Good morning ladies and gentlemen – welcome to IFA and welcome to Philips.
One year ago I outlined at this show how the CE industry must adapt itself to consumer lifestyles. My New Convergence story talked about opening up different value spaces, truly consumer-centric products that address the needs of consumers, not just the capabilities of the engineering community.
In my keynote last year I challenged the very notion of convergence. “Old” convergence was, essentially, the ICT industry driving consumers to adopt new digital platforms. In consumer electronics terms, however, it was too much about the “electronics”, and not enough about the “consumer”.
New Convergence, however, is not about which technology platform will win: the only winner, in my view, is the consumer. Fundamentally, it's about putting the consumer at the heart of consumer electronics, enhancing their lifestyles with new, sensorial experiences and a whole range of applications that extend beyond the entertainment paradigm that has traditionally shaped the consumer electronics industry.
New Convergence calls for our industry to apply the same vision of Sense and Simplicity Philips has introduced, to give consumers the products, services and content that meets their needs.
One year on, Philips – in particular – has made significant strides forward in applying New Convergence: in transforming itself from a High Volume Electronics business to a Healthcare, Lifestyle and Technology company, we are, today, a brand delivering products for contemporary lifestyles via both our professional and consumer businesses.
I fully appreciate that the notion of “healthcare, lifestyle and technology” combined may not be the first thing you think of in the context of IFA. After all, throughout its 83-year history, this show has been mostly concerned with AV equipment, hence its original name – Grosse Deutsche Funkausstellung, or “great German radio show”.
So what possible relevance could healthy living have here at IFA? Very simply, it's all about the consumer and their lifestyle. The FlatTVs and MP3 players you see here at IFA in abundance are all aspirational lifestyle propositions first, and technology platforms second. But as I will talk about in greater detail this morning, these are not the only consumer electronics categories relevant to contemporary lifestyles.
Maybe there is even room for IFA to evolve as well? I've often said that the term “CE” shouldn't refer to consumer electronics, but consumer experience, or even consumer emotion. Yes, consumers want the latest tech gadgets, but we also know that consumers have other priorities. Increasingly they are making intelligent choices about their own personal wellbeing, that of their families, their homes and the global environment itself.
In addressing the consumer lifestyle paradigm, and putting the ‘Wellness and Pleasure” of consumers at the heart of our lifestyle strategy, Philips has not abandoned traditional technological innovation in consumer electronics – far from it. But rather than just being a technology vendor, Philips has reinforced its strong brand by becoming a company offering solutions to people, helping improve the quality of their lives through meaningful innovation.
This transformation of the Philips brand is growing in recognition:
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This year we moved into the Top 50 of the Business Week-Interbrand rankings of brand value amongst companies in all business sectors.
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In terms of innovation, the Business Week-Boston Consulting rankings moved us up from 67th place to 38th – on the strength of our transformation as a Healthcare, Lifestyle and Technology company.
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And in the area of sustainability, we were named global leader for the leisure goods sector of the 2006/2007Dow Jones Sustainability Index.
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Just recently sustainablebusiness.com listed Philips amongst the world's 20 most sustainable investment stocks - innovative companies having a positive impact on creating an environmentally sustainable society.
We're applying relevant, people-centric innovation to offer products which not only reflect consumers' interests and lifestyles, but deliver profound experiences to enhance them further.
Moreover, we're applying deep consumer insight to address the things that matter to consumers: how can we enhance the Space they inhabit, creating environments that aid their wellbeing and increase their pleasure?
How can we offer rich new experiences to aid relaxation and help improve their state of Mind.
How do we help consumers to live healthily, to feel good and to allow them to present themselves in the best possible way by offering products to enhance the Body on the inside, and their Appearance on the outside?
Answering these questions gives us clear definition on how we operate in the consumer space – and how we're transforming. We no longer think about offering products based on rational benefits like functions and features, but on products which connect to consumers on an emotional level.
As a consequence, our strategy is based on addressing the consumer's desire for Wellness and Pleasure, and we've mapped this approach by looking at the individual's interests in terms of their Space, their Mind, their Body, and their Appearance.
