Seiki’s Cheap 4K UHD TVs: Market Expander or Market Killer?
Frank Kendzora, executive vice president of Seiki Digital/TongFang Global, talks about the strategy behindselling inexpensive 4K UHD TVs. The company at CE Week unveiled a 39-inch model for $699, to go with the $1,499 50-inch model that launched in April. A 65-inch model is expected by year's end.
DEALERSCOPE: Describe your go-to-market strategy for your UHD TV.
Frank Kendzora, Seiki Digital/TongFang Global: We launched a 50-inch true 4K panel and have plans for at least two more in the next few months: a 39- and a 65-inch. We may even introduce a 55-inch as well, before the end of the year. So we’ll have three, possibly four, by the fourth quarter.
We’re taking a little bit of heat. We’re getting talked about for taking the profit out of the product – which isn’t really what we’re doing. My goal with this product is, if you know it and have looked at it and understand it, it’s really just a basic TV, which is our whole marketing strategy at Seiki. Our tagline is ‘Simply Brilliant.’ We make a basic TV. We don’t do a lot of bells and whistles, or 3D, or smart TV. We just want to bring a basic TV tomarket. So if somebody’s not interested in purchasing 3D or smart, they can do that with us. If they want the other features, there are certainly many other great manufacturers who can provide that. We’re targeting a section of the market that’s really just looking for a TV, which is what our new 4K panel is. It delivers the newest and greatest technology but without all the bells and whistles, and without the big price tag that comes with them.
DEALERSCOPE: What are your expectations for sales and profits for UHD 4K TVs for 2013?
Kendzora: As many as we can. We’re still working on the budget for the balance of the year, and it has to do with what the timing is when we get the newer product. We’re juggling all that, based on the shipping schedule. Our expectation is not huge on the 4K panel, because our customer base is in that lower price tier. There’s no secret that we’re a Tier Three brand when it comes to most of the product. But this is a little higher-priced, and a little different target market.
In the HD industry launch several years ago, the market was still pretty small for that product. It was expensive and there wasn’t a lot of content out there. It’s basically the same story all over again with 4K. By offering just a simple TV with a little lower price, I think, we’ve actually brought it to a broader market of people who are probably the early adopter, or those who want to be future-proof; it’s the perfect product for them, and maybe they’ll want to step up and spend $1,500. We’re looking to expand the initial base of people interested in 4K, so that six and 12 months from now they don’t say, ‘Gosh, I wish I would have bought this technology because content is all over the place now.’ So they can do that now at a much more affordable price with us.
DEALERSCOPE: How are you able to hit such low prices on your UHD sets?
Kendzora: We own our own factory in China. We do all our own electronics and bezels. We’re pretty much self-sufficient. When we control the manufacturing side of it, we don’t include a lot of bells and whistles; it’s a very simple menu system in there. It’s not smart TV, not 3D, and a very basic bezel design. It does upconvert, so if you have a signal going in it will upconvert to a 4K display.
A lot of people understand what we’re doing, and I think this lower-priced model is actually going to do a lot of good for the category and the technology, because if you’re an average consumer looking to upgrade your TV, chances are you aren’t even going to look at a $5,000 or $6,000 TV. They understand it, it may be a great brand and they get it, and they may be interested in the technology but they’re just not ready to jump up to a $5,000 TV. With us, there’s another option there. They’ll purchase our panel and who knows? It may lead to a purchase of a bigger higher-end panel down the road. The goal is to introduce this technology to a broader audience.
DEALERSCOPE: How do you think the lower price-points you are charging for UHD-equipped sets will influence the market baseline and consumer perception for this new-technology rollout?
Kendzora: I was pleased with the early response and reviews we got after our press event. I was surprised by how well it was received, and people understand what we were doing. We’re not attacking the higher-priced product in that category. We’re just looking to expand our market a bit for this new technology, not to take away sales from anybody.
DEALERSCOPE: What are the most important things you’re doing to help your retail partners promote your UHD sets?
Kendzora: It’s a little difficult because content is a bit tough right now. We’re working on our web site to get more information there about 4K. We’re going to separate out our 4K product on the site, and are rebranding it. Right now we’re calling it Seiki Pro internally, which will be defined on the web site that way, and that’s where our 4K product will live. We’ve completed phase one of the web site and are now working on phase two.
DEALERSCOPE: Do you expect to launch OLED sets into the mainstream?
Kendzora: I don’t have a timeframe, but we’re definitely studying the product. The next logical step would probably be to get into an OLED type of product format, but there’s nothing to announce at this time. We’ll be there when we feel it’s the right time to be there.