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Technological Extinctions of Industrial Firms: An Inquiry into their ...

Technological Extinctions of Industrial Firms: An Inquiry into their ...

5. Televisions 34

5. Televisions 34 Television is the only one of the four products that was heavily affected by international competition in its first forty years. The brunt of this competition, though, occurred after the shakeout was largely complete. We focus primarily on the U.S. market before the advent of international competition but also consider the effects of foreign competition in the latter part of the shakeout. 5.1. Overview 28 By 1939, when regularly scheduled experimental TV broadcasts began in the U.S., a few companies were selling TV sets. However, Federal Communications Commission decisions about standards, followed by World War II, delayed substantial market development until after the war. Standards for black and white transmissions were established in 1941, and standards for color transmissions were finalized in 1953. Annual U.S. production of television sets, both in total and divided into black and white and color sets, is reported in Levy [1981, pp. 99, 100, 112] for the years 1947-1978. Total production increased rapidly to over 7 million sets in 1950 and did not rise much above that figure until the popularization of color television sets in the 1960s. Color sets were first sold in 1954, but their high price and low quality limited their appeal, and as late as 1960 the number of color television sets produced was negligible. Subsequently production of color television sets increased rapidly to a peak of over 11 million sets in 1966, and color production surpassed black and white by 1969. Imports of televisions began in the early 1960s with black and white sets, particularly portables. They rose steadily, surpassing four million sets in 1969 and eight million sets in 1978 when imports nearly equaled U.S. production. Large numbers of firms entered into television manufacturing during the industry’s post-war boom. Figure 5 presents the annual number of U.S.-based firms, entry, and exit in television manufacturing for the period 1947-1989. The combined number of U.S.- and foreign-based firms with at least partial U.S. production is indicated separately 28 This section draws from Graham [1986], Teitelman [1994], and Willard [1982], with other sources cited where used.

35 by the curve labelled "all." These data are compiled from issues of Television Factbook and from a predecessor list published separately as Supplement 57 to Television Digest and FM Reports. The initial list of producers in 1947 contained 30 firms. In the next year entry peaked at some 40 firms. It remained high for the next five years, with a total of 71 firms entering from 1949-1953. It then dropped sharply, averaging less than one firm per year through the end of the series in 1989. In the early 1950s, sales sagged after many buyers acquired their first televisions. The number of U.S. producers started to decline from its peak of 89 firms in 1951; hence we date the shakeout as beginning in 1951. In the color era, sales reached new heights, yet the number of producers continued to fall. Then as solid state electronics became common, U.S. firms lagged behind in using integrated circuitry, highly automated production techniques, and plants in low-wage regions, allowing Japanese firms to steadily gain market share. In the 1970s, some of these Japanese firms set up final assembly facilities in the United States, and U.S. firms began selling out to European and Japanese companies. Motorola sold its Quasar line to Matsushita in 1974, and Philips N.V. acquired Magnavox in 1974 and GTE-Sylvania’s television business in 1976. In 1988 GE sold its television business, along with the remnants of the RCA television business which it acquired in 1985, to Thomson S.A. of France, leaving three firms based in the U.S. producing televisions. In 1995 the last U.S. stalwart, Zenith, sold out to LG Electronics of South Korea. Firm market shares for U.S. sales of black and white and color television sets for selected years are presented in Table 10. The early market leader and the leading developer of television technology was RCA. RCA began television research in the mid 1920s and by 1948 had spent $50 million for R&D, equipment, and broadcast facilities for its subsidiary, NBC. It obtained many basic patents which it licensed industry wide. To encourage the growth of the industry and the adoption of its broadcast standards, it held seminars to provide manufacturing know-how to its licensees. It was the leader in developing color television and also licensed its color technology liberally and produced and sold color picture tubes. This leadership gave it an initially high black and white market share, but as other firms entered production, its market share soon declined, dropping below 20% in 1950. As Table 10 indicates, its color market share also

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