Sad news: Consumers don't pay up for quality

Erica Ogg's post "Report: Pioneer to exit TV business" made a point abundantly clear: TV buyers won't pay a premium price for a better display.

"The company is reportedly exiting the TV business rather than continuing to incur losses in that division," Ogg wrote. "This latest report comes a few months after Pioneer announced that it anticipated huge losses at the end of its fiscal year in March and plans to lay off 2,000 workers."

The market's demands for lower and lower prices eventually take high-quality manufacturers out of the game.

I'm not a video guy, but I do know that while Pioneer made some of the best displays, the market wasn't willing to pay for its quality. The race-to-the-bottom environment is certainly in full swing on the audio side. Sales of high-quality speakers continue to erode, thanks to booming sales of lower-quality home-theater-in-a-box systems and iPod speakers.

I'm sorry, but I want companies making the highest-quality products to prosper. But the way things are going, only the bottom-feeders will survive.

What do you think?

[sting7k]

I will agree that the Pioneer sets in Best Buy's special theater section did look really really good. But the ones in the "regular" section from Samsung, Sharp, Sony, and many others look plenty good for many many thousands less. With the current economy I don't see anyone who would go for the Pioneer Elite that is $10,000 over a Samsung that looks fine for only $2500 just 10 feet away, even those that may have the $10k to spend. Buy getting the Samsung they save that much money to spend on other equipment.

[sting7k]

Other equipment such as some very nice Pioneer audio equipment for their new setup.

[Zoobie]

Sometimes, especially in a down economy, good-enough is just fine. People aren't buying luxury items like they were a couple of years ago. Besides the upfront costs, the electricity requirements for that Pioneer Plasma compared to a Samsung LCD is a monthly penalty you have to pay for that every-so-slightly better picture.

[grimgraphix]

"Sometimes, especially in a down economy, good-enough is just fine"

I would agree... except for one troublesome, little fact. The demand is never for "good enough" but instead it is for quantity over quality. People don't care about quality anymore, and haven't for the past 5 or 6 years. All folks care about is how small and portable a playback device is, and how many ultra compressed songs and movies can be stored in it.

I cringe every time some acquaintance who doesn't know me better, wants play the movies or music they have pirated off of limewire across my mid priced Energy home theater speakers. Why? Because when you have a speaker that can reproduce sound accurately, then it displays every flaw that low quality sampling causes. I laugh at people who brag about their 2 and 3 terabyte music and movie collection because they will never listen to half of the media that they have collected off the torrent sites at night while the world sleeps.

Everyone should remember that Pioneer produces several different price ranges of TV panels. They are not talking about dropping just the most expensive Elite line, but getting out of the business completely. The demand for quality is just not there anymore.

[pcfish]

They could also blame their marketing people, because not all companies who build quality products is going out of business.

[derrekw]

Bummer!!! :o(

[pjcamp]

Even sadder news -- I can't afford to support you in the manner to which you would like to become accustomed.

[Pauliex]

Wh y on earth can this be considered sad? It's simple market-driven economics, that means in tough times people will spend more sensibly. Sadder than the demise of the $10K TV is the look on the face of the average joe, who succumbed to market pressure and advertising and overspent on luxury consumer electronics when gainfully employed, who now finds himself out of work and with a massive credit card debt. Now that is 'sad'

[SteveW928]

Well, it is sad if it were a good company building a quality product and selling it at an honest price... but consumers only buy cheap disposable crud because it has more flashy lights and sculpted plastic on it. That seems to be the general trend in consumer electronics. However, I also agree with several who responded here.... who are questioning if this is the case with Pioneer. As I sad in another post... they seemed more the 'designer label' of the electronics industry. OK stuff, but far overpriced for what it is.

'Simple market-driven economics' only works well if there is an educated consumer base who isn't taken in by 'simple advertising' too much.... in other words... a reasonable market.

[blusky08]

It should be understood that most products these days--both across different model lines and across different manufacturers--share many of the same parts. This is true for everything from electronics to cars.

btw: Pioneer plasmas are NOT a good example since many don't like their innate fragility.

[gopnick]

I think your judgment is clouded by your income dependence on high end electronics, Mr. Guttenberg.

