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Philips and the death of Europe's last electronics giant [video]

• throwayyy479087 4y ago
  Every time we have one of these threads, it fills to the top with denial. Maybe it would be healthier for the EU if people would accept the stats and consider how to improve the situation? It's certainly possible - consider Massachusetts turnaround after the 90s, same with Pittsburgh, Colombia etc. Inertia kills economies, dynamism drive them. I see a lot of cultural acceptance of "the way it's always been done" here.
• stevenjgarner 4y ago
  > "Complete failure in semiconductor industry" Isn't this disingenuous? Phillips owns a 24% stake, or 99 million shares, in ASML. Philips is granting the underwriters an option for up to nine million shares. Philips also still holds about 1.3 billion TSMC shares, representing approximately 5.0 percent of TSMC’s issued stock. ASML is a monopoly that is literally the only supplier for most cutting edge equipment used by semi-conductor fabs globally (TSML, Intel, etc). They make it all possible. In this regard, Phillips has become more of a holding company than an electronics operation itself.
  • sct202 4y ago
    They sold off the last of their stake in ASML in 2004. They also sold off the remainder of their stake in TSMC in 2007. If they had kept both stakes, they'd be worth like $140b instead of $15b.
• jug 4y ago
  Death? Depends on how you look at it. Check out the end user ratings and product diversity on Prisjakt, the main price comparison site in Sweden. https://i.imgur.com/A2j7mYi.png https://i.imgur.com/A2j7mYi.png That is a very high bar. Sure, they sold out their production but their brand name is pretty strong.
  • hobbes78 4y ago
    But it's not really Philips anymore... It's the same with some TVs with the Grundig brand, which is also very strong. It's just some Chinese factory licensing the brand name... Grundig went bankrupt a few years ago...
• zeristor 4y ago
  Strange, my Dad worked for Philips for 30 years, well Mullards, which was a subsidiary. Reminded me of the newsletters, the employee discounts, the calendar type thing to celebrate 100 years.
• hilbert42 4y ago
  It's not only Philips that has bitten the dust, there's been a succession of other large Western electronic companies that have either gone out of business or that are now only a shadow of their former selves. Here's a partial list: Pye Industries, UK EMI (Electric & Musical Industries), UK Marconi, UK AWA (Amalgamated Wireless Australiasia), Australia Telefunken, Germany Thompson CSF, France HP Hewlett Packard, USA Kodak, USA Polaroid, USA Varian Associates, USA Ampex, USA General Radio, USA Philco, USA Admiral, USA RCA (Radio Corporation of America), USA Philips, NL - as mentioned I used to work for RCA and back then it was the largest electronics company in the world and Philips was second. When RCA failed, Philips became the biggest but unfortunately its time at the top was short-lived. There's several things that seem to characterize many of these failures, the first is that when founders leave or die companies often seem to lose drive and direction, and second companies become too big and diversification seems to kill their R&D/innovation. For example, RCA lost its direction and fell apart when its founder David Sarnoff died and his son took the helm. Similarly, another spectacular failure was Hewlett Packard when its last founder died. That said, there are exceptions such as Apple—but then it may not have been in existence long enough to tell, it hasn't been around anywhere near as long as say, Philips has. Moreover, it's highly dependent on Asian manufacturing, in the long-term, that may be Apple's Achilles's heel. Still, I think that's only part of the problem. Manufacturing and innovation in Western countries are now in a state of malaise and they're being quickly overtaken by Asian countries such as China. Like it or not, the West generally is in a state of decline.
  • georgeecollins 4y ago
    > Like it or not, the West generally is in a state of decline. I don't like it! I think the first indicator of the west's downfall was our declining production of bricks. My parents warned me of how poor I would one day be because our steel production was in decline. Now I prepare my children to live in the poverty of the United States where they have no hope of ever working in a radio factory.
  • deleted 4y ago
    [deleted]
  • rapsey 4y ago
• teekert 4y ago
  Don't we consider ASML a tech giant? A spin-out of Philips btw, as is NXP for example. Edit: Should have watched the movie first. To answer my question: I guess we don't. And, it's electronics not tech indeed, otherwise it could have included Siemens for example.
