BERLIN Gerard Kleisterlee, chief executive officer of Royal Philips Electronics, called for changes to consumer electronics business models in a keynote speech delivered at the International Funkaustellung (IFA) consumer electronics exhibition.
Kleisterlee suggested a three-pronged approach: increasing the pace of innovation; changing the current organizational structure of consumer electronics companies from one focused on product development and manufacturing to a more flexible model that emphasizes sales, marketing and cooperative competition; and making use of alliances and partnerships to meet consumer needs.
"We need fundamental change to the business model if we are to take our industry forward into a new growth era," Kleisterlee said.
"What you're seeing is some companies moving away from being vertically integrated manufacturing monoliths to focus on sales and marketing based on technology leadership," he said.
Kleisterlee cited Philips' partnership with Motorola and ST Microelectronics to build the Crolles2 Alliance semiconductor R&D and pilot line facility near Grenoble, France, as the sort of partnership required.
"Together we are developing the advanced manufacturing processes required to develop system-on-a-chip solutions that will speed the introduction of 3G and 4G mobile phones. It's a perfect example of what I call 'cooperative competition'. We pool our R&D and manufacturing resources, but still compete head-to-head in the consumer markets."
During the week before the IFA exhibition, Philips announced a series of alliances with Europe's leading telecommunications service providers intended to develop the market for broadband enabled services.
"We work with telcos and content providers, packaging their services and entertainment with our equipment to give us a whole new marketplace in the world of 'PC-less broadband', and a different revenue model based on long-term partnerships."
Kleisterlee predicted that healthcare services could be an important area for growth of consumer electronics.