Philips diversifies for another 120 years of success

Netherlands-based Philips, which has built a strong reputation in electric appliances, consumer electronic products and lighting equipment, for years has gradually shifted its portfolio to new areas such as healthcare.
In a world where the players in this industry can learn and keep themselves updated with the same technology, the 120-year consumer-electronics manufacturer has had to develop high-value-added products aimed at raising the standard of living of the world’s population.
To that end, Philips spends about 7 per cent of its sales revenue for research and development, triple the world average for spending on R&D.
As it looks forward to the next 120 years of business, Philips focuses on four areas – lighting, nurturing, healing and enjoying. These are the areas that the company sees as growing faster than the global economy. Many products are targeted to tap emerging markets such as China, India and Brazil.
For lighting, which Philips actually categorises in the living segment, the company predicts that more people worldwide will move to urban areas. The proportion of people living in cities will climb to 70 per cent by 2050 from about 50 per cent currently. Lighting equipment will be needed not only to establish the security of cities, but also to create the identity of each city.
Frans van Houten, president and chief executive officer, said recently that Philips would still champion LED (light-emitting diode) technology, which can create various features of lighting and offer energy savings.
Philips spends tonnes of money on R&D for LED lighting equipment, solutions and systems. It predicts that LED will have a 50-per-cent penetration of the global market by 2015.
Philips’ researchers do not sit in laboratories and just develop LEDs, they have to cooperate with customers worldwide to create the products, solutions and systems that serve the customers’ specific requirements.
In the US city of Boston, Philips has provided a lighting solution called Luxeon Rebel LEDs, which will help the city cut greenhouse-gas emissions by 25 per cent by 2020 and reduce energy consumption by up to 70 per cent, or US$1.1 million (Bt34 million), per year.
The company has also partnered with the Climate Group and One Foundation in China to develop solar-driven LED street lighting. The equipment will store solar energy in a battery and release the power for the LED luminaire to light the road at night.
Philips City Touch, an intelligent online outdoor lighting management system, will be the next solution that the company will introduce outside Europe next year, starting in China.
The solution allows operators to provide light precisely when, where and in the right amount needed. If the operators use the solution with LED lighting, energy consumption will be reduced by up to 70 per cent.
“The buildings in cities are also Philips’ target. About 80 per cent of them are still using outdated lighting equipment. We expect them to replace the lighting equipment with the ones that offer more energy saving,” van Houten said.
LEDs are not only used for lighting purposes, but also for therapy. Philips has created the Blue Touch Pain Relief Patch that uses blue LED light to bring nitric oxide into the skin to relieve muscle pain. Nitric oxide helps improve blood circulation, thus reducing muscle pain.
For nurturing, Philips put an emphasis on clinical solutions and products that support the good health of consumers and food safety.
The newly invented product that seems to fit with Asian people is “active water”. Its concept is to bring cleaner fruits and vegetables to consumers. The solution works by removing pesticides from the surface of fruits and vegetables. The product, which was created by Philips’ Shanghai team, will start marketing in China next year, where residual substances are the concern of the people.
Many products and solutions are in the pipeline, and these can show that Philips will grow with innovation and cooperation with its partners worldwide, van Houten said.