Riches in niches: U.S. cops, in-flight movies may be model for Panasonic survival
By Tim Kelly and Reiji Murai
TOKYO (Reuters) - Panasonic Corp's answer to the brutal onslaught on its TV sales may be in a product the Japanese firm launched 17 years ago and which is a must-have for U.S. police cars.
Two thirds of the 420,000 patrol cars in the United States are equipped with the company's rugged Toughbook computers, and Panasonic chief Kazuhiro Tsuga sees the niche product as a model for how the sprawling conglomerate can make money beyond a gadget mass market increasingly dominated by Samsung Electronics and Apple Inc.
"What we need are businesses that earn, and they don't necessarily have to have big sales," Tsuga told reporters after his appointment as company president was approved in June.
Tsuga also sees avionics - Panasonic is the world's leading maker of in-flight entertainment systems - automated production machinery, and lighting as profit earners as income from TVs and other consumer electronics dwindles.
Panasonic, Sony Corp and Sharp Corp have been hit hard by South Korean-made TVs, Blu-ray players and mobiles and Apple tablets that threaten to wipe out Japan as a global consumer electronics hub. The Toughbook, sold only to businesses and governments, was conceived as a response to the type of profit sapping competition that is now roiling TVs.
"At the time, we were losing in personal computers to Compaq and IBM," said Hide Harada, who heads the Toughbook unit from the group's headquarters in Osaka, western Japan. IBM later sold its laptop business to China's Lenovo Group and Compaq was absorbed by Hewlett Packard.
"It was a guerilla strategy," Harada said, recalling the Toughbook's launch in 1996. Panasonic's promotion campaign included driving jeeps over its computers, dropping them on the ground and dousing them with coffee on morning TV shows.
At rival Sony, too, signs of a niche strategy are emerging in a battle with Apple and South Korean brands that are making gains from a weaker won currency. Combining technologies from several divisions - from projectors to video cameras and headphones - Sony's 3D Viewer head-mounted visor gives users the feel they are sitting in the middle of a 500-seat movie theater. Continued...