IF Royal Philips Electronics' latest digital consumer electronics and technology developments showcased at the recently concluded International Funkausstellung (IFA) in Berlin, Germany, are anything to go by, the Dutch electronics giant is well on its way to fulfilling the promise it made a year ago with the launch of its Sense and Simplicity campaign.
Drawing from its experience, Philips believes there are compelling reasons to tread the simplicity path.
As Philips Consumer Electronics (CE) chief executive officer Rudy Provoost said in his keynote address Realising Simplicity Today at IFA, “it's good for consumers, good for partners, good for customers and suppliers, good for shareholders, so good for the CE business as a whole. It is what will ensure its vibrancy for years to come.”
At Philips CE today, “we have a platform for profitable growth; we are competitive in terms of innovation impact and time-to-market; we are cost-effective and asset-light. In fact, we have lowered breakeven point and run the business with negative working capital,” he said.
Provoost, who is also a member of Royal Philips Electronics group management committee, said the journey of realising simplicity really started with the consumer.
“All too often, we have seen innovation being driven by technology for technology's sake whereas simplicity should be at the heart of the consumer experience. The reality is our lives are too complex already. We want simplicity in our relationship with technology ? technology that gets the job done rather than drawing attention to itself, without us being aware of it,” he said.
Provoost said Philips believed a product or service should be designed around the user's needs; be easy to experience and must be advanced and innovative.
In an increasingly converging world, simplicity had to be the “string” that tied consumer experiences together, making the entire process intuitive and seamless.
He said the principles of simplicity had guided Philips toward reinventing the CE world and over the last two years, the company had shed its “old monolithic industrial structure” to become an early adopter and trendsetter in breakthrough business transformation. For Philips, phase one of its transformation was about de-verticalisation where it unbundled, outsourced and dismantled significant parts of its CE business, retaining the core competencies of business creation, design, intellectual property, trade marketing and brand management, he said.
“Doing business in a streamlined way is part of our definition of simplicity. We needed to fix the 'backbone' part of our operations before we could be better positioned to deliver the real 'nerve-ending' of high-impact applications and solutions to consumers.”
The next building block or phase – integrated value marketing – focused on simplifying the life of consumers and delivering value.
“Our proposition is that making TVs is no way to make a living in a world of ever more compressed margins. Instead, you have to create new value propositions for consumers and in the process find new sources of revenue. “We need to be part of the way content is experienced and enjoyed by consumers ? this means alliances with broadcasters, operators, distributors and other content providers in the world of cable, satellite and broadband communication,” Provoost said.
He said that since 2002, Philips had been the preferred supplier of set top boxes for DIRECTV in the United States while in Europe it had in recent years pursued partnerships with telcos and content providers such as Yahoo! Come June, Philips will be the CE category sponsor for the 2006 FIFA World Cup. Provoost said phase three of Philips' model for reinventing the CE industry was about creating a digital eco system governed by universal broadcasting standards and digital rights management.
Creating conditions to realise what Philips termed the “Connected Planet” vision was about making the world a place where people could enjoy digital content on the move, at home or at work in a seamless way.
“To make that experience seamless and capture the essence of simplicity, there is a need for all stakeholders, not only the industry itself but also policymakers, regulators, legislators to be of the same mindset and focused on a common framework,” he said.
At IFA, the world's leading CE fair that ran from Sept 2-7 this year, Philips occupied 8,000 sq m where it showcased, among others:
·A full range of LCD and plasma FlatTV sets and Cineos audio-video peripherals to maximise the HDTV experience:
·Latest developments in its Connected Planet vision, including a powerful new multimedia platform for digital home entertainment and a cordless videophone;
·A new range of GoGear hard disk drive jukeboxes for consumers on the move; and
·Demonstrations of technologies being developed for next-generation products.
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