The Rise and Fall of SHARP Electronics

By

Will DeSouza

COMPANY BACKGROUND

Sharp electronics Corporation is a U.S. subsidiary if Sharp Corporation that is based in Osaka,

Japan. Founded in 1912 by Tokuji Hayakawa, Sharp Corporation was built as a metal workshop. This is

where Hayakawa created first of his many inventions was a snap buckle named 'Tokubijo'. Another of his

inventions was the Ever-Sharp mechanical pencil in 1915, from which the Sharp Corporation derived its

name. After the pencil business was destroyed by the 1923 Great Kantō earthquake, the company

relocated to Osaka and began designing the first generation of Japanese radio sets. These went on sale

in 1925. In 1953, Sharp started producing television sets. In 1964, Sharp developed the world's first

transistor calculator, which was priced at ¥535,000 (US$1,400). The U.S. headquarters was established

in 1962 in Mawah, New Jersey which is the corporate offices for Sharp electronics to this day. It took

Sharp several years to develop the product as they had no experience in making computing devices at

the time. Two years later, in 1966, Sharp introduced its first IC calculator using 145 Mitsubishi-made

bipolar ICs, priced at ¥350,000 (about US$1000). Its first LSI calculator was introduced in 1969. This was

the first pocket calculator priced at less than ¥100,000 (less than US$300), and turned out to be a

popular item.

Sharp produced the first LCD calculator in 1973 (Appendix 1). Sharp had a working relationship

with Nintendo during the 1980s, and was granted licensing rights for the manufacture and development

of the C1 NES TV (1983, later released in North America as the Sharp Nintendo Television), the Twin

Famicom (1986), the Sharp Famicom Titler (1989), and the SF-1 SNES TV (1990). All of these units are

considered collector’s items on the secondary market. One of the company's main inventors of LCD

calculators was Tadashi Sasaki.

Sharp currently has operations across the globe and employs over 50,000 people with 26,000

employees residing outside of Japan. In 2014, Sharp Corporation had over $28.7 billion in revenue

including revenue from all subsidiaries and affiliates. They are known for their production of consumer

electronics, most notable their televisions and investment in LCD panels. Since 2000, Sharp has heavily

invested in LCD panel manufacturing plants: Kameyama in 2004, Sakai in 2009. The Sakai plant is still the

only 10th generation LCD manufacturing plant on the globe and best fit for production of 60 inch or

larger panels.

THE RISE

Faced with the need LSIs to use in calculators, Sharp built the Advanced Development and

Planning Center, including a semiconductor plant in Tenri in 1970 and started mass producing LSIs.

Sharp’s approach to developing distinctive products through in house development began here. They

understood that they needed to develop the products in house, so that they could full understand how

they work and innovate for the future. Sharp also realized at the time that they needed to differentiate

from the competition. To do so, Sharp incorporated an LCD, which they had been researching since 1969

into their calculator, therefore creating a thinner device that used less power. Since that time, LCDs have

become key devices used in information/communications to audiovisual products such as the

electronics that we use today. This is strong evolution from the early days in the 1920’s where Sharp was

known for their radios (Appendix 2). Sharp was part of the golden age of broadcasting when they

developed their first radio in 1925, all the way to the 1960’s where televisions became more prominent.

Even through WWII, when metal was restricted and was used in the military effort, Sharp was able to

weather the storm and still help to serve as a family’s main source of entertainment.

In 1953, Japan had its first television broadcast and the TV3-14T was the first television to be

mass produced in Japan (Appendix 3). In 1960, the first color television was released in the Japanese

market for mass production. Sharp was deeply entrenched in technology innovation for consumers and

worked to develop products that would help to make people’s daily lives easier. The radio and television

were some of the first products that they would develop, but they would not be the last of innovations

that would continue to make its way into production. In 1962, Sharp developed one of the world’s first

electronic microwave ovens that could be put into a single household (Appendix 4). This would change

how consumers were able to cook their food which up to this point had been mainly done through an

oven or stovetop. Three years later in 1966, Sharp would release an updated microwave oven that

included a turn table that would evenly cook your food. In 1978, Sharp released the color television that

also was able to show the channel in the program that consumers were currently watching and a year

later created the world’s first front loading VCR that connects with the TV but it wasn’t until 1980 when

the TV with integrated VCR would be released to the general consumer. These technological innovations

were all developed in house and were successful because they were advanced and some of the first

devices that consumers could purchase for their home. Up until this time, most individuals did not have

television in their homes and relied on radio for their in home entertainment. This was the beginning of

a technological change in how people entertained themselves. Sharp understood what the people

wanted and since they were able to develop these products in house, they were able to continue to

update these products and be at the forefront of the release of these products to the market. This was a

huge part of how Sharp was able to gain their market share and start becoming one of the market

leaders on consumer electronic production and development. It wasn’t until the 1990’s that Sharp was

able to produce portable devices such as a portable color television, laptops, and LCD video cameras.

