December 2, 2006 6:00 AM PST

Sony holds secret sale on HDTVs

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There's nothing like the delight of finding an incredible bargain on a tech product as desirable as a high-definition television. Especially if everyone else is in the dark.

Over the Black Friday weekend, from November 24 to November 27, Sony cut prices by up to $900 on certain HDTVs in both retail stores and on its Web site without telling consumers about the move. And on Tuesday, the prices had returned back to normal.

The move has analysts buzzing as they ponder why the company would do so without advertising and for only four days.

HDTVs

Sony's $1,799 50-inch Wega KDF-50E2000 rear-projection TV, for example, was available for $500 less than the advertised price if purchased within the four sales days. The $3,399 40-inch Bravia LCD KDL-40XBR3 was $600 cheaper during that window, and the $5,999 70-inch KDS-R70XBR2 was $900 cheaper. But anyone who tries to buy those televisions this week will pay full price, likely without any knowledge of the bargain that got away.

All of the Sony's retailers were "aware" of the steep discounts the company planned to offer on its Web site, a Sony Consumer Sales Group representative said. U.S. retailers "were given the same option" to cut prices on TVs--up to $900 on certain models--but whether they did so or not was up to them, the representative said.

Several online retailers were able to take advantage of the sale prices, and a Best Buy representative confirmed that the retail electronics giant also offered the sale prices over the weekend.

But Sony says consumers were not alerted to the sale via advertising. Only those hardy souls braving the Black Friday crowds or who happened upon Sony's Web site over the weekend would have noticed a 70-inch microdisplay rear-projection TV for $900 off its original price, or a more than 20 percent savings on a 40-inch LCD high-definition set.

Seems to me they're just giving (customers) money that they didn't expect they would get. It's like handing out dollar bills to everyone that walks in the store. Why would you do that?
--Analyst Stephen Baker, The NPD Group

It's not clear why Sony conducted the sale without the hoopla normally associated with a big holiday promotion. Sony would not comment on why it did not advertise or why those particular models were discounted. Analyst Stephen Baker of The NPD Group hypothesized that the secret sale could have been an attempt to drive volume on some of Sony's most expensive televisions, though he questioned the motivation.

"I'm not a big fan of unadvertised specials in general because the idea of having a special price, the point is to get people to come buy from you," he said.

One reason might be that competition in the HDTV market is so steep, said Steve Kovsky of Current Analysis. There are dozens of companies fighting with each other to get HDTVs into living rooms, especially in the flat-panel category, he said.

Sony has long enjoyed premium brand recognition in the television category, but it could be starting to feel the heat from companies like Panasonic, Kovsky said. "They need to stay on top and they've had the luxury of having not only best-selling products, but also products that are the most expensive in their class," he said.

There's also the possibility that Sony found itself with a little too much inventory this holiday season, and needed to clear its shelves of HDTVs to avoid higher inventory costs. However, HDTVs are the hottest items on the consumer electronics market this holiday season, with analysts expecting huge increases in shipments.

They're also expecting huge price cuts, but it's just not clear why Sony would cut prices for just four days of the five-week holiday shopping season if it was trying to keep up with the Joneses among the HDTV suppliers, Kovsky said. TVs are a profitable segment of Sony's business, unlike its newest gaming console, in which Sony is believed to be taking a significant loss on each sale of the PlayStation 3.

Sony also showed an unusual interest in aggressive pricing over the Thanksgiving weekend in the PC market, another area in which it has been considered a premium brand. However, it made sure customers took notice of the $599 notebook available at Best Buy with prominent placement on the back cover of Best Buy's circular.

Whatever Sony's motivation for the clandestine sale, it has certainly raised a few eyebrows, Baker said. For one thing, consumers who might have considered buying a HDTV over the weekend, but needed some more time to decide whether to spend half their Christmas budget to watch the college football bowl games in high definition, would now be confronted with a 20 percent price increase.

