Philips 2005 Annual Report Download - page 36

Philips Annual Report 200536
Information on the Philips Group
Consumer Electronics
In 2004, Philips acquired Gemini Industries, the leading
North American supplier of consumer electronics and PC
accessories, the aim being to grow Philips’ higher-margin
peripherals and accessories activities on a global scale.
Increased focus through outsourcing
A comprehensive range of outsourcing agreements allows
CEtofocusonspecicpartsofthevaluechain:product
innovation, design, and brand and channel management. CE
increasingly outsources activities to Original Equipment
Manufacturers (OEMs) and Original Design Manufacturers
(ODMs) in line with its asset-light business model. Since
2004, CE has progressively outsourced the manufacturing
of TVs and PC monitors. In 2004, CE’s television assembly
plant in Kwidzyn, Poland, was sold to global electronics
manufacturer Jabil Circuit, Inc. In September 2005, TPV
Technology Limited of Taiwan took over the manufacturing
ofPhilips’monitorsandentry-levelat-screenTVproducts,
as well as the existing OEM monitor business. This enables
CE to focus on the marketing and sales of its own branded
monitor and FlatTV products and on bringing true innovation
to the market with breakthroughs like Pixel Plus and
Ambilight. This model increases the interdependency
between Philips and its key partners; continuous strategic
alignment is therefore essential.
Key accounts
The retail trade (including PC retailers) and consumer
electronics wholesalers constitute the typical sales
channels to consumers (business-to-consumer, or B2C).
Due to the nature of the consumer electronics market,
Philips uses a broad span of distribution routes, e.g. mass
merchants such as hypermarkets and discount outlets as
well as specialist chains, PC retailers, department stores
and mail-order companies. Business-to-business (or B2B)
channels are characterized by sales to PC/IT distributors,
corporate or incentive sales, and sales to system houses/
integrators, telecommunications operators and broadcasters
(where applicable).
The most important development in CE’s customer base
has been a trend towards globalization and consolidation
in the retail sector. The resulting small group of key
international retailers has considerable power when dealing
with suppliers. This puts pressures on prices and margins,
which can best be addressed by global, multi-disciplinary
key account teams designed around the customer. CE is
further investing in advanced world-class key account
management capabilities, competencies, systems and tools.
Partnerships and alliances
CE has entered into alliances with broadcasters, operators,
distributors and other content providers in the world of
cable, satellite and broadband communication to offer
integrated hardware/content solutions to consumers.
A notable example of this is an alliance with Premiere,
Germany’s leading pay-TV operator, for HDTV content
including the 2006 FIFA World Cup™ Soccer.
Markets
CE sales to third parties on a geographic basis:
in millions of euros 2003 2004 2005
Europe and Africa 4,957 5,194 5,101
North America 2,131 2,011 2,525
Latin America 514 731 1,010
AsiaPacic 1,586 1,983 1,786
9,188 9,919 10,422
Intherstthreequartersof2005,CEmanagedto
increase its share of the total audio/video market (including
monitors)
compared to the same period of 2004. Its share
of the total TV market increased slightly, thanks in part to
theshiftfromCRTtoattelevisions,inwhichithasa
To the next level
Having already revolutionized the television viewing
experience with the original Pixel Plus and Ambilight
picture enhancement technologies, Philips has made
on-screen images even more lifelike and realistic with
second-generation versions being introduced on the
latest HD-ready Philips FlatTVs.