At the beginning of the 21st century, Sharp was working on integrating their LCD flat panel into

their television set. With technology becoming more and more prominent in the lives of consumers,

Sharp started developing technology that consumers were looking for. They released the first

commercial camera phone in 2000, which was released in the Japanese market. Sharp also

manufactures consumer electronic products, including LCD televisions, sold under the Aquos brand

mobile phones (Sidekick3)(Appendix 5), microwave ovens, home cinema and audio systems, air

purification systems, fax machines and calculators. For the business market, Sharp produces projectors

and monitors and a variety of photocopiers and laser printers, in addition to electronic cash registers

and POS technologies. In 2002, Sharp was among the top 100 R&D Spenders in a list that was published

by IEEE Spectrum magazine. This commitment to research and development paid off for Sharp. From

2005 to 2010, Sharp was the biggest mobile phone brand in Japan and were able to acquire a controlling

stake in Pioneer Corporation in 2007. Also in 2007, Sharp introduced a prototype of the largest LCD TV

with a screen size of 108 inches. They revealed the prototype at CES and said that it would be in

production for the Japanese market in 2008. While that television never was a huge success, they

released the largest production television in 2012 with a screen size of 80 inches. It was included in the

Aquos line and was priced at $7,500 and was sold worldwide (Appendix 6). At the time this was the

largest television on the market and boasted full HD and Internet, among other top of the line features.

In March of 2012, Sharp agreed to a deal with electronic company Hon Hai, where they agreed

to acquire a 10 percent stake in Sharp for $806 million, and to purchase up to 50 percent of the LCD

displays that were produced at Sharp’s plant in Japan. Once the deal was finalized Sharp stock prices

began and continued to decline down from $4.48 per share to $1.56 a share. This decline in stock prices

started to show that Sharp was losing its customers and market share even though they were a market

giant nearly a decade ago. Sharp executives looked for ways to revive their sales; even agreeing to a

partnership with Samsung in 2013, that they believed could help bring them back to prominence.

COMPETITION

LG

LG Electronics was founded in 1958 under the name GoldStar. They were founded in the

aftermath of the Korean War to help rebuild the nation with domestically produced consumer

electronics and home appliances. LG Electronics produced South Korea's first radios, TVs, refrigerators,

washing machines, and air conditioners. GoldStar was one of the LG group with a sister company, Lak-

Hui (pronounced "Lucky") Chemical Industrial Corp. which is now LG Chem and LG Households. GoldStar

merged with Lucky Chemical and LG Cable in 1995, therefore the corporate name was changed to LG

Electronics (Lucky-Goldstar). In 1978, LG Electronics earned $100 million in revenue from exports for the

first time in its history. Rapid growth by globalization saw the company establish its first overseas

production, based in the United States, in 1982. In 1994, GoldStar officially adopted the LG Electronics

brand and a new corporate logo. In 1997, LG Electronics made the world's first CDMA digital mobile

handsets and supplied Ameritech and GTE in the US. LG also received a UL certification in the US. In

1998, LG developed the world's first 60-inch plasma TV, and in 1999 established a joint venture with

Philips – LG Phillips LCD – which now goes by the name LG Display. LG launched the LG Chocolate mobile

phone in 2005 and is the second-largest LCD TV manufacturer worldwide as of 2013. By 2005, LG was a

Top 100 global brand, and in 2006 LG recorded a brand growth of 14% (Statista). Its display

manufacturing affiliate, LG Display, as of 2009 was the world's largest LCD panel manufacturer. In 2010,

LG Electronics entered the Smartphone industry. Since, LG Electronics continued to develop various

electronic products, such as releasing the world's first 84-inch ultra-HD TV for retail sale.