Also, by not advertising the sale, Sony was essentially catering to customers who were ready to buy last weekend and ready to pay the full price they had expected to encounter, Baker said. "Seems to me they're just giving (customers) money that they didn't expect they would get. It's like handing out dollar bills to everyone that walks in the store. Why would you do that?"

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Stephen Baker, HDTV, sale, NPD Group Inc., Black Friday

28 comments

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..plz tell baker
that it's not like handing out money to the customers who walked into the store.

It was for following reasons
- surprising pleasantly to customers who already wanted to buy 1
- allure customers who want a HDTV but didn't allocate full price budget and still walked into a retail store
- set the expectation for next year that - Sony will have more such unexpected and favoured deals for holiday season

and last but not the least

- save the money on Marketing/Promotionbut yet rake in the extra moolah from unexpecting customers.


Check their sales number and you will figure out.. what I am talking about.
Posted by nonicks (89 comments )
Reply Link Flag
Did Samsung do the same?
I bought a 50" Samsung DLP last weekend for $1299 with great financing (Circuit City). This weekend it's back up to $1799. Same for the 42" model DLP (was only $999).
Posted by jsamuels84 (5 comments )
Reply Link Flag
Walmart
Walmart is waking them up to the fact that they are way overpriced!
Posted by fletchb (151 comments )
Reply Link Flag
Sony Lost Me
After decades of being a big Sony customer, my computer monitor
died and it was like pulling hen's teeth to get them to fix/replace it.
It was pure hell for months. After being treated like dirt, I'll never
buy another Sony prouct, no matter how low the price is.
Posted by TVToy (3 comments )
Reply Link Flag
Me, too
I bought a Sony computer will Corel's WordPerfect pre-installed. After updating WP, there was a problem. I called Sony and someone in India said "Call Corel". Corel said "Call Sony". Then, my .NET file was corrupted. MS said "Call Sony". Sony said "Call MS". And this was my first day online. Sony in Japan doesn't use Indians or Chinese for their customer service. Why should we in the U.S. No more Sonys for me.
Posted by dzugashvili (2 comments )
Link Flag
They'll have to drop them a heck of
a lot more before I'll buy a Sony product again. I figure the Rootkit they illegally gave me cost me more than what they dropped the prices. My last Sony TV failed right after the warranty ran out. No sony products for me again, ever!
Posted by GrandpaN1947 (187 comments )
Reply Link Flag
Sony is desperate
They have screwed soooo many of their customers with rootkits, lawsuits, and bad warranties that the customers are looking elsewhere for their products. The "Sony" brand means something else to customers than what it used to. Instead of being worth extra money, it means rootkits, lawsuits, and faulty products.
Posted by GrandpaN1947 (187 comments )
Reply Link Flag
Good greif
"Grandpa" is the perfect name for your clueless on-line persona.

No one is getting a rootkit from an HDTV. The lawsuits related
to the rootkit issue are agains Sony MUSIC, not Sony electronics.

The Sony brand name still means exactly what it always has. The
best, most cutting edge technology for an attainable, albeit
higher than bargain-basement Chinese crap prices found
elsewhere.

Sony is far from "desperate" and the turnaround the company is
making is a historical effort that everyone is benefiting from.
The bottom line remains this: If you have the desire and the
means for the highest quality electronics; Sony is your choice.
Posted by Deekman (45 comments )
Link Flag
Red herring and a waste of editorial space
We have a strange culture here in the USA, where people place an extraordinary amount of their self-esteem at stake over whether or not they "got a better bargain than the other person" on something.

Any manufacturer or retailer has a right to set prices as they see fit. (within legal limits, and surely Sony is not offering product below cost here) If Sony's "regular" price on their HDTV's is competitive (as it would have to be or they would never be a major player in the market) then they are not in any way "gouging" anyone by offering an limited deal for a very limited time.

