Sony, Samsung limiting discounts on their HDTVs. An act of desperation?

Sony, Samsung limiting discounts on their HDTVs. An act of desperation?

Summary: The two electronics giants are limiting retailers' ability to discount their televisions, which should help the Best Buys of the world who often can't match the sale prices of online retailers.

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TOPICS: Samsung
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The HDTV industry has been ailing of late, whether it's TV manufacturers dealing with slowing sales or bricks-and-mortar retailers coping with buyers making more purchases online (often after testing sets in their stores). Samsung and Sony have decided to use one weapon in their limited arsenal to cope with the difficult conditions.

According to the Wall Street Journal, the two electronics giants are limiting retailers' ability to discount their televisions, which should help the Best Buys of the world who often can't match the sale prices of online retailers. And given the general trend of falling prices for sets, the move could help prop up profit margins for the companies.

In theory, if there are no sale prices for Sony or Samsung sets, you could just buy a new TV while you're at Best Buy instead of checking prices online on your smartphone as you're in the aisles and then buying from the cheapest Internet store. That increasingly common phenomenon known as "showrooming" has been a major reason that Best Buy has struggled recently, despite decent first quarter numbers.

While legal rulings have determined that manufacturers are in their rights to limit discounting of their products, there is one potential drawback to the strategy: What if people buy fewer Samsung and Sony sets because they're priced too high? LG, for example, told the WSJ that it's okay with such discounting, presumably because it could help its market share. Target has also told TV manufacturers that another way to fight showrooming is to make differentiated products for physical retailers that the Amazons of the online world can't offer.

Do you agree with Samsung and Sony's gambit that limiting sales on their TVs will help Best Buy and other bricks-and-mortar stores (and their own bottom lines)? Let us know your thoughts in the Comments section below.

Topic: Samsung

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22 comments
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  • Yeah that works...

    Instead of just sending somebody out to best buy and the like to push their TVs, they decide no more deals!
    slickjim
    • Hahah

      That's what I understood from reading the article. LMAO
      Think about it, and it actually makes sense though.
      Who doesn't like to go down the Best Buy to check out what they have on sale though before buying? I know I do. I have to see if it is real to begin with.

      BUT You make an excellent point too. They should know more than better than limit their loyal customers who will visit their websites (i.e. Sony.com or Samsung.com) to purchase a television.
      Chamayo
  • This will only diminish Samsung/Sony sales

    Samsung and Sony both have good TVs, there's no doubt about that. But so do a lot of other manufacturers, and if the entire industry doesn't agree to this "no discounts" thing, the end result will be people buying non Samsung/Sony TVs.
    Aerowind
    • If the entire industry colludes on setting prices...

      It's probably illegal. Doing that in an election year assures some politicians will be right on it.

      Best Buy has been a misnomer for ten years at least. No amount of concessions or deals from manufacturers, suppliers or vendors will save Best Buy as they have already lost their reputation for trustworthiness. Why didn't they realize that ripping off a customer even once is too much?

      Sony and Samsung won't be considered by me until they reverse their policy. My Vizio works just fine.
      djchandler
  • Huh?

    Umm....I won't buy Samsung, due to poor customer service and who would buy a TV that is made by a company that has traditionally produced Stereo equipment and very poor digital cameras?

    In all honesty both company's TVs seem to perform very poorly in the stores when I have seen them. Using the same signals as the other TVs, they usually have snowy pictures and/or artifacting issues.

    In my opinion, the best quality seems to be coming from Vizio these days and they have the best prices too boot. Toss in the fact that they are a local company to where I live and honestly, I don't see the point in considering the other guys.
    cmwade1977
    • Not to knock Vizio but

      aren't their sets made from "leftover" components of prior year models from the other vendors - I thought, at least initially, that was their business model. That being the case, I cannot see how their "quality" is any better, though you can definitely argue price / performance.
      tbuccelli
    • Samsung's made good monitors since before VGA

      "...who would buy a TV that is made by a company that has traditionally produced Stereo equipment and very poor digital cameras"? Surely you jest - Samsung have been solid in the monitor business since before flat screens, being one of the few 3-year-on-everything brands.

      I first noticed Samsung in the age on 12" and 14" monochrome PC monitors, where screens were "paper white", "amber", or "ancient green". I had a particularly clear 14" amber that I hung onto, and noted it was a Samsung; first time I'd seen the brand.

      On the other hand, their optical drives for PCs tend to frequently fail in a particular way; the trays get "confused" about whether they are open or closed, so they either spontaneously open (bad news when running a booted OS from there) and/or pull tighter closed when you try to open them. As Sony are beyond the pale (rootkit, battery debacles) I use LG drives instead.

      I'd also not go Samsung for hard drives - where the need for a proven track record makes it hard for "newbies" to enter.
      cquirke
  • Sony/Samsung Pricing

    Both companies need to stand up and smell the roses! While their sets are among the best, other vendors, LG and Sharp, offer comparable sets for a lower price out the door. I doubt either of these bigs will be able to continue holding price lines. TVs are have become a commodity and all offer about the same features. The end result of this "price approach" policy will be loss in market share.
    rwscolari@...
  • How does this end happily for either company?

    LG is already taking advantage of Sony/Samsung's attempts to keep prices higher by allowing discounts on their TV's. LG picks up marketshare while Sony and Samsung lose market share. Unless the margins on the reduced marlet share make up for loss of sales to LG, then the strategy isn't sustainable.

