Sony Shelves OLED TV: Tech Tradgedy in the Making or Learning Opportunity?

Sude View of Original Sony OLED Concept

Wither thee, O' OLED TV?!

OK, I don’t own a Sony OLED TV. And at today’s prices and screen sizes I wasn’t going to buy one! Apparently, I’m not alone. So Sony has decided to pull out of the OLED market.

But, with the way that this news came out, the announcement from Sony can only be interpreted as a black mark on OLED technology. That’s too bad, since OLED was the hot topic at the Consumer Electronics Show for the previous three years. And if you’ve seen it, it’s very clearly the best display technology out there – the technology of the future. There are only two reasons why OLED is not the technology of the present – cost and small display size.

But as is with much new technology, things are always expensive when you’re on the cutting edge. LCD and plasma is no longer cutting edge technology. LCD is now the mainstream. And to a certain extent, plasma is perceived of as the past.

Plasma and LCD each still hold on to their own benefits. LCD tends to be more energy efficient, inexpensive, and thinner. Plasma tends to offer a better contrast ratio, which many videophiles love.

But to the general market, it was very difficult to explain why OLED is worth a cost premium. Sony, failed to convey the message of OLED as a premium technology.

But more than that, Sony just screwed up. Present cost aside, OLED is better than both LCD and plasma technology in pretty much any technical measure.

OLED could (and should) still be the technology of the future. But what could Sony have done differently to avoid the seemingly gray skies over OLED technology today …

OLED and the new Trinitron
Back in the pre-flat panel days of display technology, there was no denying the supremacy of Sony. They had the Trinitron tube. As soon as you walked into a electronics store show room, you knew you wanted a Sony.

Covered by a thick, spherical glass, cathode ray tube screens all looked a little distorted. People on screen had big heads and little, alien looking bodies – unless you were looking at a Sony Trinitron. The glass on a Trinitron was more cylindrical that spherical. And when you looked at a Trinitron head-on, it looked perfect – whether you were watching Star Wars or Monday Night Football.

But now times have changed. Despite a still great looking picture (perhaps still better than LCD), nobody wants a bulky, space and energy hogging CRT in their living room anymore – high definition or not. Plasma technology made the first big flat panel splash in the living room. But then LCD came in and fell faster in price. Today, LCD is, by far, the market leading technology – followed by plasma (and some rear/front projection screens using DLP and 3LCD technology).

But it seems like every manufacturer in the display business makes LCD screens. Sony is no longer the champ in the display market. That title now goes to Samsung – with more than triple Sony’s market share. For decades – until only this decade – Sony was on top. A source of corporate pride (and major profits) were lost.

Sony needed to get back it’s edge. And it bet big on OLED.

Failure to evolve and the PlayStation Distraction

The first decade of the 21st century was a whirlwind of display technologies – some would say a new golden age for displays. But between LCD, plasma, DLP, 3LCD (and don’t forget the awesome, but dead before arrival, SED) technology there just wasn’t enough room in people’s brains for OLED.

Few questioned Sony’s OLED bet. it offered better contrast than plasma and thinner screens than LCD. And if Sony could perfect OLED with the right mix of patents, they would have their new Trinitron for the 21st Century.

Of course, it didn’t help that the biggest available OLED TV screen was only 28 centimeters (11 inches) – and over $2,000. And in the three years since Sony first announced the commercial availability of OLED screens, it never got bigger.

The bet was that hot shot CEO’s would buy OLED TV’s to decorate their corner offices. But then the global economy was already sliding in 2007, and that slide accelerated in 2008 and 2009. Many of the targeted CEO’s were accepting government bailouts and had a hard time justifying tiny $2,000 TV’s.

Without high end, early adopter sales, it was hard to get the funds to inject back into R&D. Furthermore, Sony started facing a problem with it’s unexpected stumble in the video game market. The PlayStation 3 was supposed to be a sure fire hit. But instead it was one-upped by the much cheaper Nintendo Wii – which came out only a few days later with its radical new motion interface. After more than a decade out of the top spot in the video game business, Nintendo came back to dethrone Sony – despite impressive demonstrations showing the realism-bending capabilities of the PlayStation 3. Sony went from first to third – behind both Nintendo and XBox.

