Why Philips left the market of consumer electronics ?

In the history of consumer electronics, there are two products that have spent more time on the justification for the existence of its own products than trying to keep up with the times. This Nokia and BlackBerry. Philips also put an end to its history, very deliberately. What happened?

On Tuesday it was announced that Philips sold the remains of his once-core business of Japanese Funai Electric. Dutch company piled on losses for the fourth quarter restructuring charge and a fine for price-fixing. Now, Philips no longer manufactures audio, video and multimedia accessories, leaving himself only medical equipment and lighting. If it were not for all this, the price paid the Japanese could suggest the raiding: 150 million euros and the cost of licensing the brand.

The move put an end to the history of 80 years of innovation, but over time more and more faint developments in the field of consumer electronics industry.

In 1930, Philips was the world’s largest supplier of radio equipment. The Dutch company has invented cassettes in 1963, the first VCR in 1972, and for CD came in 1983. In 1970, Philips has lost a legendary battle Japanese standard VHS tapes VHS, and from 1980 began to fall into the abyss, whose name is the Internet.

Despite the steady decline in influence on the consumer electronics market for many years, a parallel withdrawal from the television and mobile segments of the market, Philips tried their best to generate a large enough profit from the business.

Frans van Houten (Frans van Houten), Executive Director of Philips Electronics, spoke at the announcement of the results for the year in Amsterdam, January 29, 2013.

“Since we have an online entertainment, people do not buy the Blu-ray and DVD-player.”

Van Houten, who led Philips almost two years ago, has concentrated its efforts on streamlining the company to work with a narrow range of activities. For example, in the development of hospital scanners and light-emitting diodes, which are used in the lighting systems of large objects (the Empire State Building in New York). In this case, Philips continues to make such products for us, like razors and coffee machines.

Philips said that the losses in the fourth quarter totaled EUR 358 million (compared to the same period of 2011 loss of $ 162 million), so the start of sales in 2013 will be very tight.

Previously, the company warned investors that need money for restructuring in the amount of 380 million euros, and the payment of a fine of 509 million euros for market manipulation European television, which were held in 1990. Philips, of course, will appeal against the fine. A year earlier loss to the TV market in the amount of 272 million euros made the company serious thought.

So, the losses for the previous year amounted to 1.29 billion euros and net profit – 231 million euros. Net income to shareholders was 226 million euros compared to 1.3 billion euros last year. What is?

Difficult economic conditions and the American fuss regarding tax policies have led to the fact that in early 2013, according to Van Houten, the sale will go very slow. But by 2014 the company will save 1.1 billion euros already. Philips comes to success. New products appear on the market is 40% faster than in the past.

The company is now fully focus on the medical industry and will maintain strict competition policy. Medical equipment sales account for 40% of revenue Philips, Lighting Equipment – 32%, and custom equipment – 26%.

It should be noted that one of the most serious competitors Philips is now General Electric, which is going to revolutionize medicine.

Source: The Wall Street Journal

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