An amazing amount of consternation over nothing at all!
Posted by pjk0 (1198 comments )
Reply Link Flag
Time Value of Money
Get the better deal, reinvest the rest.
Posted by jion (4 comments )
Link Flag
Marketing Experimentation?
has any of those hyper-smart analyst thought that sony may have run an experiment to test consumer response to pricing changes? the best way not to bias the sample of respondents in such an experiment is not to advertise the promotion.

although letting retailers self-select whether or not to run the price promotion introduces another bias into the experimental set-up, this approach should guarantee that sony gets a test group and a control group for the experiment. (and considering that sony would cause an outrage in the distribution channel if it were to give price cuts to some retailers and not others, this approach is probably the only feasible one.)

with such an experimental set-up, sony will have shopping data from one of the busiest shopping days of the year from retailers who ran the promo (the test group) and they will have data retailers who didn't (the control group). armed with such a data set, they could determine if an increase in expected volume- generated by a price drop-will offset losses in margin (from lowering price). if sony analyzes the data quickly, they will have a good idea which promotional approach, say, in the last two weeks before christmas (also very strong weeks in the season) is likely to produce the highest returns for sony.

without an experiment such as this one, a widely publicized price promotion in the last two weeks of the season, may become very costly to sony if they were to lower prices but couldnt make up for the margin loss with increased volume . and that would most certainly displease wall street and the analysts much more...

so if my hypothetical example were to be the case, this story would be an example of very good marketing practice and control. unless the complaining analysts know that sony is in fact not running an experiment, there is absolutely no reason to complain. but who said that all analysts know what they are talking about? also, maybe sony isnt running an experiment after all . but the time to evaluate the merits of their behavior isnt now, its in january after the close of the christmas shopping season.
Posted by aleforce (1 comment )
Reply Link Flag
Even worse for the retailers?
I actually went out with the intention to purchase one of the
"limited availability" Panasonic plasma's on sale, which I didn't
manage to get on Black Friday. After failing at that, I came home
to do more TV research and the Sony rear projections kept
getting mentioned as being even better performers. That's when
I found out the 60" Sony were $900 off.

It got better though. Circuit City sold me the Sony 60" for
$2,399 on the Saturday after Black Friday (They were sold out in
most stores). I went ahead and took their credit card, which gave
me the purchase at 0% interest for 18 months, and then on top
of that they gave me 10% off on all accessories purchased with
the TV.

On Tuesday I visited Circuit City again to pick up a small item
and found the 60" Sony cut down to $1,999, which gave me a
110% price challenge return of $462. Circuit City explained that
Best Buy had cut the TV $200 and they wanted to top that, so
they cut it another $200 for a $400 total price cut.

I'm not sure if it was a screwup or part of Black Friday, but
Circuit City gave me a $599 TV stand for $340.

When I checked again in the next couple of days, the set was
$2,699...
Posted by patch_tuesday (2 comments )
Reply Link Flag
BB and CC say the retail price is...
Best Buy and Circuit City's websites report the retail price on this
set as being $3,299.
Posted by patch_tuesday (2 comments )
Link Flag
Makes Sense to Me
1) Some of the items contained obsolete/older technology. Sell it before the public becomes to tech savvy and it collects dust in inventory
2) Sony made a decision not to advertise, thus saving costly ad dollars.
3) Most important, the surprise deals" causes articles like this one as well as causes consumers to keep an eye on Sony products watching in anticipation for the next surprise discount.

I believe Sony is smarter than most give them credit for.
Posted by Dan S (1 comment )
Reply Link Flag
Correct!
Dan, I definitely agree with you!

The first obvious point that came to my mind was your 3rd point: now people will have in mind that Sony once made a "secret sale" and is likely to do another someday.
And it provoked a lot of articles like this one on CNet.
Posted by Phil-IT (31 comments )
Link Flag
Oh well
Oh well, who cares anyway, anything with the brand name of SONY, for me I wouldn't be surprised if the units sold cheaply in this mystery sale were repaired factory quality control rejects!

