Digital Home Thoughts: Is Innovation the Bane of Commodification?

"Sony might have some concerns going into this holiday selling season (Blu-ray shortages, battery recalls and the success of the PlayStation 3), but the commoditization of flat-panel televisions is not one of them. "Frankly, we don't see that as a fear. We really see it more as an opportunity," Phil Abram, Sony's vice president of TV marketing, told the crowd gathered here Thursday for iSuppli's Flat Information Displays Conference 2006. "TV manufacturers have faced the threat of commoditization before in the CRT industry," he said, and innovation is the key to avoiding it. "All flat panels are not alike," said Abram. "The threat of commoditization shows a lack of imagination" on the part of television manufacturers. Though innovation could mean making a TV with improved contrast ratio or faster response time, a majority of consumers do not buy a specific television because they know the difference between 1080p and 1080i. As Abram put it: "Consumers don't buy flat panels. They buy televisions."

Sony is arguably the foremost expert of TV commodification (a.k.a. commoditization). In the Asian market, Sony is often copied by knockoff companies who then offer a similar product for half the price. We don't see as much of that here in the U.S., and in many ways I believe Sony has brand recognition going for it. If you walk into any drug store and look at their portable CD players, you'll see a cheap no-name for $19.99, a mid-range one for $29.99 (often a GE or Sanyo brand), and a Sony for $39.99-44.99. And if I had to choose, I'd choose the Sony, and so would anyone else concerned with quality. It's not the greatest example since we're only talking a $20 price difference and in the LCD arena we're talking thousands of dollars. However, I still believe that Sony's brand recognition (for better or for worse) largely protects them from commodification. Innovation helps too, though too often Sony's innovations are too gimicky for me (changeable faceplates on my LCD? Can't I just get it in black? :wink:).