Media & Services > TV & Broadband Blog

A tale of disruptive technology impact

by User Not Found | 1月 22, 2007

Loewe AG, the German manufacturer of high end TVs and consumer electronics, announced 2006 results today. Sales were up 7% to €341m, and the company made EBIT profit of €13.2m. Loewe's name is familiar to German consumers but little known elsewhere in Europe. It is lucky to have survived at all: it nearly vanished altogether in the early part of this decade after the company missed the transition to flat panel TV.

Loewe was always a higher end brand - not as exclusive as Bang & Olufsen, but certainly a significant cut above the Sonys and Panasonics of the world. Until the early 2000s it ticked along fairly nicely as a purveyor of upmarket, large screen TVs finished off with modern designs and aimed at the comfortably affluent looking for something to help them stand out from the crowd.

In 2001 and 2002 flat panel technologies began to penetrate these larger screen segments, but Loewe management was poorly prepared for the speed of the transition. Particularly as its "tube" TVs were aimed at affluent buyers, Loewe was badly affected when those customers became the first to switch to plasma and LCD TVs, even though prices of the flat panels at that time were still very high. Loewe's CRT (cathode ray tube) products became caught in a downward price and sales spiral and the company reported collapsing revenues and a huge loss in 2003. Only in 2004 did it begin to switch seriously to LCD, but by that time the damage had been done. An investment by its long term manufacturing partner, Sharp, the Japanese LCD specialist, saved Loewe and ensured its survival.

In October last year the company was given a "Turnaround of the Year" award, reflecting its transformation after the 2003 disaster. I feel a duty to mention that Strategy Analytics had carried out consumer research in 2000 that identified a strong willingness by consumers to spend significant premiums on "wall-hanging TV", some years before the market for such products had got off the ground. We were surprised by the strength of those findings at the time, but they proved to be prophetic, as flat panels have more or less replaced CRTs in most segments within the space of barely five years. It is never easy for any company, and particularly niche players, to commit significant invesment on the basis of such research, but one has to wonder whether Loewe might have saved themselves several years of turmoil if they had been willing to place that bet at the time.
Previous Post: The convergence boom continues | Next Post: Wii…. Let’s Go For A Spin

Let's talk

Now you know a little about us, get in touch and tell us what your business problem is.
Inquiry / Message:

please enter captcha from left