I must stress, these are not new business categories for Philips: they are the domains shaping our approach, our product portfolio choices and our thinking in how we address Wellness and Pleasure and the emotional – not just technological – needs of consumers.
Let's first look at the “Space” domain: dating back to our origins as a lighting company at the end of the 19th century, Philips has long been a brand consumers have felt at home with, and increasingly, their lifestyles with.
Just as a home is something more than a house, My Space is more than just a physical location: it's also a state of mind.
When we launched our Ambilight FlatTV technology, we introduced the first truly immersive experience to home entertainment. Through the relatively simple addition of ambient lighting, Ambilight created a different dimension: instead of just looking at a TV picture, Ambilight extended the peripheral vision, while at the same time also creating a more relaxing viewing experience.
We have now gone a major step further - the amazing new Aurea. Aurea brings together pleasure, wellness and home ambience in a totally unique way, fusing pictures, sound and light in its unique ‘active’ frame. Aurea introduces style and seduction into our Sense and Simplicity story, with the result being a truly immersive experience that draws you into the content in a way no TV has ever done before.
The advertising campaign we've created for Aurea communicates in a very different way for the consumer electronics market, focusing on the seductive power and emotional benefits of Aurea's amazing light.
Aurea represents one of the key elements of Wellness and Pleasure: rich, profound and exciting new experiences, delivered by technology, but enjoyed on a far more emotional level than technology has enabled before.
My Space shares ground with My Mind. Products like Aurea help enhance the personal environment on different levels.
They also enhance the personal state of mind. As I've said, consumers increasingly want a better life balance; they want to escape the pressures of modern ‘24/7’ living by relaxing, whether through entertainment, physical activity or simply enhancing their mood.
Perhaps when you come home from a stressful day at work, your mood can be improved simply by a change of color? You can't repaint your living room just to suit your mood, but with our LivingColor lighting system, you can change the color any way you want.
This innovative lighting product uses LED technology to enable an almost infinite variety of colors to be displayed at the simple turn of a dial. Whatever your mood, your style or even whatever the occasion, the LivingColor's four LEDs can generate 16 million different color combinations, including different levels of light intensity.
Of course, we have plenty of entertainment solutions here at IFA which can clearly address the Mind’s wellbeing. Aurea, Ambilight FlatTVs, the Ambisound Soundbar and our amBX PC gaming system all offer entertainment experiences you’ll be very familiar with – whether it is TV viewing, home theater or gaming.
However, all have an extra dimension – ambience: amBX, for example, combines ambient light with sound and even effects like wind and vibration to make PC game play more immersive. The result is the player is transported into the game's realm in a totally unique fashion. Like Aurea, amBX gives the consumer a different entertainment dimension. It's a truly compelling experience.
A simple approach to creating a more relaxing home environment is to simplify the clutter within it. Our EISA Award-winning Ambisound Soundbar home theater system is an exercise in design simplicity, addressing the need for consumers to be enveloped in their entertainment content, but not have their home environments dominated by the hardware that delivers it. Ambisound does away with the need for a home theater system built around multiple speakers to deliver pure multi-channel ambient sound.
So, you can see, we can help “My Mind” to relax through the beauty of light, and transform “My Space” with a combination of technological innovation and clever design, or via simple, effective (and clean) LED solutions, creating both entertainment and decorative experiences that bring together pleasure, wellness and home ambience in a totally unique way.
Addressing these two domains, however, isn't something Philips restricts to the home environment: a century ago, less than 10% of the world’s population lived in cities. Today, the figure is over 50%, and by 2050, the percentage is expected to be over 75%. Those of us who live and work in cities know that they can be unrelenting environments.
Beautification by light can make a profound difference, and can be regarded as an experience in its own way: Philips has a significant role to play in improving the quality of urban life. In daylight, many places are beautiful, but when night falls, darkness covers treasured landmarks and fills dimly-lit streets.
Improved or enhanced light brings a city many benefits: safety, security, increased tourism, orientation, ambience, spectacle and social interaction, and identity and enterprise.
