Epson 2007 Annual Report Download - page 10

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8Seiko Epson Corporation
Review of the Fiscal Year Ended March 31, 2007
When we drafted the mid-range business plan, the small- and medium-sized LCD
market was experiencing continuing price declines; however, we expected that
sales of LCDs, especially for use in mobile phones and mobile multimedia devices,
would increase. Based on this assumption, during the fiscal year under review we
laid the foundation for ongoing growth and took steps to create a more solid
business structure through the drastic reduction of costs. In addition, we made
efforts to maintain and improve customer trust by ensuring a stable supply of high-
quality Epson products. By taking a global approach to procurement we were able
to steadily lower costs.
Despite these efforts, we failed to increase sales volumes and business
performance was poor. There were two main reasons for this. The first reason was
diluted resources. Customer demand related to such key applications as mobile
phones continued to diversify in terms of product specifications. With four LCD
technologies (color STN, MD-TFD, amorphous silicon TFT,and LTPS TFT), our
resources wereoverly diluted, and we were therefore unable to adequately
respond to customer needs.The second reason was that, in developing new
business domains, our ability to offer solutions based on our technological
strengths ahead of market trends proved to be inadequate.
Realizing the gravity of the situation, we initiated drastic structural reforms.*
Specifically, we are now taking action to more effectively respond to customer
needs by steadily implementing a structural reorganization. At the same time, in
developing new business domains, we have refined the Epson strengths of
offering products with low power consumption, compact design, and high
image quality and have improved our ability to create products with greater
consumer appeal by drawing on our distinctive technologies.
*Please refer to the opposite page for details of the structural reforms.
Q3. Towhat do you attribute the poor sales performance of small-
and medium-sized LCDs, and how do you intend to increase
profitability?
Display business abbreviations
Color STN: Color super-twisted nematic
MD-TFD: Mobile digital-thin-film diode
Amorphous silicon TFT: Amorphous silicon thin-film transistor
LTPS TFT: Low-temperature polysilicon thin-film transistor
HTPS TFT: High-temperature polysilicon thin-film transistor