End of an era: Philips sells off consumer electronics division

philips

Philips has decided to get out of the consumer electronics market, no doubt causing consumers everywhere to either feel nostalgic about the end of a legend, or to think, “Oh yeah, I totally forgot about that company.”

It seem Philips has been unable to successfully compete against companies like Samsung and Sony in such a frenetic and quickly evolving industry, and have instead decided to throw in the towel.

Philips used to be a titan of consumer electronics, dating back to the 1930s when it was the top seller of radios. It then later invented audio cassette and VCR, and was later responsible for creating the CD medium. It would go on to be a successful supplier of DVD and Blu-ray players. There’s just one problem — almost all of those product categories rely on the necessity of physical medium. Philips was unable to reorganize its company to face the digital revolution.

Philips also used to be a major player in the TV business, but it exited that market last year, leaving its consumer electronics department almost entirely rooted in increasingly obsolete technology. It should therefore come as no surprise that the company has had a poor showing in recent quarterly reports, The last of which included a loss of 358 million euros ($482 million).

In order to stay afloat, the company has decided that selling its consumer electronics division was necessary. The Philips brand name license and all of its CE assets will go to Japan-based Funai Electric Co. for a total of 150 million euros ($201 million).

Although Philips has a lot to be concerned about, it has shown growth in other divisions. The company’s healthcare and lighting segments saw increased sales over the previous year. And thus, those are the divisions that will be its focus moving forward. Although medical equipment is also a competitive industry, it mostly centers around the companies that have been in the business for decades; there is less of a chance some company like Apple could step in and cause a paradigm shift. The same is true for home and commercial lighting.

By 2014, Philips CEO Frans van Houten hopes to have reached more than one billion euros in cost-cutting and savings. The sale of its consumer electronics business is a big step toward that goal.

via Wall Street Journal

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