The only "Philips" you'll see at CES 2009 will be at the Funai booth.
(Credit: CNET)Philips will not be exhibiting at the 2009 Consumer Electronics Show. The Philips brand, however, will still be on display at the Las Vegas Convention Center, thanks to the expanded presence of Funai--the Japanese company that will be producing TVs sold in North America under the Philips name starting later this year.
A Philips representative confirmed to CNET that the Dutch electronics giant will not have a presence on the show floor at the mammoth Las Vegas trade show, verifying rumors that had surfaced earlier this year.
Traditionally, the Consumer Electronics Association's massive January event is used by industry stalwarts to highlight emerging trends and key products that will be introduced over the course of the subsequent year and beyond. Philips' exit from that high-profile showcase comes in the wake of its recent announcement that it's outsourcing TV production to Funai for Philips- and Magnavox-branded sets sold in the North American market.
Indeed, Funai is doing its part to fill the void left by Philips' exit from the show. A spokesman for the Consumer Electronics Association, the industry group that runs CES, had this to say:
Philips has been a pioneer in the consumer technology industry, and a well-known brand for consumers in the U.S. and around the world. The recent license agreement between Philips and Funai was a strategic business decision between two consumer technology companies. CEA respects the strategic decisions that all of our 2,700 exhibitors make regarding their business model and the International CES. We look forward to welcoming the Philips brand back to the 2009 CES in a new way, through its partnership with Funai, which has significantly increased exhibit space for the 2009 show to approximately 10,000 net square feet.
Keep in mind that 10,000 square feet may sound like a lot, but it's small potatoes compared with the megabooths that house major manufacturers like Sony, Samsung, Panasonic, and--up through last year--Philips.
While not having to pay for all that space on the show floor will undoubtedly save Philips considerable expense, it will also mean forfeiting the publicity and intangible buzz that comes from being at the center of the industry's biggest annual event. Just last year, for instance, the company snagged the Best of CES award for its energy-efficient Eco TV (though its admittedly impressive low power consumption couldn't overshadow the middling picture quality evident when we reviewed the final product).
The company could still use the show as a springboard for new product announcements, however: it's all but certain Philips will still have some personnel on hand at CES for meetings with journalists, analysts, retailers, and other industry insiders. And plenty of CES no-shows still crank out the press releases during that week--with the seemingly endless list of gadget blogs and tech sites covering the show, all a company really needs is a product photo and a descriptive blurb to get some virtual ink.
To be sure, skipping CES doesn't necessarily confine a company to also-ran status. Nintendo and Apple, two of the hottest names in the industry, have long since spurned the Vegas show. Likewise, Onkyo and Yamaha have opted out in recent years. Furthermore, Philips is quick to point out that the company is still producing, selling, and marketing all of its own non-TV products for North America. And it will continue to produce TVs for other global territories--most notably Europe--where its brand remains stronger.
Still, when one considers that Funai already produces electronics that are sold under the labels Sylvania and Emerson, you have to wonder: is Philips on the road to joining those once hoary companies as a ghost brand--a holding company that just licenses its Western name to give better brand cachet on store shelves to an anonymous Asian manufacturer? Maybe, maybe not. But skipping the world's biggest consumer electronics show doesn't exactly inspire confidence.
What do you think: Is the Philips brand in decline? Does Philips' no-show mean CES is losing some of its luster as the consumer electronics industry's ultimate sneak preview? Or is this just more "inside baseball" industry gossip that will have little impact on the future of consumer electronics? Share your thoughts below.
If you live near one of 117 Best Buy stores and are desperately in need of unloading your rusty, broken-down gadgets, you're in luck.
Beginning Sunday, Best Buy began allowing customers to bring two items per household per day into some stores in Baltimore, San Francisco, and Minnesota for free. But if you're looking to unload that mammoth front-projection TV--not so fast, there are some restrictions.
Unclutter your life--for free--courtesy of Best Buy.
(Credit: Erica Ogg/CNET Networks)Best Buy says they will take computers, phones, cameras, PC peripherals, and more, but only TVs and monitors smaller than 32 inches diagonal. TVs larger than that, as well as air conditioners, microwaves, and large household appliances, aren't eligible.