LG Electronics is compromised into 4 business units, Home Entertainment, Mobile

Communications, Home Appliances & Air Solutions, and Vehicle Components, with 128 operations

worldwide, employing 83,000 people. They have steadily become one of the largest consumer

electronics manufacturers with over $50 billion in revenue in 2014. Through the different business units

LG has been able to diversify its product portfolio and create a stronger company image with that

success. Their mobile devices and televisions have become popular with consumers and are known for

their high quality. LG has built a brand that stays true to their vision, “LG delivers innovative digital

products and services that make our customers’ lives better, easier, and happier through increased

functionality and fun. They have taken this vision to heart and have been able to incorporate the

demands of consumers into their products, putting functionality and convenience into the same device.

LG’s management structure is based on “Jeong-do Management where LG will succeed through

fair management practices and constantly developing our business skills. This is what they believe and

how they conduct their day to day operations. In their structure they integrate a customer-value

creation focus with a people-oriented management. These basic management philosophies ensure the

LG will accomplish its business activity goals. This is the foundation of their management and business

strategy. The ultimate goal is that they will become the market leading company with broad market

recognition. LG brand recognition can be seen in the diversity of their products that they manufacture

within their four different business units and different industries. The largest and most notable being

their consumer electronics division that produces TV, smart phones, tablets, and other consumer

electronic devices.

LG launched the first “Internet TV” in 2007; it was originally branded as “NetCast Entertainment

Access” devices. They later renamed it “LG Smart TV” (Appendix 7), in 2011 when more interactive

television features were added, that enable the audience to receive information from the Internet while

at the same time watching conventional TV programming. LG has been able to build their market share

because of their high quality manufacturing and understanding what the consumer is looking for. This is

has allowed LG to increase their global television market share LG from 10% in 2008 to 15% in 2014,

only trailing Samsung (Statista). The main component to their success is the fact that they have been

able to keep up on consumer trends, like integrating the internet to TV. As technology moves forward LG

has noticed that more and more people are looking for a device that can do more than just watch TV or

make phone calls. LG has also been manufacturing smart phones and tablets to keep up with this

growing trend. LG Electronics manufactures a wide range of smart phones and tablet devices. Other

than the G3, LG officially unveiled the curved Smartphone, G Flex (Appendix 8), on 27 October 2013. LG

has released it in South Korea in November 2013, and later announced releases in Europe, the rest of

Asia, and North America. At Consumer Electronics Show in January 2014, LG announced an U.S. release

for the G2 across several major carriers. These phones are able to integrate with the LG Smart TV and

also with the LG tablets so that you can connect from anywhere.

SAMSUNG

Samsung Corporation was founded in 1938, as a South Korean conglomerate that is

headquartered in Samsung Town, Seoul. There are numerous Samsung subsidiaries and affiliated

businesses; most of them are united under the Samsung brand, which is the largest brand in South

Korea. The Samsung subsidiaries include Samsung Electronics, Samsung Heavy Industries (the world's

2nd-largest shipbuilder measured by 2010 revenues), and Samsung Engineering and Samsung C&T

(respectively the world's 13th and 36th-largest construction companies). Other notable subsidiaries

include Samsung Life Insurance (the world's 14th-largest life insurance company), Samsung Everland

(operator of Everland Resort, the oldest theme park in South Korea) and Cheil Worldwide (the world's

15th-largest advertising agency measured by 2012 revenues).

As a subsidiary of the Samsung brand, Samsung electronics was founded in 1968 under

the name Samsung Electrical Industries, but was later changed to Samsung electronics in 1988 through a

merger with Samsung Semiconductor. Headquartered in Sewoun, South Korea, they employ over

325,000 people around the world. Samsung Electronics is the leading manufacturer of consumer

electronics, telecommunications, semiconductors and home appliances in the world, with revenue of

$179 billion in 2014. By 1981, Samsung had manufactured over 10 million black and white televisions. In

1983, they began to manufacture DRAM (Dynamic access memory) and one year later they were only

the third company to develop a 64kb DRAM. In 1988, Samsung released their first mobile phone in the

South Korean market. Initial sales were poor and by 1990, Samsung only had 10% of the South Korean

market share due to poor quality and inferior products.

