The new Sony Tablet S2 is displayed with the Tablet S1 (rear) by company representatives during a press availability in New York in this July 13, 2011 file photo.

Credit: Reuters/Brendan McDermid

TOKYO (Reuters) - Japan's Sony Corp, Toshiba Corp and Hitachi Ltd said on Wednesday they will merge their liquid-crystal display operations using government-backed funding, to better compete with low-cost panels from South Korea and Taiwan.

The merger, to be completed by spring 2012, will create the world's largest maker of small panels used in smartphones and tablet PCs, leapfrogging global leaders Sharp Corp and Samsung Electronics.

The 90 percent government-owned Innovation Network Corp of Japan will eventually invest about 200 billion yen ($2.6 billion) in the merged unit, taking a 70 percent stake, while each of the three companies will take a 10 percent stake.

An industry shakeup has been overdue in the face of panel price falls along with ever advancing technological demands and volatile output demands.

All three firms have hesitated about investing in a new line to compete against Sharp, which is due to receive a $1 billion investment from Apple Inc.

Sony has been weighed down by chronic losses in its TVs, Toshiba is speeding up plans to shrink its chip business, while Hitachi has been looking to distance itself from the panel business to focus on infrastructure operations.

"We will probably see oversupply (in small LCD panels) in the near future," said Shigeo Sugawara, a senior investment manager at Sompo Japan NipponKoa Asset Management. "It's not a business that will likely provide stable profits in the mid- to long term."

The three firms together controlled 21.5 percent of the market for small and medium-sized displays last year, larger than Sharp with 14.8 percent or Samsung Mobile with 11.9 percent, according to research firm DisplaySearch.

But how the three, which use two different types of display technology, will merge operations is unclear. Nor did the companies' initial announcement include plans for streamlining business overlap.

"The parent companies have found a most convenient buyer for their factories and staff," said Yoshihisa Toyosaki, head of Japanese research firm and consultancy Architect Grand Design.

"The assets of the merged entity will be huge. Without restructuring, there is no way that this company will win against Sharp, or rivals from South Korea, Taiwan, and eventually China."

The three firms will focus on developing next-generation displays, including thinner organic light-emitting diode displays with higher resolution, the three firms said in a joint release.

Hitachi has been in separate talks with Taiwan's Hon Hai Precision Industry, better known as Foxconn Electronics Inc, about a joint venture in LCD panels, sources have said.

Talks with the parent of Chimei Innolux Corp broke down when Hitachi failed to grab a key contract with Apple, one industry source said.

Ahead of the announcement, well-flagged by media, shares in Sony closed down 1.8 percent, Toshiba fell 2.4 percent and Hitachi rose 0.5 percent. The market benchmark Nikkei average ended flat.

($1 = 76.735 Japanese Yen)

(Additional reporting by Isabel Reynolds, graphic by Christine Chan; Editing by Michael Watson)

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A dedicated iPad station is seen in front of an iPhone at the Apple store in New York May 23, 2011.

Credit: Reuters/Shannon Stapleton

SAN FRANCISCO (Reuters) - Amazon.com Inc may sell as many as 5 million tablet computers in the fourth quarter, making the largest Internet retailer the top competitor to Apple Inc in this fast-growing niche of the consumer PC market, Forrester Research said on Monday.

Amazon.com has to price its tablet "significantly" below competing products and have enough supply to meet demand, but if the company can pull this off it can "easily" sell 3 million to 5 million units in the final three months of 2011, Forrester's Sarah Rotman Epps predicted.

Apple has sold almost 30 million iPads since launching its tablet in April 2010. Rival products from companies including Samsung Electronics Co, Research in Motion and Motorola Mobility have failed to mount a serious challenge to that early lead. This month, Hewlett-Packard scrapped its TouchPad after sales languished.

"Thus far, Apple has faced many would-be competitors, but none have gained significant market share," Epps wrote. "Not only does Amazon have the potential to gain share quickly but its willingness to sell hardware at a loss, as it did with the Kindle, makes Amazon a nasty competitor."

One problem with iPad rivals has been that developers have so far waited before creating a lot of applications, or apps, for the devices, Forrester noted.

Apple claims about 100,000 custom-built iPad apps, while Google's Honeycomb platform, which is the tablet version of the Android operating system, has attracted fewer than 300 apps, according to Forrester.

"If Amazon's Android-based tablet sells in the millions, Android will suddenly appear much more attractive to developers who have taken a wait-and-see approach," Epps said.

Amazon's Kindle e-reader is lighter and smaller than the iPad, but Apple's tablet has a browser and other services for enhanced reading and researching, Fred Wilson, a venture capital investor and principal at Union Square Ventures, said in a recent blog.

