JVC 2001 Annual Report Download - page 7

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income. This level of earnings is unacceptable given the substantial resources we allocate to
this segment. The poor performance of the Consumer Electronics segment reflects falling
sales prices and the maturity of the market for existing consumer electronics, notably
consumer AV products. The rapid emergence of companies whose strength is low prices
characterizes the market. In view of these circumstances, one might think that JVC has a
smaller role to play in the industry. But I have a different take on the situation. As a whole, the
market for consumer electronics is soft. But demand for products offering high performance,
high added value and new value is growing. We must allocate more resources to these growth
areas. With this in mind, we are advocating a Digital and Networking (D&N) Strategy to drive
growth. As part of this strategy, we will restructure development and sales systems for
consumer electronics. Key products in the D&N business include mini digital (DV) camcorders,
D-VHS, Direct-Drive Image Light Amplifier (D-ILA) projectors and hybrid TVs with built-in hard
disk drives. Our target is to grow D&N products to account for at least 70% of consumer
electronics products in fiscal 2004.
A VALUE CHAIN FROM COMPONENTS TO ENTERTAINMENT CONTENT
Components & devices (C&D) and content & media are two integral parts of our D&N strategy
and overall value chain. Both are core competencies.
In picture-related technology, JVC is a beacon of excellence. Our sophisticated technology
includes high-density build-up multilayer printed wiring boards (“VIL” PWBs), semiconductor
package substrates that contribute to advances in VIL PWBs, Direct-Drive Image Light
Amplifier (D-ILA) devices and high-value-added deflection yokes. Adding another dimension
is our high share in Japan’s music market. We have a rich storehouse of content featuring
music, visual and other forms of entertainment.
Our consumer and professional electronics are in every practical sense positioned in the
mid-stream, between C&D and content & media. Trying to compete with late entrants and
other rival companies and earn profits on the strength of such products alone would be a
fruitless exercise. We must leverage our collective strengths to be competitive. Our edge lies in
incorporating upstream (C&D) and downstream (content & media) elements in mid-stream
operations (hardware) to create a powerful value chain. This is the most effective way to raise
our overall brand value.
IN CONCLUSION
Our management mission is highly challenging, but extremely well defined. Successful
execution of the three central elements of our medium-term management plan—raising the
ratio of D&N products in the consumer electronics product mix, reallocating resources to
C&D operations and expanding our content & media operations—will restore our
competitiveness and profitability to the levels expected of a global company. I trust that
management and employees, whose actions will be key to accomplishing our reform
measures, will share this common vision for JVC. I want my term as president to be looked
upon as a period of reemergence for JVC as a high-performance, global company with a
highly efficient management framework and corporate culture.
August 2001
Masahiko Terada
President
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