[cnetterite]

Hard to justify the cost of these expensive, yet great quality sets, when you do not have control of what goes into them. The Cable and Satellite industry do not support enough bandwidth to really take advantage of these super quality HDTV's. And seeing that Blue-Ray is just becoming an industry standard, not enough time for consumer to buy into it. That said, with technology changing so fast, it is hard to justify going all in when 5 years down the line something new may come along that is thinner, lighter, higher quality and perhaps cheaper. After all, that is the business model The Electronics industry has taught to the Electronic Consumer.

[MrGadgetman]

I agree. I also think that the timetable of supersession is less than 5 years and closer to 2-3 years!

[SteveW928]

I certainly agree with the general consensus of this article. I've seen it in my many years working as an IT consultant. There was a day when the customer would let knowledgeable people figure out the best solution for them. Then it progressed to the customer giving a laundry list of junk and telling the 'consultant' to install and make it all work. That's when I exited that line of business.

I've also spent years trying to convince people of spending a few more bucks to buy an Apple Mac, and only succeed a portion of the time (while the majority of the people who didn't listen would still like me to help them do the things they can't figure out how to do or fix their systems).

I totally agree about audio equipment! I used my dad's old HK receiver (which he bought before I was born) up until a few years ago, when I spent like $600+ on a Yamaha that has been, OK, but not half as good as that old HK. I probably should have bought the HK (though are they still as good?... as so many 'experts' swore by the Yamaha as well), but the Yamaha had a feature I really wanted... which has turned out to be mostly useless because of the poor design of it (multiple zones.... though it only passes analog signals.... when almost everything I WANT to input is digital... how clueless are their engineers?).

The state of average consumer electronic goods is disgusting.... in design, function, and reliability. However, I might agree with a few other folks here.... was Pioneer really good enough here to warrant the extra $$$? I guess I think of Pioneer as a bit higher end brand... but have also seen them as more of a 'designer label' of the audio world..... more of a fashion statement than actual real quality advantage. I think all that does is make the consumer buying cheap crud think they are all the more justified. Kind of the 'Monster Cable' of audio equipment.

In other words.... if companies really want the consumer to care about quality.... then they need to give the consumer a quality product at a somewhat honest price. I think Apple is a company that now falls into this category... Sony has been somewhat in the game on this, depending on product line (like PS3 is a good example)... I've been quite happy with my Westinghouse LCD for a reasonable price, and know many others who have been as well, etc. However, I'm still looking for a company to build an equivalent to some old Infinity bookshelf speakers I had many years ago.

> was Pioneer really good enough here to warrant the extra $$$?

Quality is not cheap. First, they have to spend more on research to stay ahead of the curve. You don't produce better products than your competitors by putting your researchers on a budget. That means more expensive products. Better products are usually made with higher quality parts, which also increases the price. But more expensive products result in few sales, so they have to recoup their research and tooling up costs on fewer units, which means they have to charge even more per unit. I'm sure there's some extra for brand and status, but it may not be as much as you think. Sounds like Pioneer is following Fujitsu's lead. Fujitsu made high end plasma TVs, generally sold in high end audio video stores. They got out of the plasma display business in March 2008 for the same reason: people didn't want to pay the premium for better quality.

[SteveW928]

I totally agree that quality costs more money. I'm just asking if Pioneer was hitting the right balance. For example consider cars.... Chevy Cavalier, Honda Civic, BMW 325i, Porsche 911, Ferrari 360 Modena. There is not much doubt (for anyone who knows cars) that quality and capability climb through the list with the possible exception of the Ferrari at the top in reliability (though very high build quality). I drive a Civic, though I'd drive a BMW if I could afford one. I think the Civic and BMW are good examples of quality at a reasonable price-point. The Porsche and Ferrari are awesome, and fulfill niche markets, but aren't priced in proper comparison with their quality. No doubt the Porches is levels up in overall quality, but you'd have to face it that you're also paying a premium for the name badge. For the Ferrari, you're absolutely paying a heavy price for the name.

I think the same is true in consumer electronics. Most people buy the cheapo stuff, which either isn't good quality and/or breaks a lot. Some people pay more attention and get the better quality, though maybe not 'top-of-the-line'. Then there are audiophiles who buy really great stuff... but it could be argued to be over-priced for what you're really gaining. Then there is the almost-obnoxious products that might (or might not) be better quality, but maybe have great design or special features that cost obnoxious prices. It isn't JUST always a matter of quality.

[CyberBob859]

Pioneer should seriously think about opening their own retail stores and become a much bigger online presense, similar to what Apple does. If they want to sell higher quality products at decent margins, they have to get away from traditional retail channels which will always cater to the "good enough" crowd mentality and promote their own in-store sales.

