Philips Bows Out Of Consumer Electronics Business

Jan.29.13 | About: Koninklijke Philips (PHG)

By John Biggs

Philips (NYSE:PHG), a brand well-known for its televisions and optical media devices, is leaving the consumer electronics market and is now focusing on medical equipment and lighting. The company sold its CE business to the Japanese manufacturer Funai Electric Co. for $201 million.

Like Cisco (NASDAQ:CSCO), Philips found the CE market fraught with peril. The 122-year-old Dutch company originally built radios, and continued selling televisions and optical disk players in a saturated market. With competitors coming from all sides, the most interesting thing Philips could produce was the Ambilight system for splashing color behind a television based on the video on the screen. That was clearly not enough to survive as a CE maker.

"Since we have online entertainment, people do not buy Blu-ray and DVD players anymore," said CEO Frans van Houten to the Wall Street Journal. The company saw a loss of $483 million which was double the loss in Q1 2011.

CE is a slow-moving commodity now. Brand loyalty is dead and digital has made nearly every television the same. Philips' decision to close up shop is a brave one and necessary. It will be interesting to see who else is taken up by the whirlwind of change coming to home CE.

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