-rumored HD DVD player price cuts, dropping the expected retail price by $100 each for the entry HD-A2 (to $399) and the step up HD-A20 (to $499), and by $200 on the top-of-the-line HD-XA2 (to $799).

The price moves, which go into effect April 1, were published in a flyer and a catalog distributed to attendees at a store celebration event for local retailer Datavision March 15.

Jodi Sally, Toshiba A/V products marketing VP, confirmed the prices to TWICE this morning.
Datavision is adding to the new prices a $50 instant rebate. In addition, purchasers of any of the players qualify for five free HD DVD titles offered through a separate Toshiba promotion.

Sally denied speculation that Toshiba had made the price step because Sony had recently announced plans to sell a $599 Blu-ray Disc player later this year, and Samsung’s Blu-ray model has been aggressively price promoted on the Internet.

“Price moves like this are planned pretty far in advance,” she said. “It has always been our strategy to really plan strategic pricing and promotions long-term with this category.”

The instant rebates advertised by Datavision are offered by the retailer and not backed by Toshiba, she said.
Sales of HD DVD players have been doing well this year, Sally said.

“As of last week, Amazon.com was showing the HD-A2 and the HD-XA2 players in the No. 5 and No. 6 spots of all HD DVD players,” she said.

As for the future incentives, Sally hinted that some major HD DVD title releases will be coming soon, but declined to elaborate until the studios make official announcements.

This news is so hot, it's not even on TWICE.com as of this moment.

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