All across the world, from London's Buckingham Palace, the Eiffel Tower in Paris, to the symbolic road Bosphorous Bridge linking Europe and Asia - Philips' innovative solid-state lighting technology is making a difference to cities and towns. Our application of solid-state lighting also adds significant energy efficiency as well, which is a topic I will come back to a little later on.
Our consumer focus revolves around a holistic group of consumer interests which can be addressed by meaningful technologies. While there isn't a technological connection between an Aurea FlatTV and a shaver, for example, our new mapping helps understand the Wellness and Pleasure sectors we serve and why we serve them.
With this in mind, I'd like now turn your attention to how we help consumers the consumer determine how others perceive them.
This is the domain of “My Appearance”. Consumers feel good, achieve greater confidence and improve their self-esteem when they feel that they are presenting themselves in the best possible way. However, they also wish it could be easy to always look their best. And often, it isn't.
This is where we apply Simplicity, design and innovation. I don't profess to be an expert on fashion, but I do know that fashion accessories are a simple solution to looking and feeling good. In our collaboration with Swarovski, our Active Crystal accessories transform headphones or USB memory devices into fashion accessories. The Active Crystals fuse function and fashion, delivering on the respective brand promises of Swarovski and Philips - “Poetry and Precision” and our own “Sense and Simplicity”.
The Swarovski alliance also marks another departure for Philips, as it is enabling us to project the Philips brand – and Philips technology – into the fashion world. A jewelry store is the last place you'd expect to buy flash memory or headphones, but as from next month, that’s exactly what we’ll be doing when our Active Crystals range go on sale via Swarovski retailers around the world.
Wellness and Pleasure can come from looking good and feeling good, and consumers want their bodies to look good. Philips has provided personal care products for many years and today has a substantial portfolio, ranging from our world famous shavers through to the innovative Sonicare dental care solutions.
To show that My Appearance is nothing new to Philips, we've been selling electric shavers since 1939. This year we reached the milestone of having sold 500 million shavers since then.
Almost 70 years on, we're still innovating, and next month we will introduce our latest shaving innovation: the Philips ‘Arcitec’. Arcitec is the world's first shaver to use three independently flexing heads in a shaving unit connected to a proprietary central drive technology. This ensures optimum skin contact in curved areas such as the neck where some hairs lie flat and are more difficult to catch.
Arcitec joins our family of innovative male grooming products designed with specific needs in mind, such as the Philips BodyGroom. Whether for the sake of vanity, or to improve their athletic profiles, many men want to minimize more than just their facial hair, which is what has made the BodyGroom so popular.
Indeed, Arcitec and BodyGroom provide clear proof that that simplicity, consumer-centric thinking and meaningful innovation don't just apply to gadgets and ‘hard’ technology: even in a mature, personal grooming category like shaving, we are still applying new technology - enhancing people’s lives through meaningful innovation. These products meet consumer demands for less complexity in how they manage themselves and their lives.
That's Simplicity, and it's why our Brand Promise, Sense and Simplicity, is more than just an advertising slogan: it's a compelling statement of our brand, our culture, our attitude and our approach. It's in our DNA. It's how we apply ourselves across all our portfolio choices.
Whereas My Appearance is about the human exterior, “My Body” – the last of our four domains - is about the body within. We have long been a provider of solutions to the healthcare profession – dating back to X-ray valves in the early 20th century. Today, we are the second largest provider of healthcare technologies and related services in the world, especially diagnostic and preventative applications for conditions like cancer and cardiovascular diseases. In many individual sectors, like patient monitoring, external defibrillators, cardiac ultrasound and cardiovascular X-ray, we are the number one company.
You could say that some of these activities address lifestyle needs too: sadly, many of these conditions are related to unhealthy lifestyles, and they're not restricted to western economies either. Improving access to healthcare in new and emerging economies - where virtually all the world's population growth is expected to take place - is an important focus area.
In Chinese markets, for example, we have formed a joint venture with Neusoft to develop and market economy-range healthcare products. In addition, we develop innovative technologies, such as our Intelligent Water Purifier, to specifically address healthcare and lighting issues of the bottom of the pyramid.