  • wkat4242 4y ago
    It's very important in the tech market but as a company it's not a giant.
    • seper8 4y ago
      Lol. Has a market cap of twice that of netflix but not a giant? Where do you draw the line?
      • hef19898 4y ago
        Public perception and whether or not they pay FAANGM salaries? Just a wild guess.
        • seper8 4y ago
          They absolutely do pay these salaries and for anyone aware of what asml does the public perception is very positive...
      • paganel 4y ago
        ASML is a geo-political play. When the Chinese will be able to duplicate what ASML is doing its share price will go back to "normal", i.e. to 8 to 10 times less what it is today (that was the level until relatively recently).
        • seper8 4y ago
          When indeed.
    • 4y ago
• DoingIsLearning 4y ago
  Not mentioned in the video is that Philips Ventures is effectively buying up MedTech companies with proven tech, and hovering up the IP into their portfolio as an 'innovation' strategy. Effectively it's a zero risk venture for big corp companies that depend on innovation, they don't have to sink money in research projects in their own R&D labs. Just find someone with something interesting which has already been de-risked, with proven feasibility, buy them out and develop for manufacturing. For clarity all big MedTech companies are doing this not just Philips.
  • tetrep 4y ago
    > Not mentioned in the video is that Philips Ventures is effectively buying up MedTech companies with proven tech, and hovering up the IP into their portfolio as an 'innovation' strategy. Why is that bad? Unless there's something underhanded about the sale, it sounds like it's exactly what a lot of startup founders want: make an MVP, get noticed, get bought, take your pile of money and make another business or go sit on a beach or whatever you want to do.
    • DoingIsLearning 4y ago
      I think the issue is that companies like Philips aren't just buying a rising star, they are also buying out fractions of early startups or creating 'accelerators' for early startups. They are reaching out and grabbing earlier and earlier in the pipeline. To me this is bad from two angles. For startups, they start to get influenced and stiffled by big corp 'this is the right way' too soon, which stiffles innovation. For big companies it gives suits an easy cost down to defund internal R&D and externalize that cost, this means that all the deep pocket research you had in the golden days of Bell Labs cannot be replicated, which again stiffles innovation.
  • esel2k 4y ago
    I agree all big MedTechs do this and I wonder what other (better way exist)? Typically these giants have more cash and heavy process instead of small nimble engineers who can freely use their potential. PS: I work directly with two ex-venture Philipps people, thats why I ask.
• Zetobal 4y ago
  Western European would be right... there are some eastern companies that do fine... Beko etc.
  • mothsonasloth 4y ago
    Beko is a Turkish company, not Eastern European.
  • ibz 4y ago
    Beko is Turkish though...
  • coldtea 4y ago
    Well, Beko is Turkish-owned, so wouldn't exactly qualify as "Europe's". Also not exactly a Phillips level giant (Phillips does 4-5 times as much revenue today, and was doing even more compared to Beko in better days).
• pvaldes 4y ago
  Another mark for the VAT kills list
  • hef19898 4y ago
    VAT as in Value Added Tax? How so?
    • pvaldes 4y ago
      To start VAT reduces the margin of benefits of the maker and also damages the brand by requiring it to burn uncountable working hours to calculate taxes that could be used in a more productive way. This is bad, but their worse effect is to introduce friction in the trade, Introducing fear, angry, uncertainty and mistrust between buyer and seller. This has the effect of reducing the market. If people needs to pay more for a product the final effect is less items sold and people delaying their purchase. If people things that has been scammed with a product with a poor ratio cost/benefit will be reluctant to keep buying accessories or other products from the same brand. With VAT people needs to remind all of the time that the price for <stuff> that they asked for, could be with or without VAT, and that need to ask again to clear the issue and avoid surprises when paying. They will need also often to calculate the 21% more in your mind, before to decide to purchase or not, and this is a real pain in the ass. VAT changes the behavior of the clients to be more cautious and conservative when buying things. Buyers will keep buying the old stuff that they know well and ignore entirely the new products, or will delay their purchase until spend some time looking actively for cheaper replacements. This is specially bad for innovative companies, that need to recover as soon as possible the zillions invested for years into creating new products. They will success only if they can attract enough early adopters; and a market full of cautious buyers is not a good start.