"What we all want is a hybrid of the two -- a Kindle that is a full-blown tablet computer with a browser, apps, and an OS," Wilson added. "It looks like Amazon is going to bring that to market this fall ... It looks like a killer product."

Amazon shares were up 3.4 percent at $206.03 in afternoon trading on Monday, leaving them up more than 10 percent so far this year.

Apple shares were up 1.6 percent at $389.87. The stock is up almost 19 percent so far in 2011.

(Reporting by Alistair Barr; Editing by Tim Dobbyn and Matthew Lewis)

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People test out Samsung Electronics' new tablet 'Galaxy Tab 10.1' during its launch ceremony at the company's headquarters in Seoul in this July 20, 2011 file photo.

Credit: Reuters/Jo Yong-Hak

SEOUL (Reuters) - Samsung Electronics Co said on Monday it would delay the launch of its latest Galaxy tablet computer in Australia until after a court ruling in late September on its ongoing global patent dispute with Apple.

Samsung and Apple have been locked in acrimonious battle over smartphones and tablets patents since April as Apple seeks to rein in the growth of Google's Android phones by taking directly aim at the biggest Android vendor, Samsung.

The sales delay in Australia is the latest setback for Samsung after Apple won an injunction in a Dutch court last week to ban sales of three of Samsung's smartphone models in some European countries.

A Germany court also said last week that Apple's injunction request to stop sales of Samsung's Galaxy Tab 10.1 tablet in the country will remain in place until September 9 when it delivers its ruling.

Samsung said on Monday it has agreed to delay the launch of Galaxy Tab 10.1 in Australia pending the court's decision in the week of September 26 and said it will lodge the cross claim through the Australian court in the coming days.

"Today, Samsung informed the Federal Court of Australia it intends to file a cross claim against Apple Australia and Apple Inc regarding the invalidity of the patents previously asserted by Apple and also a cross claim against Apple regarding violation of patents held by Samsung by selling its iPhones and iPads," Samsung said in a statement.

Samsung first delayed the launch of the Galaxy Tab 10.1 earlier this month following an agreement with Apple at an earlier court hearing.

Apple, which has conquered the high end of the phone market with its iPhone, has argued that Samsung had infringed on its patents and the Galaxy line of products "slavishly" copied its design, look and feel. It is fighting legal battles in the United States as well as Europe, South Korea and Australia.

Samsung has counter-sued, arguing Apple infringed its wireless patents.

The launch of the new Galaxy tablet is crucial for Samsung, a distant No.2 player in the global tablet market, to close the gap with Apple and achieve its target of raising tablet sales by more than five folds this year.

(Reporting by Miyoung Kim)

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Google Chairman Eric Schmidt smiles during a rehearsal of his MacTaggart lecture speech for the Edinburgh International Television Festival in Edinburgh, Scotland August 26, 2011.

Credit: Reuters/David Moir

EDINBURGH, Scotland (Reuters) - Google is "absolutely committed" to its fledgling television business and expects many more partners to join it soon, Executive Chairman Eric Schmidt said on Saturday.

Google TV, which allows viewers to mix Web and television content on TV screens via a browser, has received lukewarm reviews and been blocked by the major U.S. networks since its launch in the United States in October.

Schmidt told the Edinburgh television festival its lack of success so far was partly because it was a feature designed into televisions, devices which consumers tend to replace only about once every five years.

"We're absolutely committed to staying, to improving Google TV," he said, adding that new companies would be joining existing partners Sony and Logitech for the next version. Logitech makes computer mice, speakers, webcams and keyboards.

"I believe that they're both going to be on board and I believe there are many more coming. Wait shortly for an announcement," he said.

Google has long harbored ambitions to extend its $28 billion online advertising business to the television arena, where the lion's share of global ad budgets is spent.

It owns YouTube, the world's most popular online video site, but has not announced any profits from that business since buying it in 2006.

Schmidt said in a keynote speech on Friday that he expected Google TV to launch in Europe early next year.

On Saturday, he said Google had not yet resolved its differences with U.S. networks ABC, NBC and CBS, and hoped the company would not encounter similar problems for its British launch.

"We certainly have talked to them about reversing their position and we certainly hope that won't happen here," he said, adding that Google was in talks with UK broadcasters.

Like other industries disrupted by the Internet, the television industry is broadly suspicious of Google, fearing the company will steal its advertising revenues without contributing toward the high costs of programing.

Google argues that the Internet can expand the total advertising market by providing better-targeted and more effective ads that will encourage companies to spend more.

KNOWLEDGE SHARING

Google could glean valuable insights into U.S. viewing habits from the $12.5 billion acquisition of Motorola Mobility, which it announced last week.