    The only company I would imagine being able to execute this type of strategy would be a premium manufacturer like a Bose or Bang and Olufsen. But they tend not to sell in big box retailers and when they do, they don't lower the price. Sony and Samsung certainly have high end products, but they also have lower cost products that require volume sales to keep them profitable.

    It's difficult to see how a differentiated product strategy works, either. Too many TV's of similar type from the same manufacturer will just confuse people. If the consumer is having trouble comparison shopping, they will likely choose the product they are best able to comparison shop. 10 different but similar Sony's with different model numbers vs. 4 models of the LG set.

    At best, this is a holding strategy while both companies tighten up the supply chain and business processes to drive down manufacturing costs. Trying to artificially prop up prices in a market with the transparency of this one is like arguing against the law of gravity. I can't imagine it will succeed for long, there's too much upside for competitors.
    Bugbyte
  • Just bought three sets - Vizio, Sony, and Toshiba

    Outfitting the conference rooms in my office with big screen TV's (used primarily for Powerpoint etc.). Of the three, I think the Vizio is the best. Simple remote control, includes Netflix and other basic web-TV apps, and it has a terrific picture.

    The Sony set doesn't have any obvious advantages in spite of being a little more expensive.

    So, based on my personal experience, I think Sony and Samsung are simply going to lose market share on this.
    pjb@...
  • WalMart

    "Target has also told TV manufacturers that another way to fight showrooming is to make differentiated products for physical retailers that the Amazons of the online world can???t offer."

    WalMart has been doing this for years. Selling TV models that appear to be identical to BestBuy's models, yet they are distinguished by slightly different features and model numbers.
    malcolm@...
    • Store Unique Models

      It's already difficult to distinguish between various similarly named models; how is coming out with store-unique variants going to actually help? Unless the store unique models offer one or more major features that aren't available in the "online" models, most folks will go with the less expensive machine. if there IS a major feature available only in stores, the online sellers will raise cane and customers will order other brands that other that feature at a better price.
      Lazarus439Z
  • Who needs Sony or Samsung

    When Sony invented Trinitron picture tubes in the last century they were innovators. Now they make televisions which are in no way worth the outrageous prices they charge. We have a Toshiba 47 inch 3D 240 HZ, LED, Connected TV which I just paid $899 for. We also bought a 73 inch Mitsubishi 3D DLP TV which comes with internet apps. That cost us $1299. DLP is a very good format and we still have a 65 inch 2009 3D Mitsubishi which we bought for $999. I see no discernible difference in picture quality in most name brands. Sharp sells and manufactures more 60 inch and larger panels than any other company and they are often sold at deep discounts. Retailing is different than it was before and price fixing was found to be illegal in the 1960s when the Federal Courts outlawed Fair Trade Laws which were price fixing. Manufacturers do have the right to limit distribution but it is illegal to fix prices. Shame on Sony and Samsung. This will not work out well for them.
    barryberlin@...
  • RE: Walmart

    Walmart is not the only one to do this, Best Buy has started doing this, albeit on a smaller scale. Last Black Friday they offered an ASUS Transformer tablet that had most of the features that the retail one had for $110 less than the retail one, ran out at 4:30AM.
    mkemp@...
  • there is no bottom to discounting, only eventual business collapse

    as the car industry learned a few years back (remember, just before multiple multi-billion dollar bankruptcies?) you can never discount enough, because somebody always (in desperation) offers more cash, more freebies, etc. to hold onto some market share. it's the same story here, with not much true product differentiation, no consumer interest in real quality, and essentially zero service support from everybody, it's now all about price. when the smoke clears, you will have a few consumers laughing over the incredible deal they got, and a lot of people out o work, because their company just couldn't give away enough to sell their product.

    the discount path is very dangerous, and is usually a sign of industry over-capacity or not enough available capital for buyers. once you start down this road, it just never stops until the players collapse. nobody shops now unless there's a deal, think what that really means. everything is driven by sales and incredible discounts. too bad employees don't feel like discounting their labor and suppliers the raw materials to make that actually possible.
    walter2
  • Seriously?

    Well guess who will be reporting a loss!
    Silly folks and they also tell sellers like Tigerdirect to hide the price.
    The Only reason i bought my Samsung LCD TV is that it was on SALE!
    SHAMKEN@...
  • Great! I'll gladly go with Vizio

    Like pjb, above, I have found my Vizio to offer superlative picture quality, features, controls, etc., and would be more than happy to choose another in preference to a non-discounted Sony or Samsung.
    eustace
  • Taxes Law will have to change a litlle bit.

    besides sometimes you get discounts online. Most people avoid paying taxes buying online. This is a legal problem that should be worked out. Eventually all online retailers depend on physical stores showrooms so, if physical stores disappear they will eventually have to create some. A la "Apple Store way"...

    Maybe a new tax should be implemented on online retailers that might level the field for physical stores. And, at the same time, some kind of subsidy should be give to the physical stores. I.e. online retailers should pay traditional stores for the showroom services. (just my 2 cents)
    jsapaj
  • An act of desperation

    is shopping at Best Buy to begin with.
    klumper
  • sony- samsung - target - best buy - price fixing

    Are we in a free economy ?
    if yes can samsung and sony explain their price fixing to help 2 retailers which have made their living destroying other business , so it is highly irononic that Both Sony and samsung the sme day announced they will cut off any retailers selling their junk lower than either circuit city or target , this is not free economy it is price fixing at the detriment of the consumer.
    BuyAmerican