Pioneer to remain in DVD recorders despite losses

By James Wells

TOKYO: Pioneer has confirmed that it is not pulling out of manufacturing DVD recorders altogether, despite substantial losses in the category.

A report by the Nikkei newspaper published this week in Japan stated that Pioneer will end its development of DVD recorders and that the company will work with rival Japanese consumer electronics company, Panasonic, to develop next generation Blu-ray recorders.

“Our stance is as follows: Pioneer will continue to develop DVD recorders, by focusing on the area where we can demonstrate our strength. As to Blu-ray disc technology, Pioneer is a front-runner. However, we do not deny that we are working with various companies for the development,” a statement from Pioneer Tokyo said.

The company admitted that reports by Nikkei of 40 billion yen ($A472 million) in sales for its DVD recorders business and a 10 billion Yen ($A118 million) loss was “about equal to the real numbers”, despite not publicly disclosing the sales and profit by product lines.

Pioneer is the world’s fourth largest manufacturer in terms of DVD recorder market share with between 7-8 per cent of the market in Japan and about 6 per cent globally.

Following these losses, Pioneer has confirmed it will discontinue manufacturing products where profit is unlikely.

“We will continue development of DVD recorders. We will continue the development of products for expanding markets such as Europe, where Pioneer will be able to make a strong showing. Even in the domestic market, we will continue developing products where our accumulated assets can be utilised.

“The optical disc product business encompasses a broad range of fields, not only including DVD recorders, but also DVD drives for PCs, the design of pickups and chipsets for PC drives and mechanical components. Our overriding goal is to restore profitability in the optical disc product business. Because we believe this goal is achievable, we do not plan to divest this business,” Pioneer Japan said.

Pioneer said it is confident it can avoid the losses incurred by the DVD recorder business with new Blu-ray product development.

“To enter the Blu-ray business will be limited as its technical hurdle is high. So we don’t believe that we have fallen into the same status of the DVD recorder business we are facing now. Pioneer has advanced the development of Blu-ray technologies in the industry and believes that we can demonstrate our strength in the area of production process,” the company said in a statement.

“We hope to make the most of our experience in the DVD products business, drawing on the challenges we faced and the lessons we learned. Instead of developing everything by ourselves, as we did in the DVD products business, we must form collaborations to hedge risks. Thus far, we have conducted the DVD recorder business on our own. Looking ahead, we will actively forge alliances with other companies. The main thrust for developing the Blu-ray disc format will be Blu-ray disc players as a top priority. The Blu-ray disc recorders will have less priority. The development of DVD recorders will be continued in Japan and Europe, where we will not incur large development expenses.”

Pioneer has admitted it will consider restructure of its business divisions.

“In order to strengthen the car electronics business furthermore, we will consider Pioneer’s group-wide personnel relocation. It might be possible to transfer some members from the DVD related department. We have made efforts to shrink the development and production cost by promoting outsourcing and working with other manufacturers,” the company said.

The company has however, delayed the introduction of its first Blu-ray Disc product – BDP-H1, which will provide Samsung with the only product to be launched in winter 2006 – the BD-P1000. The company plans to release a Blu-ray Disc product in Japan in 2007 after the software titles are launched later this year.

A spokesperson for Pioneer Australia said he was unable to comment on the statements made by Pioneer Japan.

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