Yamaha 2007 Annual Report Download - page 14

Yamaha Annual Report 2007 2625
In the AV equipment business, exploiting skills as a manufacturer of
musical instruments and as “the sound professional,” Yamaha
plans to create growth by supplying markets in consumer audio
products such as home theater and Hi-Fi audio systems. In the
field of IT equipment, Yamaha aims to expand through the early
establishment of full-scale operations in IP conferencing systems, a
sector that Yamaha entered in fiscal 2006.
Business outline
The AV/IT segment comprises audio and
visual (AV) equipment (including AV amplifiers
and receivers, speaker systems, Digital Sound
ProjectorTM and other products), commercial
online karaoke equipment, routers, and IP
conferencing systems.
Performance overview
Segment sales in fiscal 2007 were 4.1%
down on the previous year at ¥72.8 billion.
Sales of the segment mainstay, AV receivers,
grew steadily in Europe and the United States,
and the Digital Sound ProjectorTM also regis-
tered significant growth. Sales of commercial
online karaoke equipment declined, however.
Segment operating income rose slightly com-
pared with fiscal 2006, to ¥2.1 billion, in part
due to currency-related gains.
Market trends and business strategy
AV equipment
The global market for existing home theater
products entered a downward trend during
fiscal 2007. With competition from Korean
and Chinese manufacturers leading to sales
price erosion, Yamaha managed to achieve
positive year-on-year growth in sales, but was
unable to cope fully with fierce competition in
the medium- and high-end product ranges.
Going forward, Yamaha plans to concentrate
resources on high-value-added products
within growth market segments. By increasing
the value offered as a customer-supported
brand and by striving to introduce
manufacturing-led reforms to further reduce
costs in processes from design to the factory
floor, Yamaha aims to create a new earnings
structure for the business capable of
withstanding fierce competition. Plans for
expanding the business are focused on the
areas outlined below.
Growth in the front surround speaker
In the market for existing home theater
products, volume is declining across the
component product, HTiB* and DVD player-
integrated system fields, notably in Japan
and Europe. The market for front surround
systems designed for flat-panel TVs is
expanding rapidly, however. Yamaha is
responding to this surge in demand with
aggressive development of the Digital Sound
ProjectorTM (YSP). Yamaha aims to grow sales
by supplying a broader lineup through
expanding the current YSP series with
additional products based on AirSurroundTM
technology, to cater to different installation
styles, including more multifunctional units, and
by seeking to create added value in the form
of products that offer greater convenience.
Strengthening the medium- and high-end
Hi-Fi product range
In Japan, the impending retirement of the
baby boom generation has revived interest in
audio, with demand expected to rebound for
two-channel high-end Hi-Fi systems. In recent
years this sector has also been posting
double-digit growth in European markets.
Yamaha is working to reinforce its product
range in this area by exploiting the Company’s
origins in musical instrument creation and
profound knowledge of professional sound-
related technologies. In 2006, Yamaha
launched the SoavoTM series of high-end Hi-Fi
Review of Operations lAV/IT
these new trends, Yamaha aims to develop a
line of highly differentiated products for the
desktop audio field that combine high sound
quality with compact, stylish design. Yamaha
is also developing new audio equipment to
support business users in making effective
presentations.
Commercial online karaoke equipment
In the market for commercial karaoke
equipment, demand from replacement of first-
generation machines has fallen off, and
investment in new equipment remains weak.
Other prominent trends include demands by
online karaoke vendors to reduce costs and a
shift toward equipment supplied by Korean
manufacturers. Although sales in this business
remain in decline, Yamaha is focusing on
developing a new generation of online
karaoke systems with high-definition image
capabilities. Such products promise to help
Yamaha ride the next wave of replacement
demand from online karaoke vendors.
Routers
The global market for routers continues to
grow strongly. Yamaha’s business has grown
by focusing on ISDN and VPN (Virtual Private
Network) routers. Going forward, Yamaha
plans to maintain the current scale of
operations by developing new models tailored
to specific customer needs and applications.
Based on a wealth of expertise in the field,
Yamaha also plans to adopt a broad
perspective by developing total next-
generation network solutions, including
maintenance and support services.
IP conferencing systems
The global market for IP conferencing systems
was worth ¥400 billion* in 2005 (with
Yamaha’s domain a quarter of this figure*).
Strong growth is expected in the period to
2010, led by the Chinese market. Utilizing
expertise in sound and network technologies,
Yamaha is pursuing the combination of
excellent sound with convenient features such
as multi-node interconnection capabilities and
sound activated automatic video switching.
Plans call for developing a sales network in
Japan and overseas markets to promote sales
of various devices such as high-performance
microphones, speakers and echo-cancellers,
both through Yamaha sales channels and
routes provided by other makers in the field.
The sales target for fiscal 2010 is ¥5 billion.
In product development, Yamaha is
focusing on combining router technology with
ProjectphoneTM PJP-50R
Broadband VoIP Router RT58i
Digital Sound ProjectorTM YSP-1100 with furniture stand
Speaker system SoavoTM-2
USB powered stereo speaker NX-U10
* HTiB (Home Theater in a Box) products put the AV
receiver and speakers in a single package.
* iPod is a registered trademark or trademark of Apple
Computer, Inc. in the United States and other countries.
speakers. Future plans call for the progressive
introduction of medium- and high-end Hi-Fi
amplifiers and CD players that are compatible
with this speaker range.
Growth in new product fields
Yamaha aims to establish the desktop audio
genre as a new product field. In recent years,
the spread of portable digital audio players
such as the iPod*, the expanded use of online
music distribution services, and the progress
made in music audience functions for mobile
phones have all transformed the way that
people enjoy music. Taking advantage of
its strengths in sound, and on creating multi-
node training systems that can interface with
PC-based images and data. Such systems
could supply the growing demand for
equipment that would allow companies
to hold training courses over multiple sites.
Yamaha plans to market such products
globally through action to include developing
e-sales channels.
* Yamaha estimate