Epson 2006 Annual Report Download - page 42

Seiko Epson Annual Report 2006
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(3) Epson’s technologies compete with the technologies of other companies
Some of Epson’s products that it sells contain technology with which Epson competes against other
companies. For example,
1. Epson’s Micro Piezo technology*1 that it uses in its inkjet printers competes with the thermal inkjet
technologies*2 of other companies; and
2. Epson’s 3LCD technology*3 that it uses in its projectors and large LCD projection TVs competes
with other companies’ DLP*4 and LCOS*5 technologies.
Epson believes the technology it uses in these sorts of products is technologically superior to the
alternative technologies of other companies, but if consumer opinion with respect to Epson’s
technology changes, or if other revolutionary technologies appear on the market and compete with
Epson’s technologies, Epson may lose that competitive edge and its results might consequently be
adversely affected.
*1. Micro Piezo technology is an inkjet printer technology created by Epson that manipulates so-called piezoelectric elements to fire small
droplets of ink from the printer nozzle.
*2. Thermal inkjet technology is a type of technology for printers whereby the ink is heated to create bubbles and the pressure from the
bubbles is used to fire the ink. (Some manufacturers call this technology by different names such as bubble jet technology.)
*3. 3LCD technology is a technology whereby TFT displays are used as light valves. The light from the light source is divided into the three
primary colors (red, blue, and green) using a special mirror, the picture is created on separate LCDs for each color, and then the picture is
recombined and projected on the screen.
*4. The DLP technology is a technology that uses a digital micro-mirror device (DMD) as a display device. A DMD is a display device on which
hundreds of thousands of micro mirrors are arranged, each mirror directing light onto its own individual pixel, and the image is created by
the light from the light source being reflected from the mirrors onto the screen. DLP is a trademark of Texas Instruments Incorporated.
*5. LCOS technology is a technology that uses liquid crystal on silicon (LCOS) as a display device. It is characterized by the extremely large
number of openings on the surface of the reflective LCD panel. Because the circuits and the switching elements are etched underneath the
reflective layer, there is no need for the BM (a light-blocking layer that prevents light from falling on the pixel transistor area), making for a
seamless display of the picture.
(4) Epson might experience a reduction in the market for Epson-brand consumables
Consumable products for inkjet printers, especially ink cartridges, are particularly important to Epson’s
sales and profit. There are third parties who supply ink cartridges that can be used in Epson printers.
These alternative products are generally sold at prices cheaper than Epson’s brand products, and
they are slowly gaining market share in Japan and the United States, but even more so in Europe
and developing countries. Such third parties will continue to expand their share of the market for
these alternative products in the future, so for Epson to remain competitive, it might have to lower its
prices of such consumables.
In responding to such risks as a decline in its share of the market for Epson-brand products and a
reduction in prices, Epson has introduced onto the market, in accordance with the demands and
tastes of consumers in each region, its own products that appeal to consumers searching for quality
and ease of use. For example, Epson aims to maintain and improve the quality of its products,
striving to boost their user-friendliness, such as by using even longer lasting ink and an array of
single-color ink cartridges. Epson will also take legal measures if any of its patent rights or trademark
rights it holds over its ink cartridges are infringed.
There is no assurance, however, that any of these efforts will be effective, and if Epson’s profit
from consumable products for inkjet printers declines because, for example, in the future the market
share occupied by the alternative products increases further or Epson must reduce the prices of its
brand products, then Epson’s results might consequently be adversely affected.