General Electric, a company with high brand-recognition in household appliances, has announced it will re-enter the crowded HDTV market in the spring of 2009 with a new line of TVs. In a conversation with the company’s top executives, we learned more about GE’s plans and strategy — which is fine, but success will depend heavily upon execution of the plan. Given the information we know so far, GE should have a better-than-even chance of pulling this off.

Chris Chinnock
Senior Analyst and Editor
for Insight Media

First, let’s start with the structure of the new company, General Displays & Technology LLC. This will be a joint venture between General Electric and Tatung (Taipei, Taiwan; www.tatung.com) with GE holding a 49% stake and Tatung having a 51% share. There is a seven-member board of directors, with three from each company and CEO Marc McConnaughey holding the seventh vote. On the GE side will sit the company’s global CTO and a top executive from GE Capital. This board says a lot about GE’s support for the venture. As McConnaughey explained, "GE has access to a lot of R&D and a lot of capital. TVs are a great way to start to monetize this technology R&D investment." Nevertheless, total revenue for the JV is still expected to be a very small part of the massive GE revenue stream.

As for strategy, the plan is for the company to enter the market in April 2009 with a full line of HDTVs from19 inches to 65 inches. These will be positioned as mid to low high-end models — probably a slightly higher-level positioning than most consumers would associate with a GE-branded product. The display focus will be squarely on LCD-HDTVs and they will be offered in good (GX series), better (DX series) and best (TX series) platforms. The plan is to introduce six to eight new products each quarter until the line is flushed out to about 22 SKUs.

GE will differentiate these HDTVs in several ways. First, it is working with another GE subsidiary, NBC Universal, to create a clean way to access Internet-based content. Initially, this content will come from NBC Universal, but GE is open to expanding this to other sources, such as Hulu, CinemaNow and Netflix, in the future. To help make accessing Internet-based content easier, the company will unveil a new remote-control system that eliminates the old paradigm of selecting your input source (video 1, video 2, etc.) and will create a list of content sources instead. And, this will not require a PC to be connected to the TV — the common way to get Internet-based content today. "The long-term strategy is to allow consumers to customize their viewing experience by downloading widgets and a variety of services directly to their HDTVs," McConnaughey said.

While the concept of accessing Internet-based content is good, the reality is often different. The main constraint is the bandwidth of the Internet pipe into most homes, which is far too limited to allow streaming of HD content. This means consumers need to download and save content for viewing later — which is not exactly on par with the channel-surfing capability TV watchers are used to. McConnaughey admits this remains a hurdle, but he hinted GE and Tatung were working on some ways to minimize these inconveniences.

Other versions of these HDTVs will feature Blu-ray 2.0 support, including BD live. Another will feature an integrated PVR with true two-way interactivity, while another will feature a fiber-optic coupling between an electronics box and the TV monitor.

Initially, the company will offer one LCD-HDTV with an LED-based backlight, but plans call for a fast migration to LED BLUs. In fact, McConnaughey hopes that GE will become a leader in this area by becoming the first company to offer only TVs with LED BLUs.

Another nifty feature will be a wireless audio system that can allow the connection of speakers, sub-woofer and headsets. At some point, GE will offer a grand HDTV that unifies all of these features, which will initially be in separate boxes, into a single TV set.

Tatung naturally will be responsible for the manufacturing of these sets. It will take care of the manufacturing design, supply-chain development and certain backend logistics through facilities in Greater China, North America, Europe and South East Asia. General Display will design the TV architectures, software and interfaces, market the TVs and be responsible for all servicing.

All of this is great, but the company needs to get some shelf space in order to execute the strategy. That is where Peter Weedfald, president of GDT, North America, will help. Weedfald was a former senior VP at Samsung where he helped initiate high-profile advertising and celebrity campaigns to sell HDTVs. He later moved to Circuit City as chief marketing officer and is now with GDT. He and McConnaughey are now on a two-week tour of major retailers to introduce the new GE-branded products, and, presumably, to negotiate shelf space deals.

"Sales of LCD-TVs have grown 30% year over year as flat-screen TV prices have fallen, opening up the market to new consumers," explained Weedfald. "But beyond the top five leaders, about 40% of the remaining sales are lumped into the ‘other’ category by DisplaySearch. We think GE-branded products have a great opportunity to capture a good bit of this part of the market."

He may be right, but it will take a combination of exciting new products, a cost-competitive value proposition, solid marketing, retail shelf space and a commitment to re-establish the venerable GE brand in the consumer TV space. Some may recall that GE used to offer TVs. It stopped manufacturing sets and later sold its brand to Thomson, only to pull it back after Thomson also bought the RCA brand and began diluting the GE brand value. After looking at other deals along the way, GE finally has settled on working with Tatung. The new deal grants GDT a 10-year license to the GE brand name.

This team recognizes rebuilding the GE brand will not happen overnight, but the brand continues to have high recognition — a great first step. And, with the resources of GE behind the company, it should have some staying power. Good luck, guys.