We firmly believe that business, through technology, know-how, products business models and management solutions, can contribute to providing the many economic, environmental and social challenges society faces. At this point, you may question why I should be talking about our medical activities at a consumer electronics event: but as I mentioned at the start, everything we do here at IFA is about the consumer lifestyle, and as I have also explained, Wellness and Pleasure embraces entertainment and healthy living.
Healthcare is a key growth area in the global economy: within the next three years, healthcare expenditure will account for approximately 10% of global GDP. Within 50 years, there will be two billion people in the world aged 60 and over – a tripling of the figure today.
Today they may be buying the latest FlatTV: but at a future life stage they may be looking for a home appliance that measures their blood pressure, their blood glucose, or helps to manage any one of a number of medical conditions which, today, require in-hospital supervision, but – thanks to innovation – could be treated at home.
That is why we are growing our home healthcare business; that is why we have made acquisitions like Lifeline in the United States, and why we have been moving ahead with the commercial introduction of a patient monitoring applications like Motiva.
We're developing simple tools to help people take care of themselves today, and to make it easier for them to actively pursue healthier lifestyles.
For example, we're all encouraged to exercise more and eat less. We're told to eat five portions of fruit and vegetables every day. But how do you get an eight-year-old child to eat any fruit and vegetables if they're only interested in pizza, chips and fizzy drinks? You make fruit juice fun, as Philips has done with its range of juicers, which not only make it easy to make juice from natural ingredients, but adds creativity, relevance and kitchen style to the process.
In addressing My Mind, My Space, My Appearance and My Body, we are reflecting the consumer's holistic interest in better wellbeing. This is a dramatic difference from the traditional view of consumer electronics. But as I hope you are already recognizing our interest lies in the consumer, and not just in the electronics. Addressing the consumer's needs, applying the notion of New Convergence, are all coming together in how we go after market opportunities that exist for and around the modern lifestyle.
These four domains have not been plucked out of thin air by our strategists and thinkers: we have chosen these four domains because A) our insight tells us these are things that matter to consumers, B) we have the bandwidth within our capabilities and competencies to successfully deliver on them, to meet these consumer needs.
While we know that consumers are seeking better wellbeing for themselves and those closest to them, increasingly, they are also seeking better wellbeing for society as a whole, and the environment in particular.
Not so very long ago, environmentalism was regarded as a special interest of a few well-meaning and dedicated individuals, but not something to attract much attention in the mainstream. But not any more: today, the environment is front page news. It's on the political agenda. It’s on the commercial agenda. It's on the consumer agenda. And it's on Philips' agenda.
Indeed, it's been on our agenda for some time: over the last thirty years we have developed programmes and policies aimed at ensuring our products have as little environmental impact as existing science allows them to have.
Of course, at the end of the day, we're a business, and one that has chosen to make its money selling electrical goods which consume natural resources in their manufacturing, distribution, usage and disposal.
We have, though, become good at minimizing that impact, enabling consumers to make responsible choices about the products they buy and the environmental impact they have before, during and at the end of their lifecycle.
Our nine-year-old Green Flagship programme, for example, identifies products within each range which have been defined through independent testing as having better-than-average environmental ratings and lifecycle assessment in six categories specific categories – energy consumption, packaging, hazardous substances, weight, recycling and disposal, and lifetime reliability.
We have also made several advances of our own in addressing power consumption, for example by greater use of innovations like dimming backlights and ambient light sensors in our FlatTVs, or the application of LED lighting technology.
We are also very active in addressing the controversial issue of standby power. Clearly, the best approach is simply to not have standby mode at all on a product, but as consumers want this feature, we have to find ways to minimize the environmental impact that standby mode can have.
Almost all of our current TVs consume less than a single watt whilst on standby, compared to nine watts as the industry standard less than a decade ago. As a result, if you were to leave one of our current TVs on standby for a whole year, it would consume less than a single Euro's worth of electricity in that time!
Today, we're below one watt in standby power, but our ambition is to get to next to nothing. The technologies to do this are being developed, and although they will take a little longer to deliver, ensuring that a feature as consumer-friendly as standby mode carries minimal environmental impact is of great importance to us.
Our green product focus isn't only limited to television, however. Across our consumer electronics range, we are uncompromisingly driving sustainability in all aspects of product creation.
