TP Vision CEO Won’t Rule Out Making Run For Philips TV Business in North America

However, taking over the Philips TV and video products business from Funai in North America “would be at a certain stage a question to ask of TPV,” as TP Vision’s 70 percent owner, de Vries said. “So it is not on my mind at this moment.” Asked if he would rule it out, de Vries said: “Anything is possible for the future, but at this moment, our focus is on the markets we play in.” At the last CES, Philips announced it had agreed to extend by two years to 2015 its North American license agreement with Funai, saying it’s “pleased with the progress Funai has made” since landing the Philips license in 2008 (CED Jan 10 p9).

Philips as a 30 percent owner in TP Vision “is not involved in the operation at all” of the joint venture, de Vries said in the interview. TP Vision’s senior management team, comprised of half Philips, half TPV executives, runs the show, with the supervision of TPV as the majority parent, he said. Philips watches TP Vision “at arm’s length” through quarterly “supervisory board” meetings where Philips “is of course present,” he said. “Where Philips is still closely involved is in terms of the brand. We have a formal brand committee. We have lists of agreements that we need to make sure we follow in terms of the positioning of the products, the branding of the products, point-of-sale materials, those kinds of things. But for rest, operationally, Philips is not involved."

It is “very clear” that TPV, as majority owner of TP Vision, “acts like the owner,” de Vries said. “This investment in Philips televisions is a major strategic move” for TPV, he said. “So the involvement of TPV in the Philips television business is obviously very important, because for them it’s strategically important going forward.” With TPV’s industry-leading monitor business now “maturing,” TPV “as a display player needs to put its mark on the television market, and that’s exactly what they're doing” through TP Vision, he said. TPV hasn’t given up its ambition of bringing the AOC TV brand to market globally, but its main priority is growing the Philips brand through TP Vision, he said. In no way would the AOC and Philips brands compete head-to-head at retail because they have “completely different positioning,” he said.

"We have set up TP Vision to drive profitable growth” in the Philips TV business, de Vries said. TP Vision also wants to be “a Top 3 player in every market we play in,” he said. “That’s a place we ought to be with the strength of our Philips brand.” Since it’s consumed on a “24/7” basis with growing the Philips TV brand, TP Vision has no plans to assume control of other CE product categories, de Vries said, without specifying whether the joint venture agreement would allow that.

De Vries “absolutely” disagrees that striving for market share gains for a TV maker is mutually exclusive with achieving profitability, he said. Still, “you cannot strain your business to prosperity,” he said. “For me, profitability and growth goes together, but you need to be clear on your growth and your growth goals. Our ambition is to be a Top 3 player. If we would want to be a Number 1 player, that would probably not gain us our profitability, because that would cost too much. But with the strength of the Philips brand, we absolutely can gain market share and be a strong Top 3 player. Our goal is not to be the Number 1."

De Vries thinks profitability and growth “go absolutely hand in hand, but you need to go about that in a smart way,” he said. “You need to understand the business models you need to play in the different countries, and they are different per country. We have a different approach per country. We have also transferred the accountability and the ownership of driving that profitability to our individual country leaders. It’s a change also in how we run the business. The product portfolio for Brazil is different than the product portfolio for Germany, and we need to recognize that.” TP Vision “also needs to compete locally, and that’s how we plan to gain our shares,” he said. In the past, if Philips was flawed in its TV operations, it was because the company had had too much of a “global steering” in its product range, de Vries said. “To be fair, it was much more of a global steering with too much of an eye on Western Europe.”

TP Vision “has a huge focus on driving 50-inch-and-up” screen sizes, where margins are better, de Vries said. In Europe, “we have already seen the evolution from 32- to 42-inch, and we believe going forward that will go up even further to the 46-inch segment,” he said. “But again, it’s easy to make general statements because the situation per country is very different. If you take the Spanish market, for example, the Spanish market is still very much driven by smaller screen sizes. The Northern European markets are much more focused on growth in larger screen sizes."

TP Vision thinks 3D TV “will only really take off when we bring goggle-less 3D to the market,” de Vries said. “We don’t feel that consumers will sit in their living rooms with glasses on. That’s something they'll do in the movie theater, but not so much in the living room. The current 3D is very much a feature, not a very strong use case for the living room right now."

For the last year, Philips engineers in the company’s Eindhoven labs in the Netherlands have been working on “further perfecting” autostereoscopic 3D TV technology, de Vries said. “Honestly, this technology is still improving significantly. We will bring goggle-less 3D technology to market when we can realize the right price point for the consumer. So the technology is there, we are every day working to further improve the technology, but we will wait until the moment when the price point is right. We could bring it now to the market, but at a price point where it would not gain any traction with the consumer, so why bother?"

TP Vision thinks it would be a mistake to launch a glasses-free 3D TV set at 5,000 euros, de Vries said, suggesting that’s the price point Philips technology would command if the sets were launched today. He thinks the tipping point would be a price point at 2,000 euros or less, much more in tune with the mainstream high-end market in large-screen, feature-laden TVs, he said. As for when he thinks that tipping point might be reached, “I don’t see it for the next year,” he said. “But it will come, and that will be the true breakthrough. I can tell you what we have in our labs is extremely impressive, and indeed we have some proprietary technology in our hands to do this.” -- Paul Gluckman, Barry Fox

IFA Notebook

"Credit iTunes with really establishing a border around intellectual property and music,” Logitech President Bracken Darrell said in a keynote Q-and-A session Saturday. Before iTunes, “there was this outright piracy everywhere,” said Darrell, whose company introduced an Ultimate Ears-branded Bluetooth boombox and other wireless music products at IFA. “I mean, everybody was downloading everything, all kinds of music,” he said. “It was terrible for the artist. I would say iTunes really re-established that, and now Pandora, Spotify and others are creating new ways to consume that safe music that are consistent with intellectual property rights. It will always be a battle, I'm sure, and I'm no expert on how this will play out in the future. But it’s certainly in all of our best interests to protect the intellectual property of device makers and music makers. Anything we all can do to help fan that going forward is a good thing.”