Cost is often an issue for recycling programs. Almost all states have electronic waste recycling laws, and most of them put the cost burden on the manufacturer or retailer that actually does the recycling. That's why though other electronics retailers have programs to take back undesired electronics and PCs, there's often a fee for their trouble.
MENLO PARK, Calif.--The practice of playing up a company's green policies for show was the new black for the past few years. But now actually making and selling green products is what's hot because of its potential to put a business in the black.
At the 2008 Consumer Electronics Emerging Technologies Summit held here in Silicon Valley, venture capitalists, business consultants, entrepreneurs, and representatives of some of the largest consumer electronics companies in the world discussed the new wave of innovation in a rapidly commoditizing industry. It basically comes down to two words: energy efficiency.
And the reason it's important? Because it can make a product stand out. And if consumers can see a real benefit to using products that are environmentally conscious, they'll buy it. And that's potential profit for vendors and manufacturers.
"Before it was something (consumer electronics companies) just said to make themselves look good. Now it's a business imperative," said George Bailey, general manager of IBM Microelectronics.
That's because flashy, visible new breakthroughs in technology in the CE space aren't providing the same profitable bump for as long as it used to. High-definition televisions are a prime example.
"TV manufacturers are troubled in terms of profit," said Bailey. "They're asking, 'How can I add value, recapture profit?' Before it was larger format LCD screen. If yours was bigger you'd make more money. Now we know that's not true."
When the big TV manufacturers come to his division of IBM he says they are all looking for greener, more energy-efficient chips that will make their TVs consume less power because that's a way they can differentiate their product from others on the shelf. New technologies include High-K Metal Gate chips that IBM is working on that "leak" less power and can power smaller devices for longer.
But green-friendly products can be more expensive, which can deter certain types of consumers. A representative from Samsung in the audience said the company has yet to see that consumers are willing to pay for products just because they are "green."
That's why you have to give them a real benefit, not an imagined one that makes them feel good, said Steve Westly, who runs the clean tech venture capital firm The Westly Group.
"You have to give customers a real value proposition. A 'green' truck that gets 16 miles per gallon? Consumers will see through that," he said. A green product "has to have an added benefit."
Even if energy efficiency doesn't attract consumers in the numbers that these manufacturers and investors hope, businesses will be forced to green their products one way or another, Westly said.
"You'll see (environmental standards) dialed up in a government-mandated way," he said. "Government regulations and mandates are only going to increase. Not just here, but globally."
Blockbuster sure sounds like it wants to buy Circuit City, but is it able to?
The financial advisers to Circuit City told company officials Wednesday that they think Blockbuster, which has offered $1 billion for the consumer electronics retailer, doesn't have the proper financing to make good on its bid, according to a Reuters report.
In a statement, the company said, "Circuit City awaits a viable financing structure that is predictably executable by Blockbuster given its current constraints of size and capital structure before it would be appropriate to allow further due diligence."
Blockbuster's CEO said earlier this week that his company would proceed with its takeover effort only if conditions are right and that it is loath to go through with a hostile bid. Circuit City has essentially stonewalled Blockbuster since the initial bid was made in February, not allowing easy access to its books.
Also Wednesday, a Circuit City investor who owns 6.5 percent of the company's stock sent a letter to Circuit City urging the company to open its books to its suitor and begin negotiations. The retailer responded quickly to Wattles Capital Management, issuing a statement reiterating its position that Blockbuster hasn't answered its questions regarding how it plans to finance a deal.
Now this is a passionate user base.
Protesters turned out to riot and burn photos at a press conference in Seoul Wednesday held by former Samsung top lawyer, Kim Yong-Chul, and the Associated Press got a great photo of the civil disobediance in action.
We're not allowed to run AP photos (we don't pay for the service, but if anyone has their own photos, please send them my way at Erica dot Ogg at cnet.com), but Engadget has the image, so be sure to check it out.
The company's former lawyer held the press conference to call for punishment of Samsung's former chairman, Lee Kun-Hee, who stepped down Tuesday after being indicted on tax evasion charges.
The rioters are apparently angry with Kim, whose admission to prosecutors about the existence of a $215 million company slush fund used to bribe public officials touched off a high-profile investigation into South Korea's largest company, which has long been a symbol of national pride.
