Hitachi Consumer Electronics
Co., Ltd. Business Strategy

June 9, 2010

Shutoku Watanabe
General Manager, Consumer Business Division,
Hitachi, Ltd.
President and Representative Director
Hitachi Consumer Electronics Co., Ltd.

Hitachi Consumer Electronics Co., Ltd.
Business Strategy

Contents
１. Business Overview
２. Business Policy・Growth Strategy
３. Profit Target

1-1. Business Overview
Transform the business structurefrom flat-panel TVs to video and components.
Flat-panel TVs
Flat-panel TVs

１６％

３０％

FY2009consolidated
revenues¥418.9 billion

FY2012
consolidated
revenues¥380.0 billion

７０％

８４％

Video andcomponents
Flat-panel TVs

Video andcomponents

Video and components

LCD projectors

Optical storage

Optical pickups

Mobile phones© Hitachi Consumer Electronics Co., Ltd. 2010. All rights reserved.

21-2. Structural Reforms Centered on Flat-panel TVs (1)Products■ FY2008

・ Withdrew from consumer-use PCs
・ Stopped producing video cameras for consumers in-house■ FY2009

・ In-house plasma panel production → Procurement
・ In-house production of TVs for Europe and the U.S. → Procurement
・ Stopped in-house production of TVs for China→ Considering procurement

Base realignment■ TVs

・ Closed Czech Republic/Mexico
・ China: Making it worldwide production base for LCDprojectors■ Panels・ Sold Hitachi Plasma Display’s Miyazaki Works toSolar Frontier K.K.
© Hitachi Consumer Electronics Co., Ltd. 2010. All rights reserved.

31-2. Structural Reforms Centered on Flat-panel TVs (2)Revenues and operating income
２００７

２００８

２００９

Revenues (Billion yen)

７５８.２

５４３.４

４１８.９

Operating loss (Billion yen)

(１２０.２)(１０９.８)(１２.０)

Operating loss ratio(１５.９％)(２０.２％)(２.９％)

Employees (People)

１１,１００

８,７００

５,５００Main product sales index
２００７

２００８２００９

Flat-panel TVs (Japan)

１００１０２１１３

Flat-panel TVs (Overseas)

１００４５２６

Video cameras/PCs

１００１７０LCD projectors/optical storage

１００８３７６© Hitachi Consumer Electronics Co., Ltd. 2010. All rights reserved.

4

Hitachi Consumer Electronics Co., Ltd.
Business Strategy

Contents
１. Business Overview
２. Business Policy・Growth Strategy
３. Profit Target

2-1. FY2010-FY2012 Medium-term Management Plan
Create a continuously profitable structure centered on the video and components business.

Strengthen key components and products aiming to be
the top runner in video technology.

FY2010: Return to profitability; FY2012: Target operating income ratio: 1.8%

LCD projectors

Secure No.1 share worldwide (FY2011) andincrease earnings

Optical storage

Maintain No.1 share worldwide andincrease earnings

Flat-panel TVs

Achieve stable profitability© Hitachi Consumer Electronics Co., Ltd. 2010. All rights reserved.

6

2-2. Revenues and Operating Income Ratio
Operating income ratio
１.６%

０.５%

１.８%

(２.９%)

Revenues(Billion yen)

４１８.９

Index

３８５.０

３８０.０

３８０.０

Flat-panel TVs 100

55

Video and 100components

121

FY２００９

FY２０１０

FY２０１１

FY２０１２© Hitachi Consumer Electronics Co., Ltd. 2010. All rights reserved.

7

2-3. Video and Components Business: LCD Projectors (1)TargetAim to secure No.1 share worldwide

Market andHitachi’s position

Target worldwide share: Over 16% in FY2011(%)
Share inmonetary terms

１１No.2 share
１４１４

No.1 share
１６１６
５.５

(Million units)

３.５

３.５

４.０

４.６
Japan
North America
Western EuropeWorldwide
demand

２９%

３２%

３６%

４０%

２００８

２００９

２０１０２０１１

４４% China
Emerging economies (*1)
２０１２

*1 Emerging economies: India, Central and Middle East, Eastern Europe, Russia, Central and South America(Note) Demand source： Hitachi (Calculated from PMA and Projector Window data) ; excludes home useand SVGA
© Hitachi Consumer Electronics Co., Ltd. 2010. All rights reserved.

8

2-4. Video and Components Business: LCD Projectors (2)Productstrategy

Establish Hitachi brand, develop full lineup

High-end

Differentiate with Hitachi’s proprietary technologies(Ultra Short Throw technology, lighter weight,networking) → Establish brand
Develop affordable models and expand

Demand (2009→2012)
CAGR１７０%
９３%Standard range sales channels

High-end
Ultra Short Throw (Space saving)Standardrange

Brightness(3000 Lumens)
・Classrooms
・ Small andmedium-sizedmeeting rooms

High brightness(7500 Lumens)(For halls)

High brightness(4000 Lumens)(For large meeting rooms)

Small (A4 file size)(Mobile use)

© Hitachi Consumer Electronics Co., Ltd. 2010. All rights reserved.

