Toshiba 2005 Annual Report Download - page 22

In coming years, imaging technologies in which Toshiba
excels will move to center stage, providing a competitive
advantage that will be fully promoted. The diverse strengths
of Toshiba Group will drive the continuous introduction
of advanced, differentiated products that fuse diverse
multimedia technologies.
Digital Media Network Company
Results for the term under review: Operating income rose
on improved sales, primarily in the Color TV business and
Storage business. In the TV business, a growing lineup of
Flat-Panel Display (FPD) TVs was strongly reinforced by
the introduction of the LZ series of network-ready TVs
integrating “Meta-Brain,” Toshiba’s proprietary system
for bringing advanced intelligence to digital TVs, and the
mid-range LC 100 series. Overseas, the unveiling of a
Micro-Device Projection TV (MD PJTV) in the US market
also contributed to the sales increase. Improved income
in the Storage business reflects the positive impact of the
new Joint Venture business with Samsung in the Optical
Disk Drive (ODD) business. In the Hard Disk Drive (HDD)
business, sales of 2.5-inch drives advanced with expand-
ing demand for portable PCs. The market for 1.8-inch
HDDs continues to grow, reflecting the explosion in
demand for HDD-based digital audio players, and now
accounts for 40% of Toshiba’s HDD production. In the
latter half of 2004 Toshiba added another strategic product
to its portfolio when 0.85-inch HDDs started to ship.
Despite unit sales gains, profit declined against the
same period a year ago due to softening prices for TVs,
DVD players and recorders, HDDs and ODDs. This was
particularly severe in ODDs. As competition on
performance specs ended, price competition came to the
fore in a level market that undercut profitability.
Challenges and strategies: Factors that include continued
price pressure promise an increasingly severe TV business
environment. In fiscal 2005, Toshiba will promote mea-
sures to strengthen the product lineup and the product
power of its FPD and PJ TVs, to cut costs by increasing
use of common parts and boosting the rate of in-house
production of core parts, and to enhance efficiency in
production and distribution—all to secure a better profit
position. In fiscal 2005, Toshiba will unveil the SED TV,
a new, high-value-added product. Along with the HD
DVD, the next generation DVD, this will differentiate
Toshiba from its competitors in a market moving toward
high definition content. Continued growth is expected in
the HDD business, on cultivation of new applications,
cost reductions and increased production of 2.5-inch and
1.8-inch products, and larger output and storage capacity
in the 0.85-inch format. Improved performance and profit
and loss in the ODD business will be achieved by a shift to
recording drives, such as super multi-drives, and a focus
on the thinnest, 9.5mm models with high-value-added.
The business will also draw on the still emerging strengths
of the new Joint Venture in product development and
manufacture, and in widening the lineup and promoting
cost reductions. A continuous roll-out of new, differenti-
ated HDD & DVD recorders, a product area where Toshiba
has won about 20% of the Japanese market, and of
Gigabeat players in the fast growing market for HDD-based
digital audio players, will also add to the bottom line.
Personal Computer & Network Company
Results for the term under review: Operating income
boosted by cultivating overseas growth, especially in the
U.S. and Europe. Sales for the term climbed by ¥64.5
billion, with operating income improving by ¥55.5 billion.
Contributory factors to this turnaround were accelerated
decision making on thoroughgoing organizational and
structural reforms. Procurement costs were deeply cut as
the number of computer chassis was almost halved and
use of common parts increased, and through a commit-
ment to international procurement making full use of IT.
The concentration of in-house production bases also
made a notable contribution to recovery by bringing
greater efficiency to distribution and sales while
sharpening market responsiveness.
Challenges and strategies: Commoditization is a significant
factor in the PC business, and cost competitiveness and
differentiating technologies are keys for survival and
growth. Concentrating engineering resources on differ-
entiated products, the manufacture of commodity products
will be consigned to the Taiwanese ODM to reinforce the
foundations of the business by the scale merits of volume
production. Within its differentiation strategy, the business
launched notebook PCs embodying the concepts of
“Audio-Visual (AV)” and “Thin & Light.” AV notebook PCs
employ advanced imaging technologies that reproduce
beautiful, realistic images, and offer diverse recording
functions and more. “Thin & Light” PCs, combine with
greater mobility to offer enhanced security functions that
not only prevent unauthorized access but protect the
Hard Disk Drive and its data from external shock.
By leveraging the convergence of its PC and AV
technologies and promoting the PC business globally,
the business will maintain its competitive edge.
22 Toshiba Corporation 130th Anniversary