[opendtv] News: Philips to Stop Manufacturing TVs for the U.S. Market
- From: Craig Birkmaier <craig@xxxxxxxxx>
- To: OpenDTV Mail List <opendtv@xxxxxxxxxxxxx>
- Date: Wed, 9 Apr 2008 08:05:30 -0400
http://www.nytimes.com/2008/04/09/technology/09philips.html?th&emc=th
Philips to Stop Manufacturing TVs for the U.S. Market
By ERIC A. TAUB
Published: April 9, 2008
LOS ANGELES - In another sign of a shake-out in the competitive
flat-panel television market, Royal Philips Electronics, the Dutch
consumer electronics giant, said it would no longer manufacture
televisions for sale in the United States or Canada.
Philips-branded TVs will still be sold, but the sets will now be made
under license by Funai Electric for at least five years. While not a
well-known consumer brand in the United States, Funai, based in
Tokyo, already sells Emerson, Sylvania, Symphonic and other
lower-priced brands in the North American market.
As prices for flat-panel liquid-crystal-display TVs continue to fall,
Philips has been in an unenviable position: while a well-known name,
its televisions have not occupied the premium brand position of Sony
and Samsung and the company could not compete on the low end with
commodity brands like Vizio and Westinghouse.
The decision to simply license the brand and collect royalties
"allows the Philips brand to be very evident in the North American
market and de-risks the profit potential," said Paul J. Zeven, the
North American chief executive of Philips. "Margins here are
razor-thin; this is a win-win situation.
In the United States, the company will focus on health care devices,
lighting and other electronic products, Mr. Zeven said. The company
said it was taking a charge of up to 125 million euros ($196.3
million) for the Funai transition.
Funai will be responsible for sourcing, distribution, marketing,
sales and customer service for the Philips and Magnavox brands,
beginning Sept. 1. Philips will continue to design, manufacture and
market televisions in the rest of the world and also oversee Funai's
United States marketing.
The Philips share of the L.C.D. business in the United States has
been steadily declining. While the company was the top-selling brand
in the fourth quarter of 2006, with 17 percent market share,
according to the research firm iSuppli, Philips dropped to sixth
place one year later, with just a 6.6 percent share. In 2007, Philips
sold $1.7 billion in televisions in North America, Mr. Zeven said.
"This is probably a good move for Philips," said Riddhi Patel, an
analyst with iSuppli. "They're getting out of a business where
margins are really getting squeezed."
According to iSuppli, the average selling price for a 42-inch L.C.D.
television has fallen 26 percent, to $1,544 from $2,082 a year ago.
Depending on the manufacturer, the profit margin for that size set is
9 percent to 16 percent.
"Philips has a great top-tier brand in Europe, but it has been
difficult for them to realize that premium positioning in the U.S.,"
said Ross Rubin, director of industry analysis for the market
research firm NPD Group.
The company joins other competitors that have reduced their presence
in the United States. In 2003, Thomson, the French company, sold its
RCA television brand to TCL of China. Last month, Pioneer announced
that it would no longer produce its own plasma panels, buying them
from others instead.
Globally, Philips has pulled back from consumer electronics
manufacturing. Most recently, the company has significantly reduced
its position in LG.Philips L.C.D., a display panel manufacturer.
Originally a joint venture with LG Electronics of South Korea,
Philips has now cut its stake to 13.2 percent and the company's name
has been changed to LG Display.
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