Philips to Stop Manufacturing TVs for US Market

[admin]

Royal Philips Electronics, apparently sick of the hyper-competitive nature of TV sales which results in ultra-low profit margins, will no longer manufacture televisions for sale in the United States or Canada as of September 1, 2008 (current inventories notwithstanding). TVs will still be sold under the "Philips" brand, but for at least the next 5 years they will be made under license by Funai Electric. Funai is a Tokyo-based company that already sells Emerson, Sylvania, Symphonic and other lower-priced brands in the North American market.


Discuss "Philips to Stop Manufacturing TVs for US Market" here. Read the article.

[Marc Peters]

The information and conclusions on this article are completely incorrect and misleading. The deal between Philips and Funai encompasses the sale and distribuition of TVs in the US market. The manufacture, design, sourcing of TVs will remain with Philips, so I don't see how Funai is now the "guts" of Philips.

Moreover, Funai has extensive experience with Philips in several markets, and we should only see an improvement in Philips distribution and availability of TVs in US, but no other changes whatsoever.

Vizio (as mentioned in the article), is completely manufactured through OEM, which means there are no Vizio plants, it only manages the purchase or parts and services from different providers, and arranges distribution with other providers.

[Clint DeBoer]

No, I don't believe they are incorrect at all. In fact you appear to be misleading when you say the manufacturing remains with Philips. Funai will now direct where the sourcing of parts and products will be according to my sources (in addition to other duties). The conclusions are based on common sense and the information available today. Funai makes products for such brands as Magnavox, Sylvania and Insignia. THAT is who Philips just threw in with.

Do you work for Philips? We'll welcome more info as it is made available. But I don't see how Philips off-loading the responsibilities of its entire display brand in the US is not a big deal and won't result in a lesser product. The article pretty much tells it like it is - Philips cannot compete with the reduced US margins and has to cut costs. Going to Funai is going to cut costs by lowering their manufacturing costs through better (cheaper) sourcing. As a result, however, they are now likely to be manufactured by the same companies who do many other "cheap" brands in the US. They are going to have to prove to consumers that Philips isn't going to be just another cheap brand - and it's going to be an uphill battle.

I agree that we'll likely see an improvement in Philips distribution in the US - but that has nothing to do with quality. On the surface this seems to be their "B" game.

[TLS Guy]

No, I don't believe they are incorrect at all. In fact you appear to be misleading when you say the manufacturing remains with Philips. Funai will now direct where the sourcing of parts and products will be according to my sources (in addition to other duties). The conclusions are based on common sense and the information available today. Funai makes products for such brands as Magnavox, Sylvania and Insignia. THAT is who Philips just threw in with.

Do you work for Philips? We'll welcome more info as it is made available. But I don't see how Philips off-loading the responsibilities of its entire display brand in the US is not a big deal and won't result in a lesser product. The article pretty much tells it like it is - Philips cannot compete with the reduced US margins and has to cut costs. Going to Funai is going to cut costs by lowering their manufacturing costs through better (cheaper) sourcing. As a result, however, they are now likely to be manufactured by the same companies who do many other "cheap" brands in the US. They are going to have to prove to consumers that Philips isn't going to be just another cheap brand - and it's going to be an uphill battle.

I agree that we'll likely see an improvement in Philips distribution in the US - but that has nothing to do with quality. On the surface this seems to be their "B" game.

I must say my sympathies are with Philips. The American consumer is forcing a headlong rush to the bottom, which increase a pace. Just look at the mentality of a huge number of posts on these forums. It's all about the most features, including bells and whistles of highly dubious benefit for the lowest price. And to compund it, they expect this cheap jack junk to perform like a Rolls Royce!

This mentality is driving us to JUNK FOR ALL.

A lot of the BEST equipment I own is the vintage gear. Its high time for the American consumer stand for quality again, a do without until they can afford quality gear.

[GlocksRock]

This is unfortunate, I hope their quality/reputation doesn't suffer as a result.

[Clint DeBoer]

This mentality is driving us to JUNK FOR ALL.

I can't entirely disagree. This is what was so bold about Pioneer when they decided to thumb their collective noses at the game and simply make higher-end displays. Of course the plasma industry is consolidating so it resulted in some unexpected results (moving manufacturing operations to Panasonic, for example).

[annunaki]

I must say my sympathies are with Philips. The American consumer is forcing a headlong rush to the bottom, which increase a pace. Just look at the mentality of a huge number of posts on these forums. It's all about the most features, including bells and whistles of highly dubious benefit for the lowest price. And to compund it, they expect this cheap jack junk to perform like a Rolls Royce!

This mentality is driving us to JUNK FOR ALL.

A lot of the BEST equipment I own is the vintage gear. Its high time for the American consumer stand for quality again, a do without until they can afford quality gear.

That is the Wal-Martization of our society. People have it stuck in their head that they can get Rolls-Royce quality for a Tata price. It just is not possible. Very few purchase on value anymore. Because of this many once US based manufacturers have catered to customer demands for cheap and shifted manufacturing overseas (there are other reasons here too, but that is a big driver).

[TLS Guy]

This is unfortunate, I hope their quality/reputation doesn't suffer as a result.

Well of both will suffer, and and Philips made a financial decision, that they don't care. The made the long range call that the American market is a looser, that will become increasing small on a proportionate world wide basis.

They had two choices. Produce the junk demanded, or go high end and drastically increase prices. Then they would have all the marketing costs of associating Philips with the high end. In their consumer division even prior to world WWII, Philips tried to produce good middle of the road gear. I would say at least in Europe, that is still a big part of the market. Here we seem to be shifting to junk and luxury, with the middle getting increasingly squeezed.

I don't think market trends in this country are healthy, or in anybody's interests.

[Marc Peters]

Mr. de Boer, I'm sorry but you are incorrect (and I do not work for Philips, but for a NY based investment co., where I, do extensive researching before making bold statements about companies and their strategy, which is not always the case in the internet community). Although the deal includes the freedom of sourcing to Funai, there is a 5 year agreement that Philips will provide the TV's to Funai, so, manufacturing, quality control, design, all remain with Philips.

TVs that were produced in the begining of the year will continue to be produced the same way, by the same people, same company (Philips), but now the "delivery" will be made by someone wearing a different badge.

Moreover, you should check your sources: Magnavox is not made by Funai (actually Funai is a strict sales and distribuition company, they do not make anything, no plants, no direct sourcing). Magnavox is a brand owned by Philips, manufactured by Philips, and thus will be included in the deal.

And by the way, the deal was signed on April 8th I believe... bit of old news... in addition to incorrect.

[bandphan]

http://redwing.hutman.net/~mreed/war...m/blowhard.htm