[tigrzeye]

Excellent point CyberBob859. There should always be room for high end high dollar equipment. Just not in Best Buy or Sears or Wal-mart.

I have a friend who installs high end video and audio equipment and home lighting controls etc. He only works by word of mouth. Doesn't advertise a bit. His home is his showroom. When he installs a system/theater and the owner has all his friends over they all WOW over it and he gets a ton of referrals. He doesn't sell low dollar sets even if asked. Doesn't have free interest financing, no credit cards accepted for payment. He had an "extremely good year" as he put it last year. This one place where high end electronics have a home.

They also have a home as when reading reviews they are a point of reference and what lower sets are compared too. So their quality forces other manufacturers to at least TRY to get it right.

Just because the walk in the door of a retail store clientele can't afford them, doesn't mean they aren't "necessary".

[ev61]

lol, his home is his showroom? The first rule of high end installation is "don't let your home be your showroom"

[chrkeller]

I have mixed feelings. I love nice equipment, but Pioneer has gone overboard. Honestly they have the best plasma sets out there, but 60 inches runs 6k while Panasonic is below 4k. The Panasonic is only slightly inferior, but at 2k less it is a very easy decision. I went with the 58 inch 800u by Panasonic for $3600, if Pioneer had better pricing things might have been different.

[chrineg]

I agree with sting 7K, why spend so much more for what is considered "The Best" when you can get a set that is very good for a much more reasonable price. It's not about bottom feeding it's about being fiscally responsible. The very nature of the electronics business dictates that if you buy the very best today in a very short time span it will be obsolete tech, very wasteful if you ask me. I would rather be funding my savings and retirement then throwing cash at ultra high end TV's.

[chefmitch]

I think it is a loss that one of the best flat panel makers is leaving the business. The technology breakthroughs at the top trickle down and improve the lower priced alternatives.

The big problem is that paying a premium for a TV is a tough sell. Look at TVs from 2 years ago - thicker, lower resolution, lower contrast, fewer connectivity options (hdmi, ethernet, etc.).

The other big problem is that it is not very easy to tell the difference in picture quality between sets. To be able to get 2 competing sets playing the same demo material from the same source hooked put the same way and then repeat that with other sources (let's look at HDTV, Blu-Ray, DVD, streaming internet video) is impossible.

There have been predictions that Apple will enter the TV business - let Pioneer's failure be a warning to them. Stay away - the TV business is a commodity business.

[SteveW928]

Heh.... the computer business isn't that far from being a commodity business either.... though it seems things have finally gotten to the point that a few people are starting to get snapped back into reality. The problem is that I'm not sure there is anything quite as bad in the consumer electronics as M$ in computers, nor the complexity of software and the Internet. People can buy super-crumby A/V stuff, and as long as it doesn't get so bad that it just breaks in a short time period... it really then comes down to whether the average person cares (or can tell) the quality difference.

I've sometimes thought of being an audiophile as almost a curse.... I guess if you can't tell the difference, it saves one a LOT of $$$. ;o)

[minimalist]

Apple gets the importance of marketing, especially when you are charging premium prices. Pioneer didn't get it and for that they are now paying the price.. Shame too, because their lower end Kuro's were actually not unreasonable at 2400.

The computer business more or less is a commodity business yet Apple still gets away with charging a large premium for their products and they are actually reporting gains on the computer sales right now while all the other manufacturers are reporting loses.

Clearly they are doing something right and if anybody had a shot at selling a premium priced TV right now it would be Apple.

[SteveW928]

@ minimalist - I disagree about Apple and TVs... consider Apple's LCD market. There just isn't enough complexity in a TV (from the consumer point of view) to justify the extra price margin. For computers.... with all the actual user complexity and UI... along with problems like virus, etc.... it really makes a substantial impact at the consumer level to pay attention and make the change. You are totally right that Apple recognizes the need to market enough to actually explain the difference to the average consumer. That might help with TVs... but if the average consumer has no outlet to actually SEE a difference... and there isn't some specific style or UI improvement that is notable.... they just aren't going to buy it.

[planblove]

Pioneer could've adapted to the market condtions but chose not to. It nobodys fault for their situation but their own. And Steve I'm not sad, I'm extremely happy with my $2200 "bottom feeding" 50 inch Panasonic. This is only sad to a very, very small distinct group of people. Rich people with disposable incomes.

