Sony's OLED Delay: Harbinger of Finance-Induced Reductions
Sony's postponement of Organic Light-Emitting Diode (OLED) TV set production provides a valuable vision of electronics economics. Sony has decided that development and manufacturing of the ultra-thin displays, which have been hyped for more than two years, would be too expensive and would exacerbate losses at its TV division now, according to sources cited by the Wall Street Journal.Buried in the reports is acknowledgement that Sony (and presumably others) may face difficulties in acquiring affordable materials and resources for mass-production of OLED screens. My sources have indicated that manufacturing and shipping large-screen OLED equipment will be challenging - at least in the early years of development. For cash-strapped CE makers, the financial barriers are too severe to push ahead with expensive technology in today's restrictive economic environment.
Decisions like this may affect the entire business, as manufacturers weed out or set aside products - no matter how appealing - that are not financially justifiable.
Some analysts see Sony's retreat as an opportunity for LG Electronics, Samsung and others to seize leadership in the OLED market. Such aggressive moves seem likely, especially if any manufacturer can develop a breakthrough formula to overcome the tactical production issues.