Epson 2007 Annual Report Download - page 47

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Annual Report 2007
(2) Price competition causes a downward trend in prices
Market prices of information-related equipment have been on a continuous decline because of a recent
intensification of competition and a shift in demand toward cheaper products. Intensifying competition or
an excess of supply in mobile communications devices and related devices is currently driving a remark-
able decline in prices of electronic components for mobile communications devices, such as color LCDs
and LCD-driver ICs, and could similarly affect other products.
Epson is striving to improve profitability by reducing production costs, for example, by using low-cost
designs, and is taking measures to fight the trend of declining prices, for example, by expanding sales of
high-value-added products. However, there is no assurance that these efforts will succeed, and, if Epson
is unable to respond effectively to counteract the downward price trend, its results might be adversely
affected.
(3) Epson’s technologies compete with the technologies of other companies
Some of the products that Epson sells contain technology that place Epson in competition against other
companies. For example:
1. Epson’s Micro Piezo technology*1 that it uses in its inkjet printers competes with the thermal inkjet tech-
nologies*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 types of product is superior to the alternative technolo-
gies 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 ele-
ments 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 special mirrors, 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.