In 1995, Samsung decided that it needed to change its strategy. They shut down production of

many of the underselling products and instead pursued a process of designing, manufacturing, and

investing in new component technologies. They also outlined a 10 year plan to get rid of their image as a

“budget brand” and then they could challenge Sony as the world’s largest consumer electronics

manufacturer. As they shifted away from consumer markets, they also devised a plan to sponsor major

sporting events such as the 1998 Winter Olympics held in Nagano, Japan. Through this strategy change,

Samsung looked to gain an understanding of how products are made and gain a technological lead for

the future. With their new direction and vertical integration strategy of manufacturing components,

Samsung found success in the late 2000’s when they were able to strike a deal with Apple. In 2004,

Samsung developed the first 8Gb NAND memory chip and a manufacturing deal was agreed upon with

Apple. This deal was that Samsung would supply Apple with memory chips that would be sealed into

their devices. As of October 2013, Samsung is the key supplier of Apple components, including the A7

processor that is inside the iPhone 5s.

In 2010, Samsung was fined by the US and EU, along with eight other memory chip makers, for

their part in a price fixing scheme that took place from 1999 and 2002. They were granted immunity in

December 2010 by the EU for acting as an informant in the investigation. Through the information that

Samsung present to the EU, five companies including LG Electronics were implicated in the price fixing

scheme and later fined.

In 2010, Samsung was the market share leader in LCD panels (26%), Active-matrix OLED (97%),

and Television (17.2%) sales in the world (Statista). In all three categories LG was second to Samsung by

a large margin. In 2007, Samsung released a ten millimeter thick, 40 inch LCD television that was the

thinnest to date. Samsung also released their first Internet TV in 2007, allowing its customers to receive

Internet information while they watch television programming. By 2009, Samsung had reduced the

thickness of their television from ten millimeters to 3.9 millimeters and while reducing the thickness of

the television, they were still able to maintain the performance of their previous models which included

full HD resolution. That same year they sold around 31 million flat panel televisions, which allowed them

to maintain the world’s largest market share for the fourth year in a row. In 2010, they launched its first

full HD 3D LED television and sold more than one million within the first six months. They became the

first company to have a full line of 3D offerings, including 3D television, 3D Blu-ray player, 3D content,

and 3D glasses. By September 2013, Samsung had released its 55” curved OLED TV which allowed

consumers to see their picture clearly from any angle in the room, which had been a downfall of the

previous flat models.

Samsung also manufacturers mobile devices, such as the Samsung Galaxy S (Appendix 9), which

is considered to be a direct competitor to the Apple iPhone. The Samsung Galaxy S won the 2010

European EISA Award for the best Smartphone and social media phone in the world. While competitors

have tended to focus on one or two operating systems, Samsung has differentiated itself by supporting a

wide range of operating systems, such as Symbian, Windows phone; Linux based LiMo, and their

proprietary Bada. In 2011, Samsung overtook Apple as the leader in worldwide Smartphone sales with a

total market share of 23.8% compared to 14.6% from Apple. By 2013, Samsung decided to only support

Android and Windows Phone operating systems and that same year they released 43 Android phones or

tablets and two Windows Phones. In the third quarter of 2013, Samsung Smartphone sales increased

but a strong consumer reception in emerging markets such as India and the Middle East, where lower

priced handsets were popular.

THE FALL

The global economic collapse had shaken everyone up, but Sharp appeared to have the technology,

the brand recognition, and the market share to weather the storm. Then the forecast changed and

Sharp’s sales dropped rapidly. TVs became more than just TVs; they became computers. The Korean

brands saw their opportunity and pounced. Samsung and LG—with their know-how and established

investments in phones, microchips, and software design—ushered in the era of the smart TV. “Sharp

was always focused on picture quality and then some extras” (Kender). But those extras, like Wi-Fi

connectivity and apps for streaming video services, quickly became more important than Sharp

expected. The company's state-of-the-art LCD tech was undeniably impressive, but it struggled to

produce a user interface that could keep pace with the age of the iPhone.

On November 8, 2008, Department of Justice announced that Sharp agreed to pay US$120

million as criminal fine. According to the announcement, Sharp Electronics participated in the

conspiracies to fix the price of TFT LCD panel for Dell's computer monitors and laptops (2001 - 2005),

Motorola's Razr phones (2005 - 2006) and Apple's iPod (2005 -2006) (Kender). They were also ordered

to pay 261 million yen ($3 million US) for price fixing on the Nintendo DS LCD panels (Kender). However,

the 2008 financial crisis and strong Yen (especially against Won) significantly lowered world demand for

Japanese LCD panels. Furthermore, the switch to digital TV broadcasting was virtually completed in

Japan by the middle of 2011. Via Japanese government issued coupons for digital TV sets, consumers

were encouraged to purchase digital TV sets until March 2011 and was followed by the conversion to

digital TV sets in the US. As a result the LCD TV market was drastically affected, reducing it almost by half

from 2010. All of those events strongly hit Sharp's LCD business and as result, the Samsung LCD brand

suffered a reduced rate until Q3 2012.

