Aiming to capitalise on what it sees as a convergence of the consumer electronics and IT industries, Philips has decided the time is ripe to leverage its name and re-enter the branded PC market -- and to kick off the effort in Asia/Pacific.
Marketing activities for multimedia notebooks, desktop PCs and entry-level servers have begun in 14 countries around the region, including China, Korea, Taiwan and Hong Kong, according to Shanti Kumar, general manager of Philips' business electronics' PC unit.
Asia/Pacific was selected as the launch location because of the boom in the PC market here, and because most of Philips' IT-related manufacturing -- including its substantial components business -- is based in Taiwan, Kumar says.
Philips relinquished its branded PC business in 1992 when it sold its Data Systems unit to Digital, according to Kumar. However, R&D and OEM manufacturing continued, and in 1994 Philips again tested the waters with its own brand of PCs in Taiwan and a few selected markets, he says.
Kumar says Philips has a strong OEM business, manufacturing computers and components for suppliers such as AST and Compaq.
OEM systems and components, including monitors, notebooks and multimedia software cards, account for about 70% of Philips' PC-related business. Philips-branded products account for the remaining 30%. Branded PC sales are meant to be a growth area that will not detract from the OEM and components business, Kumar says.
Citing Philips' experience in the computer area, Kumar maintains that coming back into the PC market will not be a difficult proposition. "We have the manufacturing capabilities, we have the in-house technology, we have the distribution business and we understand the home multimedia business better than any one of our competitors," he says.
While Philips can apply its know-how in consumer electronics to market PCs, Kumar acknowledges that the two are distinct industries and that some business processes will need to be re-engineered.
Confirming his company's interest in the network computer and the so-called US$500 PC, meanwhile, Kumar says that Philips is discussing the possibility of a joint venture with a major PC supplier that he declined to identify. "We have components they want from us -- for example, our manufacturing and R&D in monitors. You need a low-cost monitor, and low cost-components for the Internet PCs and that's the strength of Philips," Kumar says.