I would be more than mildly surprised if an SED-TV is ever sold at Best Buy. That’s especially true now that Canon has bought Toshiba’s share in SID Inc., which means that Canon will no longer have the benefit of Toshiba’s consumer electronics experience and commercial common sense. I would not be surprised if at least some people at Toshiba are breathing a sigh of relief.

Ken Werner
Senior Analyst and Editor

Canon seems to be pursuing a faith-based business plan, in which broadcast monitors supply an early market and - against all evidence - production cost then declines far more rapidly than does the production cost of LCDs and plasma panels, allowing SED-TV to compete in the CE market.

Canon Chairman and CEO Fujio Mitarai runs his company with an admirable social and environmental conscience, so it is hard not to wish him well. But I’m sorry, Mitarai-san; I can’t believe your dream of SED-TV competing on an equal footing with LCD-TV and PDP-TV will ever become reality, in spite of SED’s magnificent image quality. The TV business is about affordability, and LCD and PDP have traveled so far down the cost-quantity curve that any new technology must have very formidable inherent cost advantages to compete. SED doesn’t qualify.

So Toshiba is out of the picture and Canon has a technology and product for which there is no convincing business plan. Who’s the winner? It’s Zvi Yaniv’s Nano-Proprietary Inc. (NPI), which has won a significant decision over Canon before the United States District Court for the Western District of Texas. District Judge Sam Sparks ruled on February 22 that Canon violated the IP licensing contract it signed with NPI in 1999, validating NPI’s termination of the agreement last December.

This gives NPI exactly what it wants: the opportunity to negotiate a new licensing agreement with Canon (or SED, Inc., which is now truly a Canon subsidiary). The 1999 licensing agreement called for a one-time payment of $5.6M with no royalties. That won’t look like much if Canon actually goes into substantial series production of SED-TVs. Now, NPI can renegotiate the up-front amount and negotiate a royalty. And there’s been no litigation yet on the amount of damages to which NPI is entitled as a result of Canon’s contract violation, although Judge Sparks clearly ruled that NPI is entitled to damages.

With the legal decision going so decisively in NPI’s favor, will Canon simply throw in the towel on its entire SED program? Not likely (and not at all what NPI wants). Mitarai-san has a dream that Canon-branded SED-TV sets will be sold to consumers. He’s not ready to give up that dream. Not yet.