Lee was cleared on charges related to the slush fund, but was also indicted on breach of trust for helping to arrange the sale of company stock to his son and unfairly low prices.
Nine other Samsung executives were indicted on charges similar to Lee's.
Compelling gadgets are the key to consumers' hearts--and wallets--during a recession, according to a consumer spending study.
Of those surveyed, 37 percent of U.S. consumers say they plan to cut back when it comes to entertainment purchases this year, according to an upcoming report from The NPD Group, "Entertainment Trends in America." Just under half of the 11,000 interviewed for the study said they'll likely spend the same amount this year as in 2007.
But what's more interesting is that 18 percent say they plan to spend more, despite widespread concerns over an unstable economy. More specifically, respondents in that group say they see themselves buying gadgets more than content.
"These are the people who tend to be in a higher economic situation so the cost of technology may not be such a barrier for them, whether it's a Blu-ray player or a gaming console or a new iPod," said Russ Crupnick, entertainment industry analyst for NPD. "Those are the things they seem to be anticipating purchasing...That's not to say they're not going to buy movies or music, but their expectation is if they're spending more, they're spending on devices and consumer electronics."
In the recession in 2001, spending on entertainment devices and content remained relatively steady, but this time around, as the price of gas and food continues to climb, the landscape of the consumer electronics industry is very different.
In 2001, there was a new PlayStation game console, and DVD and CD sales were still on the upswing.
"What you're looking at now that's different, especially in music is CD sales have been down pretty significantly. DVD is starting to look like a mature product category," said Crupnick. "The willingness of people in bad times to collect things is less than it was five, six, seven years ago."
Sun Microsystems CEO Scott McNealy had a colorful assessment of the planned merger between Hewlett-Packard and Compaq: it's like two garbage trucks, he said, backing into each other in slow motion. (Beep, beep, beep...thunk.)
That brings me to Monday's rather stunning news that Blockbuster, the giant video chain that's seen better days, is trying to buy Circuit City, the giant consumer electronics retail chain that's also seen better days. The offer, which was made in February and is just now becoming public, is worth $6 to $8 per share--between $1 billion and $1.3 billion total. It's about a 54 percent premium above Circuit City's value before the news broke.
This hybrid garbage truck unveiled Monday has a brighter future than Blockbuster/Circuit City.
(Credit: Volvo Trucks)Now you can argue McNealy was way off base on the HP-Compaq merger, but he'd be spot on if he applied the double-garbage-truck metaphor to Blockbuster and Circuit City. As Peter Kafka at Silicon Alley Insider wrote earlier, it seems like they'd "rather be in a low-margin business than none at all."
In fairness, there is some logic to what they're trying to do. By combining a company that sells the entertainment with a company that sells the equipment that entertainment plays on, you have the mass-market equivalent of Apple's retail stores. If Blockbuster really is developing a set-top box that could allow movie downloads from another Blockbuster acquisition, Movielink, the Blockbuster/Circuit City hookup moves from the realm of the insane to the "nice idea if it were operating in a vacuum" category. At least that's the theory.
But here's the reality: Apple has around 200 retail stores and can meticulously control what is sold in them and how they are run. Apple retail employees go to a veritable boot camp before they're allowed to sell in Apple stores. By comparison, the combined Blockbuster and Circuit City would have 9,300 retail stores, with 5,500 in the United States (though I have to think more than a few of them would be shut down). Quality control? They're going to have to bring in a logistics expert from the military for that one.
Wall Street already hates this. Blockbuster was in the middle of a modest turnaround, after several years of suffering at the hands of Netflix's lightweight mail distribution business and various forms of digital distribution such as on-demand television from Comcast. The company's net income for the first quarter, which ended March 31, is expected to be $30 million, compared to a net loss of $49 million a year ago. Not great, but it's a start.
Pundits already worry a Circuit City takeover could distract Blockbuster executives (they're right) and divert money that could be used elsewhere (they're right about that, too). In afternoon trading Monday, Blockbuster shares were down 14 percent to $2.69 per share.
Circuit City shares, of course, jumped more than 30 percent to $5.12 in afternoon trading. Talk about a company suffering from a changing market...and Best Buy. For the full fiscal year, which ended February 29, Circuit City lost $321 million on $11.7 billion on revenue. The fourth fiscal quarter, thanks to $65 million in reduced costs, did show signs of improvement, with a modest $4.5 million profit on $3.65 billion (sales were down 7.7 percent from same quarter a year ago). But this is not exactly a company with a long line of suitors.
