Evolving Philips focuses on high-end health care, space-age lighting

Evolving Philips focuses on high-end health care, space-age lighting
Philips "Fidelio" wireless speakers are seen at the booth of Dutch electronics company Philips at the 53rd IFA electronics trade fair (Internationale Funkausstellung) in Berlin on September 5, 2013.

THE HAGUE - Back in 1978 in a boardroom near Lake Geneva, a bunch of nervous Philips inventors demonstrated a device that was to revolutionise the entertainment industry for the next three decades.

Called the "Pinkeltje" after a small Dutch gnome in a children's story, the device performed flawlessly - and so the world's first Compact Disc (CD) player was born.

Thirty-five years later the Netherlands' Philips, once one of Europe's best-known brands for radios and televisions, is ditching the consumer electronics business that used to be its bread and butter, and is thriving.

The Philips story is a business case of how a leading global industrial group, with leading technology, went through several rocky years of restructuring, and found a successful strategy to re-invent itself in time.

Now the company is reaping the rewards of emerging from the restructuring cycle.

In January, Philips announced the sale of its lifestyle entertainment branch, which makes stereos and DVD players, after selling its troubled TV-making arm in 2012.

In February, Philips said it intended to drop the word "Electronics" from its name to indicate its shift in strategy.

Faced with dwindling margins and fierce competition from Asia, the manufacturer born in southern Dutch city Eindhoven is refocusing on high-end health care, space-age lighting and the global explosion of a middle class interested in healthy living.

This example of transformational strategy is working, analysts say. Profits are strong despite the recent financial and eurozone debt crises, and in a high-stakes roller-coaster climate for high-tech companies which has claimed high-flyers such as Nokia of Finland and BlackBerry of Canada.

Last month, Philips announced that its third-quarter profits jumped almost three-fold from the equivalent 2012 figure ,to 282 million euros ($380 million) this year.

The latest results were even driven by sales of household appliances in the emerging markets from whence came much of the new competition which threatened Philips.

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