Philips 2005 Annual Report Download - page 37

Philips Annual Report 2005 37
stronger share than in CRT. CE’s share of the total DVD
market was under pressure, as its increases in the DVD
player and portable categories did not fully compensate
thelossinDVDrecorders−mainlyduetothefactthat
more and more C-brands are entering this market. As the
audio market transforms, CE’s share of this category is
under pressure.
In the fourth quarter, CE sought to secure its overall market
share and strengthen positions in key categories such as
total TV with a number of product introductions and
marketing initiatives.
The CE business experiences seasonality, with higher sales
in the fourth quarter resulting from the holiday sales.
Awards
In 2005, CE products won several prestigious awards.
The European Imaging & Sound Association (EISA) named
the new Streamium Wireless Music Center ‘European
Audio Compact System Of The Year, 2005-2006’, while the
‘European Video Innovation Of The Year, 2005-2006’ went
to ClearLCD. In addition, CE won 12 Innovation Awards
at the 2005 CES (Consumer Electronics Show) in the US.
Theawardscoveredvecategories:‘HomeTheater’,‘Audio’,
‘Portable Audio’, ‘Electronic Gaming’ and ‘Accessories’.
CE also received external recognition for its continued
sustainability and environmental performance in the form
of gold and bronze Hong Kong eco-design awards for the
Xenium 9@9C mobile phone and DVP520 DVD player.
Sourcing
CE mainly purchases components from suppliers in the
regions where assembly centers are located. The raw
materials required to produce the components are directly
acquired by the respective suppliers, except for key
components like cathode-ray tubes, LCD panels and
plastics. In order not to rely on one supplier only, it is
CE’s practice to have a second source for the majority
of components. In addition, this practice enables the
acquisition of components at competitive market prices.
In a limited number of cases there is a dependence on
a single source of components due to a unique differentiating
technology for product performance and/or cost. In such
cases, CE generally decides to enter into an alliance in
addition to supply agreements. In a number of cases, these
partnerships are made with other Philips businesses and
ventures (like LG.Philips LCD).
Regulatory requirements
CE’s processes and products need to be consistent with
the relevant regional or national regulatory requirements.
Such legislation includes the EU WEEE (Waste from
Electrical and Electronic Equipment) Directive and the
RoHS (Restriction of Hazardous Substances) Directive.
Strategy and 2006 objectives
CE’s strategy for 2006 and beyond will focus on sustainable
protability,competitiveadvantageandlong-termvalue
creation, based on an asset-light and agile operating model
and the unstinting pursuit of optimum operational
excellence.Theaimistobuildananciallyreliableglobal
division with a consistent performance – negative net
operating capital and an EBIT margin of 4.0-4.5%, including
1.5-2.0% from licenses – derived from a focused and
balanced portfolio of businesses and markets, while living
up to its quality and sustainability commitments.
CE intends to make the transition from business renewal
to sustainable competitive advantage and structural
protabilityby:
capitalizing on a focused portfolio of businesses,
includingthelaunchofHigh-DenitionTVandBlu-ray
recording (the next-generation optical storage standard),
as well as creating value in high-value markets like
peripherals and accessories;
continuing to implement differentiated business models,
while capitalizing on its consumer franchise;
establishing a balanced global presence in key markets;
driving integral customer management with leading
customers via One Philips key account management;
developing the capabilities and competencies of its people.
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GoGear jukebox
The Philips GoGear HDD6320 �ukebox brings a new level of ease
of use and listening en�oyment to MP3 and WMA music, as well as
the ability to store and view photos. The player features a backlit
touchpad and Philips’ acclaimed SuperScroll system for speedy and
precise navigation. The Philips GoGear HDD6320 can store up to
15,000 songs or over 8,000 pictures.