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Philips Decides to Shut Down 3D Operation

March 27th, 2009

Executives in Philips corporate offices have decided to stop operations at Philips 3D Solutions, an incubator business it has been funding for some time. All this week, CEO Jos Swillens and other executives have been talking to customers, dealers and distributors to explain the sudden shutdown, which apparently caught many employees off guard when is was announced internally a week ago.


Chris Chinnock
Senior Analyst and Editor
for Insight Media

According to Swillens’ note, "Because of current market developments, the point in time where mass adoption of no-glasses based 3D TV will occur has shifted significantly. Therefore, Philips has decided to stop the 3D Solutions venture. Philips has been marketing its leading no-glasses based 3D technologies through a pro-active approach for a long time, because it believes that over time, no-glasses based 3D TVs will bring the ultimate 3D experience to the home. Unfortunately, the current market developments no longer justify such a pro-active approach. As a consequence of this, Philips has decided to scale down its investments in this area. In practice, this means that the 3D Solutions venture will be discontinued."

In a follow up discussion with Bjorn Teuwsen, Manager Marketing & Communications, he explained that the recession and the impact on the LCD industry had changed the math in their risk-reward calculation. In essence, Philips needed the LCD industry to make investments in new switchable 2D/3D technology and to aggressively cost reduce Quad HD panels. Philips believed both were needed to establish cost effective autostereoscopic 3D TVs. But the LCD makers are delaying these investments and the ripple effect impacted Philips by stretching out the time when these TVs would become available.

The consequence was that Philips would need more time and investment in 3D. While it also has a viable B2B 3D display business, it was judged that the revenue from this component, plus the additional investment and longer time scale to a consumer AS-3D TV, ultimately did outweigh the potential long-term income from 3D TVs. The business equation became too risky, which is why the operation was shut down.

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However, since the 3D Solutions group was not part of Philips Consumer Lifestyle group, which is responsible for consumer TVs, this group is still free to evaluate 3D technologies for use by Philips. As Teuwsen noted, stereoscopic 3D TV has strong momentum now and will need time to establish itself as the first wave of 3D TVs. He believes that AS-3DTVs will follow in a second wave, but the horizon for this is now longer than initially planned.

Teuwsen said that a spin-off of the unit had been considered and is not a possibility now. However, what will happen to the company’s IP remains unclear. Unfortunately, we are not optimistic that this technology will ever see the light of day again as Philips has a history of closing the book on technologies where it no longer plans to invest. Let’s hope we are wrong however, as the company has solid technology.

Philips was clearly the market leader and evangelist for autostereoscopic (no-glasses) 3D displays. It was selling its 42" lenticular-based 3D display (42-3D6W02) along with its 3×3 array of these displays called the WOWvx, and it has a number of sites using its Blue Box and Red Box processors. Prototypes of 50-inch and 8-inch no-glasses 3D displays were close to introduction too. At last year’s 3D BizEx event, it showcased the future of AS-3D display by demonstrating a 56-inch AS-3D display with a native resolution of 4096×2160, creating one of the best no-glasses 3D images to date.

Philips 3D Solutions’ plan was to create a community of content developers and installation sites and it initially focused on the professional markets where 3D advertising signage in theaters, shopping malls, lobbies and other venues would adopt the technology. This would pave the way for 3D TVs to roll out in the later years.

In addition, the company was the main proponent of the 2D plus depth 3D encoding technique. There are many advantages to this approach and it is not likely to go away.

The sudden shutdown has also made many dealers and customers unhappy, too, as momentum was building within the Philips community. However, Philips has been assuring these dealers and customers that it will honor all warranties and service commitments.

In the meantime, glasses-based 3D TV continues to generate great interest and excitement. No doubt no-glasses 3D TV will arrive sometime, but Philips will no longer be there to nurture it along. That’s really too bad as the technology and strategy was sound - it just needed more time to play out.

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