92-5. Video and Components Business: LCD Projectors (3)Sales strategy

・ Focus on developing markets in China andother emerging economies
・ Expand market share in Japan, North America andEurope by strengthening lineup

・ China: Expand agencies targeting educational demand・ Other emerging economies: Strengthen sales with dedicated sales forces
Hitachi share in monetary terms

China(Millionunits)

Middle
East

1.08
28％

Demand0.64
0.18

0.08

0.58

12％

8％

8％

３１８

8％

２０１２

２００９

SouthAmerica

0.38

21％

２００９

India

２０１２

３１８
0.03

0.14

4％

4％

２００９

２０１２

２００９

２０１２(Note) Demand source： Hitachi (Calculated from PMA and Projector Window data) ; excludes home use and SVGA

© Hitachi Consumer Electronics Co., Ltd. 2010. All rights reserved.

102-6. Video and Components Business: Optical Storage (1)Target

Maintain and expand No.1 share (35% in FY2010 )Market andHitachi’s position

Target worldwide share: Over 35% in FY2010(%)

Share in units(Million units)

No.1 share
３４２９３５３５

３５２９５３００

３１０

３１５２９０Worldwide
demand

６２００８

１１２００９

１７５ DVD-Slim

１７０

１５５

１４０

１２０６Other

２５２０１０４５２０１１Blu-ray２０１２(Note) Share source: HLDS
© Hitachi Consumer Electronics Co., Ltd. 2010. All rights reserved.

112-7. Video and Components Business: Optical Storage (2)Businessstrategy

・Increase share in the growing value-added zone
・Create new businesses
Maintain No.1 share by expanding sales ofhigh-value-added products (Blu-ray, DVD-Slim)
Hitachi’s share

Opticaldrives

Blu-ray

１７５(Millionunits)

４５Worldwide
demandDVD-Slim
１４０33%
３１８31%
６28%

25%
２００９

２０１２

２００９

２０１２(Note) Share source: HLDSNewbusinesses

Develop products combining optical drives and HDDs
© Hitachi Consumer Electronics Co., Ltd. 2010. All rights reserved.

122-8. Flat-panel TV Business (1)Strengthen JapanesebusinessRestructure overseas
operations

Concentrate development resources for Japan market to stabilize profitability
Expand the lineup by utilizing procured products and cut fixed expenses

Shift from in-house production to procurement/focus more on sales channels

Japan market and share
７.５(%)

Share in units

６.７
６.０
Hitachi product coverage ratio ３８→９８%・Additional models
Large size models without recording function
Small size models with recording function

１６.０

１５.９
(Million units)

72%

７.０

38%

Demand１９％

２３％

２００９

２０１０Recording
３３％models
２０１２98%Hitachi productcoverage ratio(Note) Demand source: FY2009 JEITA; FY2010 onwards: Hitachi prediction© Hitachi Consumer Electronics Co., Ltd. 2010. All rights reserved.

132-9. Flat-panel TV Business (2)Important Development Themes
Important Development
ThemesPicturequality

EnergysavingRigorously pursue
energy efficiency andhigh picture quality

Internet
enabledIP home networking

Recording

Enhance ease of use

Main Points
・Resolution enhancement technologies (RET)・High picture quality 3D・New format LED
backlighting technologies

・Wooonet + DLNA
・Advanced user interface
・HDD + iVDR

DLNA (Digital Living Network Alliance): A standard that allows digital AV equipment and PCs to share content across a home network.
iVDR (Information Versatile Disk for Removable usage): A cassette-type removable hard disk drive.
© Hitachi Consumer Electronics Co., Ltd. 2010. All rights reserved.

14

2-10. Flat-panel TV Energy-saving and Environmental Technologies
Video, networking, user interface

Progressive TV technologies■ Energy saving,high picture quality
・ New format LED
backlighting
technologies■ Camera and sensor
technologies
・ Presence
detection
・ Gesture remote control■ TV technologies
for the environment■ Develop an eco-friendlylifestyle infrastructure business・ Networks(IP, home networks)

・ Data security management
・ Advanced user interfaces
・ People detection, face recognition
・ LED applications
・ Energy saving

・ System integration
・ Power control andinformation networks
・ Knowledge extraction
・ Data security management
・ Energy management(Integrated control)・ Improved LEDs
(Lighting, backlights)

Solar power
generation module

DC electricity
AC electricity

Ｗｏｏｏ
PHEV/EV■ Network technologies

Home controller

・ Ultra-highdefinition

Electricity generation andstorage control equipment

Accumulatorbatteries

Thermalstorage

Autonomouscontrol in homes© Hitachi Consumer Electronics Co., Ltd. 2010. All rights reserved.

