Panasonic's vision of the future is in 3D – and all shades of green
The Japanese giant wants to sell us its hi-tech stereoscopic TV screens, but its heart lies in its eco principles – and the humble battery
Sunday 12 September 2010
The acrobat was performing the Spanish web, winding down from the ceiling on a red ribbon in a move many Britons will remember from an advert promoting BBC1. But the people clustered around the stage weren't watching Berlin's Cosmic Artists directly. Instead, they peered through special spectacles at TV screens showing the action live in 3D.
The giants of the television hardware business, Samsung, Sony, LG, Toshiba and Panasonic, were all pushing stereoscopic screens (and accompanying goggles) at the IFA consumer electronics show in Berlin last week. Panasonic, for example, featured not only the live acrobats, but 3D clips from the Blue Man Group, Universal's Despicable Me, a promo for the London Olympics, and, on a more high-brow note, a trailer for the forthcoming Wim Wenders film about the late dancer Pina Bausch.
Crucially, after Avatar's success, film-makers and broadcasters are piling into the technology. A flurry of films including Alice in Wonderland, Shrek Forever After and Toy Story 3 followed the sci-fi blockbuster. And as Sky says of its new channel, due in homes before Christmas: "3D is the next revolution in television."
The new technology is not just for content professionals, either. Panasonic's headline-grabbing gadget this year is a 3D home camcorder – a world first – for under €1,500 (£1,250). Wedding videos will never be the same.
But a bigger contributor to the Osaka company's bottom line will be the one million 3D sets it expects to sell. "It's like the switch to colour," says Panasonic's president, Fumio Ohtsubo. "Once they've tried colour, no one wants to go back to monochrome. When you compare it with the pleasure of 3D, the inconvenience of wearing glasses is next to nothing."
In a Spartan conference room above one of the vast exhibition halls at Berlin's Messe complex, Mr Ohtsubo is holding forth in Japanese, his voice soft and his demeanour calm. He's wearing a blue striped shirt with a white collar and two small badges on his jacket lapel: one says simply "Panasonic", the other is a green leaf with the slogan "Eco ideas". And there-in lies a contradiction. For while Panasonic's marketeers are focused on television's latest magic, Mr Ohtsubo wants to talk about a less sexy product – batteries.
Like companies from Marks and Spencer to Shell, Panasonic has an environmental plan, in this case called GT12 (Green Transformation 2012). "We want to bring everything under the eco umbrella," he says.
Central to that plan is Panasonic's 100 per cent takeover of its home-town rival, Sanyo, launched this summer after it bought a 50.2 per cent stake for £2.8bn last December. The attraction, says Mr Ohtsubo, is not Sanyo's wide range of consumer products, from mobile phones and (D) television sets to refrigerators and washing machines. Instead, the allure is its expertise in alternative energy generation – particularly solar power – and storage, a low-profile field that he believes has huge potential. "Even without subsidies, we think the solar business will grow," he says.
The company that is now Panasonic was founded in 1918 by Konosuke Matsushita, his 22-year-old wife, Mumeno, and her brother, Toshio Iue, 15. Its first product was an improved light-bulb socket. Nearly 30 years later, while Japan was occupied by US forces, Mr Iue borrowed a disused Matsushita factory and began to manufacture bicycle lamps. His business later became Sanyo.
So was Panasonic's acquisition a fraternal rescue or a predatory pounce on a weakened rival? Sanyo has been plagued with bad luck for the past decade. First it got caught selling under-powered solar cells in the subsidised Japanese market. Then, in 2004, a devastating earthquake crippled its semiconductor plant in Niigata plunging it into a financial crisis. A ¥300bn (£2.3bn at today's exchange rates) restructuring in 2006 left its banks holding five out of nine board seats.
Even the company's battery division was not immune. In 2006, shortly after the collapse of a proposed joint venture with Nokia to make handsets, it recalled 1.3 million mobile phone batteries when they demonstrated a tendency to overheat. Efforts to sell the semiconductor division were abandoned in 2007 after the credit crunch hit. Mr Iue's son, Satoshi, stepped down as chairman for personal reasons in March that year and the grandson of the founder, Toshimasa, resigned as president in April.
By then, Sanyo was embroiled in a US Securities and Exchange Commission investigation (since settled) for allegedly failing to report a $1bn loss. By November 2008, Sanyo's new president, Seiichiro Sano, was in talks with Mr Ohtsubo.
There are several possible explanations for Mr Ohtsubo's dedication to greenery and interest in Sanyo. Cynics might argue that it's just greenwash. But the price he's paying for his rival, though well below peak, is far too much if all he wants is a lick of green paint to satisfy investors on corporate social responsibility (CSR).
Another explanation is that Mr Ohtsubo has spotted, or thinks he's spotted, a genuine growth market and is seizing the opportunity. If so, he's got nerves of steel, because this is a huge gamble. Solar power installations are not profitable without subsidy, and in tough economic times, government handouts are vulnerable. Spain, Europe's solar power leader, cut its photovoltaic subsidy – worth €3bn (£2.5bn) last year – by up to 45 per cent this summer amid howls from the industry.
Rechargeable batteries, where Panasonic-Sanyo now leads the world, with 43 per cent of the market, is also a long-range bet. The company likes to show off the battery packs it makes for hybrid cars. But while it's true that hybrid market share is growing fast, it's doing so from a low base, 3 per cent in Europe last year. This is a market driven by the desire of some people to "do something" about the environment rather than by calculated self interest. The sales growth could have a low ceiling.
To succeed in either of these fields, Panasonic will have to improve its technical performance. This, it seems, is Mr Ohtsubo's strategy. "There's a lot more we can do to improve our technology in order to increase capacity and speed up charging time," he says. "Everyone knows petrol will be replaced by electricity."
What nobody knows, though, is how quickly this will happen. The tipping point will come when electric cars undercut the price of those with internal combustion engines. And that will depend not only on Panasonic's technology but on innovation by car makers and how long supplies of cheap oil last.
Initially, investors took a dim view of Mr Ohtsubo's decision to buy Sanyo and another part-owned energy subsidiary outright in an ¥800bn deal. The move sent Panasonic shares tumbling 11 per cent. And the firm had only just pulled out of a two-year slump.
But the buy-out did make sense to some analysts. "Panasonic faces fierce competition from Samsung and Sony in consumer electronics," Yuji Fujimori of Barclays Capital in Tokyo told Bloomberg at the time. "Its rivals are not as competitive in the energy-related products and household-electrics systems that Panasonic aims to strengthen."
Oddly, Mr Ohtsubo does not justify the acquisition by pointing to juicy profits so much as matters of principle. "A company is only viable when it is useful to society," he says. "Each company has a role to play, and the role Panasonic should play is to cope with the most important issues of the time. At the global level, that's how human beings can co-exist with the environment."
At Panasonic, the idea that the company has a higher social purpose was being taught to employees long before Western management gurus invented CSR. "At the base of our vision is the principle and philosophy of our founder," says Mr Ohtsubo.
That principle was set out in 1932 in an address by Mr Matsushita to his assembled employees: "Our mission as a manufacturer is to create material abundance by providing goods as plentifully and inexpensively as tap water," he said. "This is how we can banish poverty, bring happiness to people's lives, and make this world a better place."
And nearly 80 years later, Mr Ohtsubo is eager to take up the challenge. "We have so many things to do," he says. "This is giving us much pleasure."
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