      • hnbad 4y ago
        There are arguments against VAT but your argument is nonsensical. It sounds like you're thinking of how sales taxes work. The VAT rate varies throughout the EU so I'm not sure what you're basing the 21% on. In most of the EU that I'm aware of, VAT must be included in all listed consumer prices because that's what the consumer pays. VAT is only excluded by default in B2B prices so yes, sometimes as a business you have to double-check listed prices to see what you'll actually pay. It sounds like you're arguing for consistent price labelling regulations (aka consumer protection laws), not against VAT. VAT also doesn't really affect businesses. Businesses collect VAT from sales and pay it on purchases, then declare the difference to their tax agency and either pay any excess they collected or get refunded what they overpaid. It's literally a zero sum game and dealing with it in accounting is trivial on top of everything else you already have to keep track of. The problem with VAT is that for consumers it is an inflexible tax that acts regressively in practice: because it's a flat tax on all goods, customers with less money spend proportionally more of their income on VAT than customers with a lot of money. It also doesn't apply to business expenses (due to the aforementioned zero sum) and people earning higher incomes are more likely to have access to "job perks" that convert regular expenses to business expenses (e.g. business lunches, company vehicles, etc). If you wanted to reduce the burden on lower income households, you'd not just abolish the VAT but also abolish any other sales tax and instead raise income tax (especially the ceiling, which often lumps in millionaires and billionaires despite the 1000x difference in scale which often translates to an exponential difference in lifestyle) or (re)introduce a wealth tax (to discourage wealth hoarding and instead encourage reinvestment and commerce).
• wkat4242 4y ago
  IMO where Philips went wrong is selling off their name for everything they weren't interested in to cheap brands, totally undermining their name. TVs (Philips CRT tubes) were legendary in the 80s, now they're made by a budget OEM from Hong Kong. Pretty much all home electronics in the end. Very bad strategy, with minor short-term rewards and killing the brand long-term.
  • sogen 4y ago
    Had a philips cassette player. stopped working exactly 1 day after the guarantee expired.
  • flakeoil 4y ago
    > IMO where Philips went wrong is selling off their name for everything they weren't interested in to cheap brands, totally undermining their name. I'm curious, to which companies/products has Philips sold their name to?
    • ChuckNorris89 4y ago
      Mostly chinese OEMs. Japanese brands are doing it too. If you buy a Toshiba LCD TV, it's not actually a Toshiba.
      • yread 4y ago
        Sharp TVs are also made by hisense
  • trabant00 4y ago
    I think they started selling off their name after and because they where in trouble, not the other way around.
  • MomoXenosaga 4y ago
    Philips knew that they couldn't compete with LG or Samsung. Nobody else could. Getting out of electronics was the right decision.
• arp242 4y ago
  I grew up in Eindhoven, the birthplace of Philips. It was everywhere in the city back then. My entire family worked for Philips: dad, grandfather, uncles. I don't really think it's a bad thing what happened to it. Many viable components have been spun off and sold in various ways; the business is essentially fine, just not under the Philips name and management. Does that really matter? I don't think it does. And giant companies are not a good thing: the bureaucracy in Philips was legendary and giant companies don't tend to be good for consumers. It is hard to underestimate how much influence Philips has had on the history of Eindhoven; it turned a small medieval town to the city it is today (technically its had city rights since 12-something, but it was really just a small town until 1920). It's also easy to be romantic and look back with rose-tinted glasses, or to transpose activities from the past to today.
• pavlov 4y ago
  ASML, a Philips spin-off, is worth about $250 billion today. They make the machines used to manufacture high-end semiconductors everywhere. In that sense Philips’s legacy still underpins every smartphone and computer today.
