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Philips gets pushed out of the consumer electronics industry

TV & AVBlog
by Jamie Lendino, 30 Jan 2013Blog
Philips gets pushed out of the consumer electronics industry

Yesterday brought some sad, if not entirely unexpected, news for consumer electronics fans. Philips, once an electronics industry giant, is selling off its audio and video product business to Japan's Funai Electric for roughly $200 million (£125 million), in an effort to focus on more profitable industries such as medical equipment and lighting products, according to The Wall Street Journal.

It's been quite some time since Philips, as a brand, has been relevant to the conversation in consumer tech. But that wasn't always the case.

The golden years

It's pretty common knowledge that Philips invented the compact cassette in 1963 and unveiled the compact disc (CD) in 1982 along with Sony. The first cassette player, the EL-3300, is pictured below. But Philips also created the first boom-box and the first video cassette recorder, and co-authored the laserdisc format in the mid-1970s to boot. As the Journal article points out, Philips originally got its start as the world's biggest supplier of radios in the 1930s.

That's a pretty significant chunk of consumer electronics history right there, and it's all from one company. Let's take the long view back for a moment: The 1960s brought stereo music and FM radio to the masses, although both were invented earlier. The 1970s saw revolutions in stereo gear, an entrenched LP market, the adoption of the cassette, and the phasing out of 8-track tapes, along with the birth of the home computer and video game console industries in 1977 with the Apple II and Atari Video Computer System (2600), respectively.

The 1980s brought the home video revolution with VHS tapes and rentals, boom-boxes with cassette players, and the "perfect sound forever" of the CD format, which began to supplant LP purchases. The 1990s brought the CD out of the home, with portable and in-car CD players pushing the cassette aside.

With the exception of the home computer industry, Philips played a significant part in all of this, and spent most of these years churning out solid (if often low-end) stereo components, televisions, portable music players, and VCRs, and it was making quite a bundle while doing so.

Losing relevance

Eventually, the money train derailed, and later efforts from the company weren't as successful, either. There was the Philips CD-i, which ended up being part of an "interactive CD" push, one of the early failed efforts at merging various living room technologies. That was a tough one; here we are 20 years later, and the Sony PS3 and Xbox 360 have done much more for that concept than any device before them, yet you can still argue that the evolution of the idea isn't quite finished yet.

Philips also introduced DCC, the digital compact cassette, which was a rival to Sony's MiniDisc. It sounded a bit better, but like the MiniDisc, it was still a lossy compression format and kind of a precursor to MP3 files. Then the MP3 format took hold, the price of hard disk space plummeted, and both events eventually sealed the fate of the MiniDisc and DCC. Most recently, Philips shifted focus towards iPod speaker docks, flat panel TVs, and Blu-ray players in the consumer electronics space, but it wasn't enough.

This all makes me wonder what future people will look back and remember in terms of contemporary tech. It's pretty clear the iPod will factor in. The iPhone and Android will be considered historic, as will the iPad. The Kindle seems to have taken the mantle as the first important eBook reader, even though Sony had one for years before the first Amazon device. But Philips can claim credit for a number of significant "firsts," as listed above.

The spotlight is on software

The reality is, once-storied names in consumer electronics like Philips, RCA, and I hate to suggest this, Sony, are being pushed aside by newcomers (or at least, companies new to the industry) like Samsung, Apple, Vizio, and LG. Oddly, the Journal cites Sony as one of the companies to push Philips aside, along with Apple and Samsung. That may have been true if we were writing this article in the 1990s, but Sony has been struggling for quite a while now in many of the most visible businesses in which it competes.

Regardless, the most important stuff isn't happening in hardware, but instead in software, as Google, Apple, Facebook, Twitter, and Amazon can attest. It's possible Philips' consumer electronics products will survive under different ownership, but the chances of that seem slim, and the truth of it is that the glory days are most likely over and the name won't mean anything. It's the biggest cliché in the book, but time really does march on.

While you’re here, you might also want to take a look at our piece on Atari: An ailing but crucial brand.

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