Philips 2008 Annual Report Download - page 53

Research & development
The ability of our Research & Development teams to
create innovative, meaningful products and solutions
for customers is a critical driver of Philips’ competitiveness
in its markets. Through substantial R&D investments,
Philips has created a vast knowledge and intellectual
property base. Early involvement of customers in new
technologies, as well as in product and business concepts,
ensures deep insight into their needs – the foundation
for our innovations. Starting in 2009, in an effort to
generate more profitable growth and new product
and market development from our R&D investments,
Philips will redirect EUR 250 million of innovation
spending from mature to emerging market areas.
The redirection of innovation is guided by the newly-
formed Philips Innovation board, chaired by Philips’
CEO, and the Company’s chief officers of Technology,
Strategy, Marketing and Design.
In 2008, Philips’ investment in R&D activities amounted
to EUR 1,622 million (6.1% of sales), compared with
EUR 1,629 million (6.1% of sales) in 2007. Higher
expenditures at Healthcare and Lighting were fully
offset by lower expenditures at Consumer Lifestyle.
Also, investments in innovative technologies increased
in areas such as energy-efficient and solid-state
lighting solutions as well as in the areas of health
and wellness. These increases were offset by lower
expenditures in more mature technologies, such as
lamps and television.
Healthcare R&D expenditures increased in 2008,
mainly due to the acquisition of Respironics. Lighting’s
expenditures were also above 2007 as a result of the
acquisition of Genlyte and higher investments in energy-
efficient and solid-state lighting solutions. The lower
R&D expenditures within Consumer Lifestyle were
mainly due to lower expenditures in maturing product
categories, such as Television. Furthermore, R&D
investments at Innovation & Emerging Businesses
were on par with 2007, as higher investments in the
Incubator activities were offset by lower external
contract research.
Philips’ strong innovation pipeline contributed positively
to the Company’s sales in 2008, as 58% of Group sales
came from newly introduced products – products
introduced within the last year (for B2C products) or
three years (for B2B products). Compared to last year,
a 2% improvement was seen thanks to above-average
contributions from Healthcare and Consumer Lifestyle.
Philips aims to maintain its new-product-to-sales ratio
above 50%, while at the same time focusing on the
profitability of new products and reallocating innovation
spend more towards new business creation.
Meeting the needs of the city
UrbanLine is a flexible, energy-efficient LED urban
lighting solution that delivers a visually comfortable
white light for the residential outdoor market. Urban-
Line enables energy savings of up to 50% compared
with conventional street lighting solutions – thanks to
efficient LED technology and smart
street lighting optics – while preventing light pollution.
The longer-life LEDs also reduce maintenance costs.
In 2008, Amsterdam became the first major city to
install UrbanLine – along the path outside the town
hall/Muziektheater opera house.
Philips Annual Report 2008 53
122
Performance statements
114
Supervisory Board report
110
Our leadership
94
Risk management
70
Our sector performance