Focus and concentration

Last week saw a number of interesting stories – I noted the completion of the Philips deal with TPV, the Dell acquisition of Wyse and the official launch of the Samsung LCD business – but there were more. The real meaning of the Samsung launch of its display business will become apparent over the rest of this year as re-alignments in that company’s display business are completed. The Dell acquisition of Wyse may be significant in the longer term, but has echos of the HP acquisition of Neoware in 2007 which suggests that it is not that revolutionary and is seen widely as a defensive move by Dell to react to HP. So, this week, I’m going to come back to the topic of Philips and TPV.

TPV is unique among the large electronics companies that we deal with, in that it is not an electronics company – it is a large display company – and not only that, it only supplies (as far as I know) direct view displays – there are no projectors in its line up. Even more clearly – today all of its displays are based on LCDs (although that could change in the future, I think).

There are lots of small display companies and a few medium-sized ones, but, excluding LCD panel makers, I struggled to think of another large company that is in the design, engineering, assembling and marketing business, that is solely focused on displays, as TPV is. That could be regarded as a weakness, but I have to confess that I see that as a sign of strength.

One of the great businessmen of the 20th century was Soichiro Honda – the founder of the Honda companies. He was always a maverick, but I remember reading a quote from him some years ago, that ‘When a dog is in a corner, it stops thinking like a dog’. He was talking about his engineers. By pushing them very hard, often with unrealistic expectations, he got them to think in different ways and to be more creative.

In my own working life, I was once in charge of a company that only made displays. I remember competing with another company that had technology that was almost as good as ours, a bigger company with a better known brand and lots more money and resources. I realised that for me, if I didn’t get the company’s order for monitors, I would get nothing, but on the other hand, my competitor could sell the firm printers or systems or telecomms. So I decided to make life as hard as possible for my competitor on displays so that meeting their sales targets by selling printers or systems became an easier option. The strategy was successful, I won the monitor business and this experience coloured my view of business ever since.

(Another ex-colleague used always to be saying ‘Better to be doing a few things well than a lot of things badly’)

So while others may see TPV as a company that is in a slightly dangerous position as its success is dependent on the conditions in the display business alone, I see the company being in a strong position. Its salespeople will not be diverted by selling phones, or systems or services. Its best engineers will be working in its display business, not drawn elsewhere. Its job is to make and sell TVs, monitors and public displays or die.

I didn’t know the non-TV parts of the Philips business well, but I suspect that the tough conditions in the TV market meant that there were always very attractive alternatives for career paths – the markets in coffee makers or medical equipment, lighting, shavers or vibrators was, surely, much more profitable and, perhaps, a little easier. However, now, in the Philips TV business there can be no cross-subsidies or ‘halo effects’. The TV business has to prosper on its own merits.

That will not be easy, but I would argue that the very clear focus is a real asset in this situation.

(And it occurs to me that Wyse had a similar single-minded focus. In the late 80s and 90s, it was just another monitor maker, with a little more innovation than most, but it turned itself into the top thin client company which made it an attractive target for Dell.)