For after all, SONY did give us the infamous rootkit, which infected more computers world wide than many live computer virii,a dodgy batch of cybershot camera's with dew point problems ,a batch of very dodgy LCD tv's preprogrammed to require expensive service calls to fix! and undoubtedly much more!

Yes who indeed will buy SONY in this day and age?
Posted by heystoopid (691 comments )
Reply Link Flag
I don't buy Sony products under any circumstances
I've had bad experiences with product quality, and I've had extremely negative experiences getting warranty service. Add to that the fact that this company would stoop so low as to install the rootkit virus on customer's computers and they've lost me for good. I won't even rent a movie from Sony Pictures.
Posted by jen953982 (5 comments )
Reply Link Flag
Very Clever
Let the other vendors pay the $$ to advertise to drive traffic into the stores, and then undercut them on prices.

Worked for me. I got a new 50" SXRD KDS-50A2000 at Best Buy for $1,899. But I had been planning to buy that set for some time.
Posted by meh130 (145 comments )
Reply Link Flag
Sale not Value
I saw the sale. I bought a LG for less. Sony needs to go for half off to be a value.
Posted by Iboughtbeta (7 comments )
Reply Link Flag
SONY=POOP
I've had a 36" XBR replaced three times only to have third act up and out of warranty (compared to other manufacturers, Sony is not surprisingly arrogant there too at 1 yr parts 90 days labor on a TV that retailed for $1999). Sony lost me (as customer).
This kind of strategy will only backfire on the bottom line. Dealers want traffic and sales, not flash-sales gimmicks. Well, off to buy a Samsung HDTV... bye bye Sony.
Posted by Below Meigh (249 comments )
Reply Link Flag
Sony = quality
I actually have a Samsung HDTV, but I also have a Sony Hi-Fi, a Sony Trinitron TV, a Sony VCR, Sony headphones, Sony Walkman and Sony Mini-Disc Walkman.
From all, the VCR is the only device which is ruined, after more than 10 years without ever having had its heads cleaned. All the rest is working perfectly and I'm very satisfied with their quality, would buy them again if it was today.
Just because Below Meigh has a problem with its Sony 36" XBR doesn't necessarily mean all their products suck, does it?
Posted by Ryo Hazuki (378 comments )
Link Flag
Sony
I bet confidently if it was Apple doing this people would be overwhelmed.
No matter what Sony does, people just criticise. They could even give away their products for free, people would say that's bad.
It's just an unusual promotion, people.
Posted by Ryo Hazuki (378 comments )
Reply Link Flag
The reason they did it is perfectly logical.
Loyalty Test Marketing. That's not it's official name, but that's the concept - test how loyal consumers are, and how many people check you out based on your branding. Advertising would bring people for the wrong reasons. Sure it increases dollars, but that doesn't matter if the amount returned equals or even exceeds the amount sold. Aside from that they may not have cared about making any money, given the sheer amount of discount per set.

I seriously think they were trying to test consumer loyalty and brand strength by seeing, of those consumers who regularly browse Sony's site, who would notice that some stuff had dropped price, thus telling friends, thus making more sales, etc.

Part of the problem has always been places like Costco and Walmart that sell substandard TVs at critically low prices in an attempt to spur demand. While that's great and all for the frugal consumer, brand names do matter. Sony's known for their products breaking down and being generally poor, beginning with the original PlayStation and extending to their other home entertainment products. Trying to improve that image is a good bet.

I know I personally have stopped supporting Sony completely. Some of the up and coming brands like Polaroid (I know they've been around for years, but I mean for their other non-camera products that they're recently releasing) and LG (same thing, but for their non-phone technology) are making great strides. I just can't deal with Sony and their poor quality products anymore.
Posted by ReVeLaTeD (755 comments )
Reply Link Flag
 

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