This CES has already seen scores of releases by two of the biggest names in TV, Samsung and Sony. But behind the scenes things are changing.

Now, Sony increasingly believes in outsourcing to build its TVs, so as to deal with its newly accounted losses, while Samsung continues to manufacture its own TVs. “Giving up manufacturing is tantamount to abandoning your brand,” says Yoon Boo Keun, president of Samsung's TV business.

Sony believes their advantage is in games, movies, and music. “We would like to concentrate our resources on Sony-unique applications,” says spokeswoman Sue Tanaka. This year Sony is big on content, and hopes to boost sales by offereing the customers candy like pre release streaming of their latest movies, even before it comes on disc.

Sony aims to outsource production of 40% of all TVs. It is noted that the fastest growth in TVs is in low-end sets sold in China and other developing countries—production that can more easily be outsourced than that of sophisticated models. Another argument for outsourcing is that even when Sony builds its own liquid-crystal-display TVs, it relies on Samsung and Sharp for LCD panels, a key component. “It is like one football team depending on another team's coach to win the game,” says Atul Goyal, an analyst with brokerage CLSA in Singapore.

In contrast, Samsung is becoming more like the old Sony, and that is a good thing for quality. It's now the only major TV maker that produces the computer chips at the heart of new digital TVs. That helps it introduce extra services more quickly, such as Internet access, turning TVs into the centerpiece of home entertainment. Owning its factories, Samsung says, also lets it reap all the benefit from new efficiencies.

Sourced from Businessweek

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