Restructuring Plans for the Display Business
Displays are positioned at the heart of Pioneer?s home audio/video product lineup. Pioneer believes that displays are indispensable to its product lineup for these reasons and will therefore maintain its fundamental strategy for the display business?supply premium models.
However, the company said that maintaining the cost competitiveness of plasma display panels at projected sales volumes will be difficult going forward.
Accordingly, Pioneer decided to terminate in-house plasma display panel production and to procure these panels externally, after panel production for our next series of models is complete. Pioneer is currently in discussions on the feasibility of procuring panel modules that may incorporate the Company?s proprietary technologies. Details will be announced as soon as they are finalized. Earlier information indicated that Pioneer would turn to Matsushita for panels for plasma sets.
In fiscal 2008, the year ending March 31, 2008, Pioneer will book an impairment loss on plasma display production facilities. The company's reconstruction plan is not expected to produce significant benefits until fiscal 2010.
Car Electronics Business
Pioneer?s top priority for maintaining its current level of profitability in the Car Electronics business is to grow the car navigation system business.
First, Pioneer will bolster telematics functions, which employ mobile phones and the Internet and are expected to become mainstream in the car navigation system field going forward. This is part of efforts to transform car navigation systems into comprehensive in-vehicle information terminals offering much more than merely car navigation in a bid to stimulate new demand.
Another goal is to counter growing demand for portable navigation devices. Pioneer will expand its customer base for in-dash car navigation systems by proposing new forms of value not offered by portable navigation devices. For instance, Pioneer is developing new in-dash car navigation systems with built-in audio/video functions that feature connectivity with peripheral electronics and innovative device operability. The company is developing a "light" platform that will support the worldwide launch of these new models.
In car audio/video products for consumer markets, Pioneer will compensate for contraction in developed countries? consumer markets by responding to rapid market expansion in the BRICs nations. Concurrently, Pioneer plans to maintain profitability and mitigate any decrease in unit prices by shifting their center of gravity from models equipped with CD players to those with DVD players.
On the development front, Pioneer will work to boost efficiency by implementing reforms of increasingly complex software development processes and by adopting common platforms for OEM products for which orders are growing.
Through these and other initiatives, Pioneer believes that they will maintain an operating margin of around 6% to 7% in the Car Electronics business over the medium term.
Restoring Profitability in the Home Electronics Business
In the Home Electronics business, Pioneer is focused on improving profitability by expanding sales of audio/video products linked with displays and by growing sales of Blu-ray Disc-related products.
Pioneer will reinforce its range of network and wireless-compatible audio/video products linked with displays.
Pioneer also aims to develop displays that are next-generation wall-mountable TVs by wirelessly connecting displays and various source devices. In addition, Pioneer will expand business by incorporating new value proposals into each new product?proposals based on video and audio analysis technologies cultivated through research into high picture and sound quality.
With regards to Blu-ray Disc-related products, Pioneer will concentrate internal product development on Blu-ray Disc players, which are expected to find growing adoption worldwide. Meanwhile, the company will use joint development and outsourcing to enhance the lineup of Blu-ray Disc recorders and other products.
In the Pro SV business, Pioneer will drive even greater business expansion by augmenting its lineup of DJ equipment and moving into new categories of video and audio equipment.
Strategy for the Speaker Business
Pioneer will focus on its already car-speaker business, but it will also release home-use and business-use speakers.
The company will also work to increase its external customer base to ensure stable growth in speaker units for mobile phones and speaker units for flat-panel TVs.
Progress on Business Alliance with Sharp Corporation
As part of a comprehensive business and capital alliance formed by Pioneer and Sharp Corporation in 2007, the two companies are conducting joint product development by making effective use of each other?s resources in their respective fields of expertise.
In the field of flat-panel TVs, for example, Pioneer is taking part in Sharp?s development of acoustic systems for ultra-thin, flat-panel TVs. Pioneer aims to develop acoustic systems employing ultra-thin speakers for Sharp.
Furthermore, Pioneer will be supplied by Sharp with LCD TVs based on its technologies. These LCD TVs will be first launched in Europe this fall. Plans also call for engineers from Pioneer and Sharp to team up to develop LCD TVs that carry on the legacy of the Pioneer "KURO" series in terms of high picture and sound quality. This project will give Pioneer access to Sharp?s expertise in LCD TVs, while promoting joint development of digital tuners, platforms and technologies for realizing high picture quality.
In the optical disc field, Pioneer and Sharp have agreed to join forces to expand their respective Blu-ray Disc-related product businesses. This step takes the alliance beyond merely supplying existing products such as DVD players and DVD recorders to each other. Joint development of pickups and drives for Blu-ray Disc players/recorders, will bolster the two companies? vertically integrated business models spanning devices to end products. Cost reductions resulting from more efficient development and volume growth will in turn contribute to business expansion.
In car electronics fields, Pioneer and Sharp plan to jointly develop products based on Sharp?s "only one device" concept. The two companies will make a point of enhancing device operability to propose new kinds of automotive passenger cabin environments. Pioneer also plans to propose new forms of value by linking Sharp?s AQUOS mobile phone concept with their car navigation system technologies.
Pioneer plans to showcase the achievements of these initiatives at CEATEC JAPAN 2008 this fall.