Without early adopter sales of OLEDs and expected mind-blowing sales of the PS3, Sony didn’t have the ability to focus on OLED technology development. Sony had to scramble for nearly three years to re-energize the PS3. It only recently came out with a new lower cost PS3 (the PS3 Slim) which recaptured the top spot in video game console sales.

The 3D Distraction

On top of the distraction caused by missteps with the PS3, another mind-share grabbing technology was racing forward – 3D. In 2008 and 2009 movie goers became reintroduced to the concept of 3D movies. And 3D, which had already gained attention at the 2008 and 2009 CES was gaining steam and set to the be the biggest buzzword of the 2010 CES.

The powers that be at Sony probably sat back over the last couple of years, watching the enthusiasm for 3D and must-solve problems with the PS3 and made the tough decision to pull investments from OLED technology development and redirect cash towards the PS3 and 3D. Furthermore, much of the OLED watching public was waiting for OLED screens to get bigger and cheaper. But with LCD and plasma sizes exceeding 250 centimeters (over 100 inches) – at least in demos – the risk was that OLED would fail to impress the press and the public unless there was a major leap in OLED screen sizes and price. Without a major investment that might have hindered 3D and PS3 development, a quantum leap in OLED technology wasn’t going to happen.

Targeting the wrong market

OLED should have evolved over the past three years, but it didn’t. 28 cm/11 inches is pretty much laughable these days as a TV size. Even on the ultra-high end, folks are used to the idea of giant flat screens that mount on a wall – not little screens that sit on a desk.

But, on a laptop, it’s pretty close. Sony did also demo a non-production 68.5 cm/27 inch OLED screen. So getting a slightly larger screen (say in the 13-17 inch range) for a laptop wasn’t out of the question with the right focus. And as Alienware has shown, serious laptop gamers (or graphics professionals) will dole out close to $5,000 for a high end laptop – what a perfect market for a $2,000 screen. And if you can notch up the screen sizes closer to the 68.5 cm prototype you have an entry into the desktop high-end gamer market (or again for graphics pros or anyone with a lot of cash to burn for the best monitors).

So, basically, Sony could have made OLED a high-end success if it had targeted the computer monitor market instead of the television market. In the computing market sub-prototype sized screens could have found a market – which could have been parlayed into R&D for larger OLED screens. And larger OLED screens could have been used to demo an awesome 3D platform – one that would have let Sony stand out in the 3D crown instead of look like a me-too player.

Correcting course

Sony didn’t say that they were abandoning OLED development – just the immediate marketing of OLED TV’s. R&D will continue, but probably at a slower pace than consumers would like to see. If you think back to the 1990′s (and even earlier) LCD screens were present on laptops long before they became popular on desktops and in the living room.

It’s not unreasonable to expect the same trajectory for OLED technology. Another added benefit is the large presence of large markets for even smaller screen sizes – on digital cameras and cell phones. And indeed you can already find some OLED screens in the miniature screen market. (For instance the Google/HTC Nexus One smart phone). The added perk of OLED in smart phones and laptops is that OLED enhances battery life – a premium that many justify paying for.

So, looking at our present day tech environment and contrasting it to the progress of LCD screens, it’s fair to say that the path of progress for OLED display technology would be to start with the small screen markets and work upwards:

  1. Smart phones/cameras/camcorders
  2. Netbooks/Notebooks/Laptops
  3. Desktop computer monitors
  4. Televisions

So Sony skipped steps 2 and 3. They tried to jump the gun and enter a market that OLED technology wasn’t ready for.

What’s really sad is that in jumping into the television market, Sony skipped markets that they already play in – Sony/Ericsson phones, Sony cameras and camcorders, Sony VAIO computers.

So what should Sony do to salvage their OLED investment? Go back to step 1 and don’t skip any steps on the way up the market. It shouldn’t be the end – but rather the beginning of doing things right.