Sony's New Budget LCD Line to Compete Directly With Less Popular Brands

Sony (SNE) has started rolling out their new line of lower costing LCD televisions. Two new exclusive 26-inch and 32-inch Sony Bravia televisions are already available online through Target's (TGT) website. The televisions will be available in Target stores starting mid-September.

Currently in Target retail stores, lesser known and non-Tier 1 brands of LCD and plasma televisions are being sold. In Target stores, shoppers see brands such as Olevia from Syntax-Brillian (BRLC), Westinghouse, Magnavox and Maxent. The new exclusive Sony televisions will compete directly with those less popular brands.

Designing new lines of televisions exclusively for discount retailers such as Target, Wal-Mart (WMT) and K-Mart (SHLD) seems to be a wise move on Sony's part. If Sony decided to ship their new line of lower costing LCD televisions to all retailers then it will directly compete with their higher end lines of televisions in stores and hurt their profit margins. However, with this new budget line in discount retailers, they are entering a new channel where there were no Sony LCD television s before.

Before, many shoppers in Target and Wal-Mart might prefer a Sony television but might not be able to afford one or wish to spend so much on one. However, now with this new line selling $500-$600 less then other lines of Sony LCD televisions, they are certainly much more affordable. Given the popularity of Sony’s brand name and reputation for high quality products, their televisions at Target might appear more attractive to shoppers then the lesser known Olevia and Westinghouse brands.

Soon other exclusive Sony lines will be able for other big box retailers such as Wal-Mart and K-Mart. By targeting their new line towards the lower end segment, Sony is entering a new market which would help them increase market share in LCD televisions. While this certainly helps Sony, it may also hurt sales for current popular brands in the Tier 1 and Tier 2 LCD market: Vizio, Olevia and Westinghouse.