From simple innovations like packaging and easier disassembly for recycling, to rechargeable batteries which last 20% longer without charging, we offering consumers more sustainable choices.
Furthermore, we're helping them to make those choices easier in store: our new consumer logo clearly identifies products which have a significantly better environmental performance than their competitors.
Our efforts to make a positive environmental contribution have not come about overnight. We have built up considerable competency, knowledge and expertise in this area.
Consumers can make intelligent choices about their electricity use: changing to more energy-efficient light bulbs or consumer appliances is one of the simplest measures every home, place of work, school or factory can take to make a contribution.
We recently underlined this simple step with asimpleswitch.com. Launched just before Live Earth, this website is designed to start a global movement promote easy ways to switch to low-power lighting, demonstrating that individual collective action can have a huge impact.
Lighting has a major role to play in the environmental story. Lighting accounts for about 19% of worldwide electricity consumption. Converting to energy-efficient lighting technologies could save 106 billion Euros in electricity costs and 555 million tons of CO2 emissions per year, along with 1.5 billion barrels of oil and 530 medium-sized power plants.
Lighting can make a positive environmental contribution in many ways. Adopting energy-efficient lighting can clearly help, but using innovative lighting techniques to beautify environments can also have a positive benefit on the spaces in which people live and work, contributing to their wellbeing.
Solid-state lighting is highly energy efficient, offering opportunities for major savings in for instance city beautification projects. LEDs, for example, are small, safe and very robust. More importantly, they can have lifetimes of up to 50,000 hours each, far more than other types of lamp. They're also highly adaptable: as I showed earlier with our LivingColor products, their enormous spectrum of colors creates fantastic possibilities for application.
There is much more to come, especially as we work towards removing the incandescent lightbulb that has been the mainstay of lighting for over 100 years. New technologies, like LEDs, compact fluorescents and energy-efficient automotive lighting, could reap energy-saving benefits of, on average, 40% and in some cases, 80% less consumption.
Philips is close to finalizing a set of additional targets across all its businesses in the area of energy management, and we will be making these public in the coming few weeks.
So what about Philips and the future? Our path forward as a Healthcare, Lifestyle and Technology is defined Sense and Simplicity. Our path forward in the lifestyle business, in particular, is defined by putting the consumer - and their Wellness and Pleasure - at the heart of our thinking and behaviour.
Consumer electronics is no longer about assembling boxes containing electrical components to perform a specific function. Nor is innovation solely about adding additional technology and functions.
Investing in the future means investing in design, and consumer-centricity comes from applying a variety of human sciences in the design process. Our Design teams employ a whole host of experts in the sciences of life – sociologists, behavioural scientists, economists and others to take a truly ‘Designed Around You’ approach to product concepts before they even reach the industrial stage.
This has become even more important as we develop products like Aurea. The difference between Aurea and a traditional television is as distinct as that between a house and a home - a house is simply a construction of bricks, but a home is an environment with an emotional value.
The same applies to Aurea, which was designed to create a seductive and holistic viewing experience, breaking down traditional barriers between hardware and content. Not only that, but also to give Aurea a function when switched off – radiating value and taste in a discreet and subtle manner.
Investing in the future also means investing in research. Philips already offers a broad range of consumer electronics devices for the kitchen, the bathroom and the bedroom: combine these with the desire for wellness, pleasure and relaxation, and the door opens up to all sorts of form, function and purpose combinations, now being devised by our strategists, research scientists and visionary design community.
You can see some examples of our maturing research projects here at IFA. Along with extensions of existing competencies, such as 3D displays for the professional signage market, you can clearly see where some of our new interests lie.
In our FutureZone on this stand, you can see the unique TagTiles – a gaming application based on a new platform providing tools to easily create tangible user-interface solutions. While playing the TagTiles game, children not only have fun, but also develop their cognitive, social and motor skills. The system can also be used with adults, either to detect cognitive decline in the elderly, or even to assist those with special needs in lighting and home control.