15

Hitachi Consumer Electronics Co., Ltd.
Business Strategy

Contents
１. Business Overview
２. Business Policy・Growth Strategy
３. Profit Target

3-1. FY2012 Management Targets

Revenues

Overseasrevenue ratio

Operatingincome(loss) ratio

FY2009¥418.9 billion

65%(2.9%)FY2012¥380.0billion

77%

1.8%

© Hitachi Consumer Electronics Co., Ltd. 2010. All rights reserved.

17

Cautionary Statement
Certain statements found in this document may constitute “forward-looking statements” as defined in the U.S. Private Securities Litigation Reform Act of 1995. Such “forward-lookingstatements” reflect management’s current views with respect to certain future events and financial performance and include any statement that does not directly relate to any historical orcurrent fact. Words such as “anticipate,” “believe,” “expect,” “estimate,” “forecast,” “intend,” “plan,” “project” and similar expressions which indicate future events and trends may identify“forward-looking statements.” Such statements are based on currently available information and are subject to various risks and uncertainties that could cause actual results to differ
materially from those projected or implied in the “forward-looking statements” and from historical trends. Certain “forward-looking statements” are based upon current assumptions of future
events which may not prove to be accurate. Undue reliance should not be placed on “forward-looking statements,” as such statements speak only as of the date of this document.
Factors that could cause actual results to differ materially from those projected or implied in any “forward-looking statement” and from historical trends include, but are not limited to:- economic conditions, including consumer spending and plant and equipment investments in Hitachi’s major markets, particularly Japan, Asia, the United States and Europe, as well as levels of demand in the majorindustrial sectors which Hitachi serves, including, without limitation, the information, electronics, automotive, construction and financial sectors;- exchange rate fluctuations for the yen and other currencies in which Hitachi makes significant sales or in which Hitachi’s assets and liabilities are denominated, particularly against the U.S. dollar and the euro;- uncertainty as to Hitachi’s ability to access, or access on favorable terms, liquidity or long-term financing;- uncertainty as to general market price levels for equity securities in Japan, declines in which may require Hitachi to write down equity securities that it holds;- the potential for significant losses on Hitachi’s investments in equity method affiliates;- increased commoditization of information technology products and digital media-related products and intensifying price competition for such products, particularly in the Components & Devices and the Digital Media &Consumer Products segments;- uncertainty as to Hitachi’s ability to continue to develop and market products that incorporate new technology on a timely and cost-effective basis and to achieve market acceptance for such products;- rapid technological innovation;- the possibility of cost fluctuations during the lifetime of or cancellation of long-term contracts, for which Hitachi uses the percentage-of-completion method to recognize revenue from sales;- fluctuations in the price of raw materials including, without limitation, petroleum and other materials, such as copper, steel, aluminum and synthetic resins;- fluctuations in product demand and industry capacity;- uncertainty as to Hitachi’s ability to implement measures to reduce the potential negative impact of fluctuations in product demand, exchange rates and/or price of raw materials;- uncertainty as to Hitachi’s ability to achieve the anticipated benefits of its strategy to strengthen its Social Innovation Business;- uncertainty as to the success of restructuring efforts to improve management efficiency by divesting or otherwise exiting underperforming businesses and to strengthen competitiveness and other cost reduction
measures;- general socio-economic and political conditions and the regulatory and trade environment of Hitachi’s major markets, particularly Japan, Asia, the United States and Europe, including, without limitation, direct orIndirect restrictions by other nations on imports, or differences in commercial and business customs including, without limitation, contract terms and conditions and labor relations;- uncertainty as to the success of alliances upon which Hitachi depends, some of which Hitachi may not control, with other corporations in the design and development of certain key products;- uncertainty as to Hitachi’s access to, or ability to protect, certain intellectual property rights, particularly those related to electronics and data processing technologies;- uncertainty as to the outcome of litigation, regulatory investigations and other legal proceedings of which the Company, its subsidiaries or its equity method affiliates have become or may become parties;- the possibility of incurring expenses resulting from any defects in products or services of Hitachi;- the possibility of disruption of Hitachi’s operations in Japan by earthquakes or other natural disasters;- uncertainty as to Hitachi’s ability to maintain the integrity of its information systems, as well as Hitachi’s ability to protect its confidential information and that of its customers;- uncertainty as to the accuracy of key assumptions Hitachi uses to valuate its significant employee benefit related costs; and- uncertainty as to Hitachi’s ability to attract and retain skilled personnel.

The factors listed above are not all-inclusive and are in addition to other factors contained in Hitachi’s periodic filings with the U.S. Securities and Exchange Commission and in othermaterials published by Hitachi.

© Hitachi Consumer Electronics Co., Ltd. 2010. All rights reserved.

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