• acd 4y ago
  I have a old Philishave Philips shaver who is made in the netherlands. Replaced the old shaver with a newer Philishave shaver made in China. Turns out the old shaver is better than the new. The old shaver shaves more closely to the skin for a better result more smooth shave.
• permo-w 4y ago
  what about Nokia?
  • hef19898 4y ago
    Still exists, well and kicking. They just don't make phones anymore themselves. And their mobile network business used to be part of a joint venture with Siemens.
• wallaBBB 4y ago
  I found this video quite flawed. What happened to Phillips is something that proved beneficial in the long run. Legacy of Philips is now ASML, NxP, pretty good startup scene in Eindhoven, and a few other companies. The only victim here is the name. If Philips tried to move as one company they would have probably dragged down their chip related businesses by siphoning money into the fields they were losing. Of course one could argue that the company under Philips name should have chose different direction and spun off consumer or medical market, but at the end of the day it's just a name. I believe in hindsight this will be a way better outcome for everyone than the one we'll see from big tech if they're not broken up. There are already too many examples of them killing competition by leveraging their monopolies or buying it up and killing it off.
  • COGlory 4y ago
    Phillips also helped spawn FEI, which was then bought by Thermo Scientific and have a near monopoly on Transmission Electron Microscopes, as well as being competitive in other EM fields. Without Phillips Electron Optics, most cutting edge structural biology couldn't be done.
  • eecc 4y ago
    Well, no it's not flawed. For one, he did mention that ASML and NXP flourished when freed from the bad management of Philips.
    • wallaBBB 4y ago
      But it also makes a point that it was a mistake to do so.
      • somedude895 4y ago
        Quite likely for them it was a mistake, letting promising companies go lest you smother them with your inertia. Like parents letting their children leave to live to their full potential. Not that businesses do or should have that as a goal per se, but it seems to have been for the greater good.
• DeathArrow 4y ago
  The West is done. A combination of greed, bad politics, poor education, degraded culture makes us live the last days in which the West matters.
  • quonn 4y ago
    Agree on greed and education, disagree on everything else. At least the US still has programmers - in Europe nobody wants to program anymore - too much work. The big car companies create software centres in Munich and hire thousands on Indians on visas there, because there are no Europeans available. I have recently talked to many young people about ChatGPT and their conclusion is that technical skills are irrelevant and they should focus only on soft skills. Well - soft skills are the most basic level - it's just what makes us humans. Some day the non-european people doing the work will figure out that they can do the managing and talking and buzz wording just as good - but that we can't do their work because we have given up on learning the skills.
    • jen20 4y ago
      Perhaps there are fewer Europeans available because they are doing the same thing in the US: making actual money instead of the pittance offered by employers in HCOL cities like Munich?
    • mciancia 4y ago
      ...what I think you are mixing up "nobody want to program in Europe" with "nobody wants to program for peanuts in Europe"
      • quonn 4y ago
        100k or more are not peanuts in Europe. But it's true that this may be part of the problem.
        • wil421 4y ago
          I’ve seen a lot more sub €100k programmers respond with salaries on HN and Reddit than ones close to €100k. A quick google search says the average is 65k in Berlin and around 60k in the UK. London is probably higher for sure.
• LeanderK 4y ago
  what about Bosch or Siemens? They still product things like dishwashers or vacuums.
• lashkhi 4y ago
  [dead]
• rbanffy 4y ago
  My uncle used to work for Philips in Brazil at its peak. They had just completed building a data-center (we didn't call them like that back then) in the 70's, IIRC, to host the many very large IBM mainframes they operated. It was a thing to behold - the whole company connected via 3278 terminals, running e-mail and other productivity applications on IBM PROFS (later to be called OfficeVision). The building now hosts the biggest datacenter of one of the largest Brazilian hosting companies. Too many companies moved from making things to licensing technology and brands, forgetting that the best way to get valuable technologies and brands is by making things.