Investing in the future must also – and ultimately – mean investing in the people who will use and apply our innovations. In order to study how people interact with prototypes of intelligent technology in a real-world environment, Philips opened its HomeLab five years ago in Eindhoven. This permanent, fully-functional home laboratory provides a center where researchers can work on the definition and creation of compelling experiences.
HomeLab allows Philips researchers to better understand the needs and motivation of people to use technology, and bring relevant and meaningful innovations to market in the quickest possible timeframe.
Since then, the HomeLab has spawned two sisters – the CareLab and ShopLab. CareLab is similar to HomeLab in that it is a home environment, but the difference is that it focuses on developing care solutions for one of the fastest growing segments of our population - the elderly.
The ShopLab is totally different, in that it tests new lighting technologies for retail environments. The common bond between these three laboratories is that they are designed to test real world experiences with our most important partners in the research process - consumers and our customers. As such we have organized them under the umbrella of The Philips ExperienceLab.
We believe this approach to innovation – based not on mere technological excellence, but also on the empirical study of people interacting with technology in realistic environments – will significantly help Philips deliver on its brand promise of “Sense and Simplicity”.
Innovation is always going to be Philips' lifeblood – that's why today we have a portfolio of around 80,000 patents. But we're not inventing because we can, we're inventing because there's a clear need at the end of it.
A strategy built on relevant innovation drives our brand value and brand appeal in all areas of interest. It drives how we make life more enjoyable for our consumers and the environment in which they – and we - live.
Via the domains of My Mind, My Space, My Body and My Appearance, we are taking the consumer lifestyle much further, making home life more enjoyable through convenience, safety and environmental friendliness.
Technology and innovation will continue to be our driver, but it will be applied with consumer-centricity as its foundation and, perhaps, in a different way to how we've done it before:
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To make entertainment more immersive, more relaxing and therefore of greater benefit to wellbeing.
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To address personal appearance needs with technology that is simple to use and personally relevant.
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To use lighting to change moods and enhance living environments.
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To make food preparation easier, more intuitive and healthier.
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To make it easier to communicate and share emotions with other family members.
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And to make home healthcare easier and adaptable to the modern patient.
In bringing together this consumer insight, with Philips' consumer strengths, we can address the core wellbeing of consumers who are at ease with modern life, have a high level of cultural mobility, who want to be a part of the wider community, and are prepared to make selective purchases.
Our goal is to go beyond conventional product categorization, instead – via My Mind, My Space, My Body and My Appearance, to explore what opportunities exist in bringing the Philips brand name to new categories, products and product-service combinations in these quadrants – all built on the Sense & Simplicity vision and drawing on the Easy To Experience, Advanced and Designed Around You design principals.
I hope this morning I have painted a clear picture of how we are evolving from a company offering its technologies to consumers, to a brand addressing the lifestyles of consumers with innovation and relevance.
Here at IFA, with Aurea, the Ambisound Soundbar system, our Philips-Swarovski Active Crystals, amBX and others, you can see where we are today. These are all unique products in the CE space, but made unique not just by technology, but by meeting the lifestyles of those we hope will buy them.
That is also the approach we the consumer electronics industry – as a total ecosystem - must adopt. To enhance and enrich consumer lifestyles, we must collectively put the consumer at the heart of our thinking:
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Partnerships – like ours with Swarovski – must meet the consumer's needs, but not only for serious needs: Wellness and Pleasure can come from something as simple as a diamond-encrusted pendant with a USB memory built into it!
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We have to think through the whole consumer experience: not only what the consumer buys, but how they buy it. For that, we need to work in partnership with the retail community.
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We have to think about what products do, and that requires partnership and open innovation amongst content providers.
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We have to ensure that consumers can get full value out of their purchases, which requires active and meaningful partnerships with suppliers and all elements of the product creation value chain.
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As president of EICTA, I have been involved in many of regulatory issues within the European Union – and I know that regulatory authorities like governments also play their part, for example in legislating on issues such as the environment or digital rights management.
This is true consumer-centricity. It's what drives Philips today.
We are making people and their needs the very foundation of our work, and at future IFAs you will see how, as we evolve as a Healthcare, Lifestyle and Technology company, we will be focusing on helping people achieve the right balance in their own health and wellbeing.
Thank you.
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