By the end of 2013, Sharp saw their market share in Europe shrink to a mere 1.6%, with reports

that it had repeatedly dipped below 1% in some countries. Sharp’s problems were hardly limited to

Europe. The previous year was the worst in company history with a reported $4.7 billion loss. In

September 2014, Sharp announced that Slovakian Electronics Company UMC was acquiring an exclusive

brand license from Sharp and its European television and audio business UMC will also acquire Sharp’s

Polish factory. As part of the deal, Sharp will support the design and development of televisions sold by

UMC under the Sharp brand. The same month, Sharp also announced a deal with Vestel in Europe for

white goods. Vestel would sell Sharp-branded white goods (except air conditioners), such as

refrigerators and microwave ovens manufactured by Sharp in Thailand and China. Sharp will also license

its brand name to Vestel for volume home appliances such as refrigerators, washing machines and

ovens. Sharp's remaining European business will then focus on the business to business sector including

multi-function printers and energy solutions.

After years of huge losses in their overseas television sales, Sharp sold its Mexico television

factory to Chinese electronics manufacturer Hisense for $23.7 million in July 2015. This sale included the

rights to use Sharp brand name and all of its channel resources in North and South America, except

Brazil. This signaled the Sharp had effectively left the television market in the Americas and a sign that

Sharp was in a rapid decline in that market. Sharp had been the leading manufacturer for LCD TVs only a

decade earlier in North and South America. Sharp posted a market share in North America of only 4.6%

in 2015 (Appendix 10), while still remain the biggest television brand in the Japanese market.

THE NEXT STEPS

In 2010, Sharp was riding high with more than 11% of the global LCD market. Its “Elite” series of

televisions was regarded as one of the best LCDs ever. Adrian Wysocki was in charge of the Sharp TVs for

Poland-a particularly strong market for the brand. Wysocki was the product manager for Sharp in

Europe and it had been a hard year for him as Sharp had divested itself of its TV operations in several

markets and it was up to guys like him to pick up the pieces (Kender). Sharp’s rapid decline in market

share started in Europe and migrated west. This included Sharp selling off some of its manufacturing

plants in Europe and the Americas. It also included 5 year agreements for branding rights within the

contracts. While Sharp still is the biggest television brand in the Japanese market, they have a lot of

ground to make up in the rest of the world. Adrian Wysocki stayed on once the Poland plant was

purchased and now is responsible for increasing their market share in Europe. Sharp wants to get back

to prominence not only in Europe but also to be known once again as a global brand. The question that

is causing problems for Sharp and all its managers, is not what they want but how do they get there.

What should their plan look like, what steps need to be taken for Sharp to get back to competing for

world market share against the likes of Samsung and LG.

Exhibit 1

Sharp Technologies

Exhibit 2

History of Sharp Radio’s

Exhibit 3

Sharp Television

Exhibit 4

A History of Innovation

Exhibit 5

Sharp Sidekick 3

Exhibit 6

Sharp Auqos

Exhibit 7

LG SmartTV

Exhibit 8

LG G Flex smarthphone

Exhibit 9

Samsung Galaxy S

Exhibit 10

Market Share

Works Cited

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Kender, David. "Sharp: The Rise, Fall, and Return of a Great TV Brand." Reviewed.com Televisions. USA Today, 20 Sept. 2015. Web. 07 Dec. 2015. <http://televisions.reviewed.com/features/sharp-europe-the-rise-fall-and-return-of-a-great-tv-brand>.

"LCD TV Manufacturers: Global Market Share 2008-2014 | Statistic." Statista. Boston Consulting Group, 2015. Web. 07 Dec. 2015. <http://www.statista.com/statistics/267095/global-market-share-of-lcd-tv-manufacturers/>.

"Sharp History." Sharp History. Sharp Corporation, July 2015. Web. 07 Dec. 2015. <http://www.sharp-world.com/corporate/info/his/h_company/>.