Philips Exec Warns of HDTV Stagnation

By | November 8, 2004 | Feature

As Europe gears up for a greater High-Definition Television (HDTV) future, consumer-electronics manufacturers are gearing up to provide the next generation of digital equipment in consumers’ homes. In particularly, HDTV offers a great opportunity for manufacturers. One such manufacturer is Philips, one of the largest global suppliers of digital equipment worldwide. The new CEO of the semiconductors division at Philips, Frans van Houten, is warning that Europe could be left behind in terms of HDTV. van Houten became the CEO of the Semiconductor division this week, having previously been CEO of the company’s consumer-electronics division.

In terms of HDTV, van Houten commented, “Philips as a global player is already active in several HD markets. We should all realize that many of the flat displays we sell are HD-ready. Philips has never made a secret of the fact that we are a strong proponent of HDTV in Europe. In fact, we believe there is a risk of Europe falling behind the United States and Asia, which would be a bad thing. That’s why Philips advocates strong, co-ordinated industry action with government support to drive HD forward, so that we will be ready for HD by the World Cup (Football) in 2006 and the Olympic Games in 2008.

He continued, “We think that when consumers buy flat-panel TVs, they are looking for the best possible picture quality; we are very much in favor of bringing HDTV to the consumers. We are also happy to see that the content industry is coming forward and recognizing the fact that they need to provide content. Unless both the content and the digital devices to deliver it are available at the same time, it’s not going to work.”

This stark warning shows the next two years will be pivotal for HDTV in Europe. The 2006 World Cup in Germany is likely to be a key event in terms of monitoring the progress of HDTV.

“The industry needs to unite around HDTV. If it doesn’t, then we could be looking at a very scattered digital television landscape in Europe, where every country does its own thing at its own pace,” van Houten commented. “That could result in poor economies of scale, which means Europe will fall behind the rest of the world. That is a very undesirable scenario.”

However, there have been some positive developments in HDTV this year in Europe, and it is the satellite pay-TV operators leading the way. Premiere in Germany and BSkyB in the U.K. have announced major HD initiatives, which are likely to ignite the industry across Europe. Others are likely to follow suit. The momentum is slowly building but there is still a long way to go.

‘Connected Planet’

Aside from HDTV, Philips is working tirelessly on its digital vision, which goes under the name ‘Connected Planet,’ and the first Connected Planet products were launched this year. van Houten explains that vision: “From your Connected Planet-enabled television or Connected Planet receiver in the living room, you can access the content you want, when and where you want it, all by wireless. That means you can access content from the hard disk in your PC or you can access content from the Internet. Clearly, this kind of umbilical cord between products, the Web and your home network allows two-way communication. Consumers can always access the content they want, wherever they are, whether they are at home, in the office or on the move.”

The convergence taking place in peoples’ home, van Houten admitted, is making it an exciting time for the consumer-electronics industry. “We have to deal with a number of changes in our key competencies. Philips has anticipated most of these changes,” he said. “Two-and-a-half years ago, we already decided to move our internal resources massively toward flat-panel televisions; that was in early 2002. In 2003, we came out with 26 flat-panel television models, and we now have a little more than 20-percent market share in LCD TVs in Europe.”

In terms of capital expenditure plans over the next few months, van Houten explains where the company is investing its money. He comments, “We focus primarily on R&D and marketing & sales. We believe in defining the product concept, developing it and marketing it – that is the most important added value that we can offer. The manufacturing process is largely a mass-market commodity process that can be outsourced to other players and we do that. You won’t see us investing in factories, but you will see us investing in differentiating research such as PixelPlus (Philips’ picture quality improvement technology), Ambilight (Philips technology that analyzes incoming television signals and produces background lighting, matching the images displayed on the screen) and Connected Planet.”

As products increase in complexity, the challenge is to bring digital products, which don’t confuse the consumer. van Houten said the company spends a great deal of time into its products. He comments, “This is something we are now addressing in our product creation environment, because we have to create a compelling consumer experience. We actually bring consumers into our labs at an early stage, and we test how they interact with our digital products, and how they experience them. That enables us to prevent the complexity, which threatens to overwhelm consumers and prevent adoption of those products, and to turn that complexity into a positive thing. I think that we as an industry have a tremendous challenge to apply the huge opportunity of digital technology and the potential benefits that it offers to consumers in the right way.”

Contact Ronneke Bosselaar, Philips Consumer Electronics, email: R.Bos-selaar@philips.com

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