Philips’ exit from the consumer electronics market has been under way for some time. Going back at least half a decade, the company started evaluating whether to get out of the hypercompetitive North America market, which was a drag on the overall performance of the Dutch multinational.
The company — which sells everything from medical equipment to lightbulbs — has been one of the fixture conglomerates in Europe, and particularly the Netherlands, for over a century. However, in recent years competition has forced it to trim some businesses, either by spinout (Philips semiconductor became NXP) or licensing the Philips brand and getting out of design and manufacturing.
This was the case for the company’s TV business in North America, which was first licensed to Funai in 2009. Apparently this wasn’t enough in the face of dwindling market share and little overall return, so the company decided to sell the entire CE business to Funai.
My feeling is that this is only the first of what may be a few high-profile exits from the TV business in coming years, particularly those brands with middling market share.
Over the past decade, we’ve seen new entrants really shake things up. Vizio is the most obvious example, while Samsung and LG came before that. These new entrants have really put a hurt on old-school CE firms like Philips, Sony, and Panasonic, much like the latter two put a hurt on older-school U.S. firms like RCA (which went out of business in the 80′s). Now, I don’t think any of those two are in danger of going out of business, particularly given that they are large and diversified multinationals, but I have to wonder what the long-term future holds for them in the TV market.
Sony will always be a player in gaming hardware and other CE categories such as cameras and audio. But in the TV display business, it has struggled as lower-cost players have eaten up market share from below, while fast-moving Samsung and LG have also competed on the high end by pushing the envelope on display technologies.
No doubt, the next decade will be an interesting one to watch. I have to say, I have a feeling Philips is only the first of the big guys to exit the TV business.