Motorola owns the world's largest set top box business and has close relationships with U.S. cable companies -- who have expressed concern about the acquisition.

Schmidt said he could not talk in detail about Google's plans for that business until the merger was completed, but said there were "interesting ideas" about how it could help Google's existing television business.

"We're intending to run Motorola, which would include the set top box business, as a completely separate business. That does not mean that there won't be communication between the two, and obviously sharing and knowledge sharing," he said.

Schmidt also said British Prime Minister David Cameron would be making a mistake if he tried to shut down online communications during periods of social unrest.

Cameron had asked authorities to look at the possibility of such measures in the wake of riots that tore through England earlier this month and were partly organized on Research in Motion's BlackBerry Messenger, Twitter and Facebook.

Such moves have been widely condemned as repressive when used by other countries, especially during the Arab Spring uprisings in North Africa and the Middle East.

"I think it's a mistake. I hope that's a clear answer," Schmidt said. "Whatever the problem was, which I don't really understand... the Internet was a reflection of that problem but turning the Internet on and off is not going to fix it."

(Reporting by Georgina Prodhan; editing by Keiron Henderson)

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Google's Chief Executive Officer Eric Schmidt poses during an interview with Reuters at Google's headquarters in Buenos Aires March 4, 2011.

Credit: Reuters/Enrique Marcarian

EDINBURGH, Scotland (Reuters) - Google Inc will launch its TV service in Europe early next year, Executive Chairman Eric Schmidt said on Friday, despite teething problems that had led some observers to question how committed the company would remain to the project.

Google TV, which allows viewers to mix Web and television content on a TV screen via a browser, was launched in the United States in October but received mixed reviews and was swiftly blocked by three of the top U.S. broadcast networks.

Large parts of the television industry, like the news and telecoms industries, view Google with suspicion and accuse it of stealing their advertising revenues without contributing to the costs of making programs.

Schmidt sought to allay the fears of Britain's broadcasting elite in a speech to the Edinburgh television festival, the first time a non-TV executive had been invited to give the keynote MacTaggart lecture at Britain's premier industry event.

"Some in the US feared we aimed to compete with broadcasters or content creators. Actually our intent is the opposite," he told an audience who quickly warmed to his friendly style and liberal compliments to the quality of British television.

"We seek to support the content industry by providing an open platform for the next generation of TV to evolve, the same way Android is an open platform for the next generation of mobile," he said.

"We expect Google TV to launch in Europe early next year, and of course the UK will be among the top priorities."

Google TV has gained little traction so far in the United States, and its set top box provider Logitech International SA slashed prices to $99 in July from an initial price of $299.

Schmidt also included a warning to British television regulators, who he said were far more stringent than their U.S. counterparts and threatened to throttle the development of British television companies in an increasingly global market.

"Stifling the Internet -- whether by filtering or blocking or just plain turning the 'off' switch -- appeals to policy makers the world over," he said. "Instead, policy makers should work with the grain of the Internet rather than against it."

OPPORTUNISTIC

Google has long held ambitions in the television arena, hoping to extend its online advertising business, which made $28 billion for the company last year, to the big screens that still command the lion's share of global advertising budgets.

"If his ambition was to go there and convince the TV people he wasn't a big threat, I don't think he achieved it," said Keith McMahon, an analyst at research firm Telco 2.0/STL Partners.

"The message I got was that TV is such a big market that Google can't ignore it. They're never going to give it up."

So far, Google has had little success breaking into the TV market, despite its ownership of the world's most popular online video site, YouTube.

Last week, however, Google agreed a deal to buy Motorola Mobility Holdings Inc for $12.5 billion, handing it the world's leading set top box business which delivers content for many of the top cable TV companies in the United States.

The headline attraction of the deal was Motorola's huge portfolio of wireless patents but the set top box business could help Google transform its TV project by giving it insights into pay-TV.

Google has not spelled out its plans for the set top box business, and many analysts expect it to divest the unit at the first opportunity, having no experience or previous interest in running a hardware business.

Others believe Google could change tack under CEO Larry Page, Google's co-founder who took back the reins from Schmidt in April and has already started a social network to compete with Facebook while ditching other projects.

"Google describes itself as an opportunistic company. So while it may not have wanted to buy Motorola's operations, it may now assess whether retaining these assets can compensate for the risk of owning them," New York-based Nomura analyst Stuart Jeffrey wrote in a note this week.

Schmidt made no mention of the Motorola acquisition or its implications on Friday, but will hold a question and answer session in Edinburgh on Saturday.

(Additional reporting by Alexei Oreskovic in San Francisco; editing by David Cowell, Tim Dobbyn and Andre Grenon)

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