[DatabaseDoctor]

"I want companies making the highest-quality products to prosper"

I'm not sure I agree with that statement. The key to business is setting a balance between what you deliver vs what you charge. There is a sweet spot for different types of consumers that you can choose to go after... one point or many is your choice. The companies making the absolute best products can be charging so much for them that they don't prosper. Their fault, not ours. The companies charging the least for the worst stuff will have customers, but not as many as the budget value at the right budget price (see visio). Pioneer may make the best tv's, but I can't route for them to make a fortune if they charge too much.

Don't lay it on the consumer. Sales / Marketing people are as much responsible.

[PrettyStuzz]

Until LCDs and plasma displays, North American consumers had a choice between Sony's Trinitron proprietary system and RCA's system, which most TV manufacturers used, for half the cost. Never did I see a Trinitron in a retail store that wasn't badly tuned at twice the price. The retail mark-up for Sonys was tiny. Most consumers have always preferred inferior products.

[research1st]

Guess we've found the point of diminshing returns... and what the consumers will support...
A $10,000 Pioneer v/s $2,500 Brand X. Pretty big price difference if you ask me...
The question to be asked... Are you getting 75% more picture quality and features with the Pioneer?
Obviously not.... Probably more like 10%, at best.... From a pure cost standpoint the Pioneer is way overpriced. Actually, Pioneer should be asking themselves why there cost is so much higher when they are only marginally better than the lower priced competition.
Only those consumers that want "the best" and are willing to pay for "the best" are going to be in that market. And that market is definitely dwindling....
And for the record... I'm not sure I would call people buying $2000+ video units bottom feeders... I still think that's a lot of money no matter how you look at it...

[Orbitalint]

I agree with your notion of relative values. My only gripe is that $10,000 is 300% of $2,500. It actually probably makes your point a little more. Does a 10k TV have 3 times the picture and features? Nope.

[gsmiller88]

They already stopped making their own displays in-house, why bother even marketing TVs?

[blusky08]

Plasma is dying.
With OLED and other tech on the horizon, Pioneer probably saw the writing on the wall.

[george_liquor]

What other tech? SED is dead, and OLED is years away from mass-market. The only OLED set available is 11" big and costs $2500.

[blusky08]

Apparently due to the delays with OLED, Sony is pushing forward with FED displays this year (you can Google it).
Also, LCD is closing the gap fast with LED tech, and moving into new territory with 3D. Then there's Laser displays from Mits....

[ghostofitpast]

As long as my finances allow, I shall continue to spend money on "live" performances and avoid obsessing over subtle differences in audio and video equipment that may be beyond the range of my (aging) perception!

[Zoobie]

Today's low-end TVs have the same specs (and sometimes better) than last year's high-end TV. It's not paying for quality, it's the early-adopter price premium. As was stated earlier, this is just the model that the electronics consumer has been taught, and Pioneer, Sony, etc. don't want to play that game. In the meantime, my Panasonic TV is awesome and I paid a lot less (30%) than the Sony equivalent.

[mmntech]

My dad was considering a Pioneer plasma. I guess I'd better tell him to hurry up before they're gone. It's true people don't pay for quality these days because we live in a disposable society. You're lucky if you have any appliance 10 years. I've had my Pioneer stereo receiver for over 30 and it's still the best sounding one I've ever owned. Even a later Harman/Kardon one didn't even last that long.

[SteveW928]

My question would be though.... would a new Pioneer receiver be as good as your 30-year-old one? My guess would be no. Many companies who used to build good stuff are now building crud... but still marketing that reputation and charging extra $$$.

[rainsft]

If Pioneer had spent a lot of money on advertising themselves as an "image" product (e.g. Bose, Lexus, Apple etc.), they might have appealed more to those "image is everything" types, and been a bit more successful at charging more for a product than normal people were willing to spend. I'm glad that they didn't go down that road, but will miss a quality alternative in the market place.

[minimalist]

Pioneers failed horribly at marketing themselves. You can't just let your product get lost in a sea of blaringly bright LCD's with crappy content running to your display and let Sony and Samsung steal the show with their blu-ray end caps.

If you are going to produce a premium product you have to go the extra mile to get all the details right and more than anything that includes marketing.

Would Lexus sell the number of vehicles they sell if they just let their cars be thrown into the mix into a lot with a bunch of Dodge's and Toyota's with no knowledgeable sales people to sell you on the premium vehicle's qualities? That's effectively what Pioneer did when they let Berst Buy handle the way their products were displayed. They were horribly sloppy.