LOS ANGELES — In another sign
of a shake-out in the competitive
flat-panel television market, Royal
Philips Electronics, the Dutch consumer
electronics giant, said it would
no longer manufacture televisions
for sale in the United States or
Canada.
Philips-branded TVs will still
be sold, but the sets will now be
made under license by Funai Electric
for at least five years. While not
a well-known consumer brand in the
United States, Funai, based in Tokyo,
already sells Emerson, Sylvania,
Symphonic and other lower-priced
brands in the North American market.
As prices for flat-panel liquid-crystal-display
TVs continue to fall, Philips has
been in an unenviable position:
while a well-known name, its televisions
have not occupied the premium brand
position of
Sony and Samsung and the company
could not compete on the low end
with commodity brands like Vizio
and Westinghouse.
The decision to simply license
the brand and collect royalties
“allows the Philips brand to be
very evident in the North American
market and de-risks the profit potential,”
said Paul J. Zeven, the North American
chief executive of Philips. “Margins
here are razor-thin; this is a win-win
situation.
In the United States, the company
will focus on health care devices,
lighting and other electronic products,
Mr. Zeven said. The company said
it was taking a charge of up to
125 million euros ($196.3 million)
for the Funai transition.
Funai will be responsible for
sourcing, distribution, marketing,
sales and customer service for the
Philips and Magnavox brands, beginning
Sept. 1. Philips will continue to
design, manufacture and market televisions
in the rest of the world and also
oversee Funai’s United States marketing.
The Philips share of the L.C.D.
business in the United States has
been steadily declining. While the
company was the top-selling brand
in the fourth quarter of 2006, with
17 percent market share, according
to the research firm iSuppli, Philips
dropped to sixth place one year
later, with just a 6.6 percent share.
In 2007, Philips sold $1.7 billion
in televisions in North America,
Mr. Zeven said.
“This is probably a good move
for Philips,” said Riddhi Patel,
an analyst with iSuppli. “They’re
getting out of a business where
margins are really getting squeezed.”
According to iSuppli, the average
selling price for a 42-inch L.C.D.
television has fallen 26 percent,
to $1,544 from $2,082 a year ago.
Depending on the manufacturer, the
profit margin for that size set
is 9 percent to 16 percent.
“Philips has a great top-tier
brand in Europe, but it has been
difficult for them to realize that
premium positioning in the U.S.,”
said Ross Rubin, director of industry
analysis for the market research
firm NPD Group.
The company joins other competitors
that have reduced their presence
in the United States. In 2003,
Thomson, the French company,
sold its RCA television brand to
TCL of China. Last month, Pioneer
announced that it would no longer
produce its own plasma panels, buying
them from others instead.
Globally, Philips has pulled
back from consumer electronics manufacturing.
Most recently, the company has significantly
reduced its position in LG.Philips
L.C.D., a display panel manufacturer.
Originally a joint venture with
LG Electronics of South Korea, Philips
has now cut its stake to 13.2 percent
and the company’s name has been
changed to LG Display.
