Philips, TPV and the European TV market

By Bob Raikes
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The deal between Philips and TPV deserves a mention. At one level, it is just an obvious final stage in the move of Philips out of the TV business that has been going on for some years. Philips has found that the consumer electronics market, especially the TV market, is a very difficult place to make money, although like any other large and very long established business, making a profit is never easy.

One of the historical strengths of the Dutch economy is banking. Some of the largest Dutch businesses are ING Bank and ABN Amro, as well as Rabobank, and it is acknowledged in London that Dutch merchant banking was the inspiration for the development of London as a banking centre in the 18th century. I joked for a long time that Philips was only in the consumer electronics business to act as a research department for its corporate finance group which then invested in outside companies such as TSMC and LG.Philips LCD (now LG Display) to make money.

In the long term, the market will miss Philips’ genuine commitment to real innovation and its willingness to invest heavily in R&D, particularly in areas related to how people use technology and the relationship between people and technology. I have often been impressed with the relative simplicity and ease of use of Philips menus and remotes (although presumably the remote control group will stay in Philips). Whatever you think of the Philips Ambilight technology (and I have mixed views), it was a real attempt to add value and understand how the TV experience could be improved. The firm was also a pioneer of 21:9 format. Personally, I remain unconvinced about the format, but there was at least an attempt to develop the industry. Philips also had long experience of how to work with others in the industry to promote technology advances that would benefit the whole market. It also understood how to use the European political and legal framework to its advantage!

So, this is a sad day for the European TV business, in my view. When we first started to analyse the TV business, having come from the monitor side, it was very striking to me that at the time, the TV business was dominated by European and Japanese companies, while the monitor industry was dominated by US and Taiwanese companies. However, with Philips gone and Thomson long sold, while Grundig is only a shadow of its former self, Europe is left only as a market and assembly region. The rise of the Korean companies has been very impressive in TV and it looks as though the near future will belong to them, although some of the Japanese may hang in a bit longer. The longer term future may belong to Chinese TV companies but, at the moment, their concentration is on their own market. In time, this will surely change.

On a positive note, Lenovo took over the IBM PC business, but seems to have retained the values of the ThinkPad brand in the process. If TPV can do the same with the Philips TV business, then the sale will not be as negative as some fear.