So bring this troubled pair together and what do you get? Well, I'm not sure, to be honest. I suspect Circuit City's ownership also has no idea, since the Blockbuster offer has been on the table since February 17.
Here's what I do know: You'd get a really big company with about $18 billion in combined sales. It would be saddled with a lot of real estate, and it could achieve some cost savings by shutting down some of those stores. But this isn't some roll-up strategy (like Larry Ellison is doing at Oracle) where costs can be quickly squeezed out and a bigger outfit can just roll in the cash. With this, you have two companies struggling to keep up with both more nimble (Netflix, Amazon.com) and much larger competitors (Best Buy, Wal-Mart, Comcast). It's a lousy place to be.
This proposed deal may have one thing going for it: Billionaire corporate raider Carl Icahn is reportedly backing the move and is willing to finance it. He owns about 16 percent of Blockbuster's Class A shares, so I have to think he sees real value in acquiring struggling Circuit City. But as my CNET News.com colleague Dawn Kawamoto wrote a few months back, Icahn's interest doesn't always translate to a Midas touch.
Like most other people who learned about this deal Monday morning, I'm baffled. And I smell desperation.
Video rental giant Blockbuster on Monday announced it has offered to purchase Circuit City Stores for $6 to $8 per share, or about $1 billion to $1.3 billion.
Blockbuster initially made the proposal on February 17, but says Circuit City has not provided the due diligence it needs to make a more definitive offer. On Monday, Blockbuster decided to go public. In a letter to Circuit City CEO Philip Schoonover, Blockbuster CEO Jim Keyes notes that the two companies have been discussing proposed tie-ups since December.
(Credit:
Blockbuster)
Blockbuster says the offer is intended to "capitalize on the growing convergence of media content and electronic devices."
"Our proposal offers Circuit City a significant premium to its existing stock price and creates a game-changing retail concept with a sustainable competitive advantage. We believe the combination will result in a compelling consumer proposition that will drive significant revenue and margin enhancements as well as cost synergies," Keyes said in a statement.
Circuit City issued its own statement saying it had received the offer, and was still evaluating its options.
A combination of the two companies would add up to an $18 billion business, according to Blockbuster's calculations. Both companies have struggled in the past year--Circuit City posted a $200 million loss near the end of 2008, and Blockbuster has been fending off Netflix's success in online video rentals, as well as the growing threat of digital movie downloads.
Last week news leaked out that Blockbuster had a set-top box under development that would stream video content directly into homes, which was seen by many as a last-ditch effort to adapt its business.
Samsung Chairman Lee Kun-Hee appeared before South Korean special prosecutors to answer questions about his company's alleged bribery of public officials, according to the BBC.
Samsung is being investigated for starting a slush fund worth $215 million used to bribe prosecutors, judges, and other public officials. The company denies the accusation, which was made by former company lawyer Kim Yong-Chul.
The chairman's wife, Hong Ra-Hee, who is the director of the Leeum Samsung Museum of Art, was also questioned by prosecutors earlier this week. She was asked whether she used money from the fund in question to buy works of art for the museum, which she denied.
South Korea's largest company, Samsung operates in many industries, but is primarily known for its electronics. The company is one of the largest television manufacturers in the world, and is also a leading handset maker.
Best Buy reported its fourth-quarter earnings Wednesday and the results were surprisingly good.
The largest consumer electronics retailer in the U.S. posted earnings of $737 million, which comes out to $1.71 per share. Analysts were expecting $1.65 per share. Fourth-quarter earnings per share were also significantly better than the $1.55 posted the same quarter a year ago.
For the fiscal year, revenue was also up 11 percent over a year earlier to reach $40 billion, which Best Buy said was aided by the opening of 137 new retail outlets worldwide.
Wednesday's results sent Best Buy shares up 8 percent in pre-market trading, but they fell back down the same day that Federal Reserve Chairman Ben Bernanke said a U.S. recession "is possible." But for CE makers and analysts watching consumer spending habits, Best Buy's earnings must be somewhat comforting since it appears, at least through the end of March, that people are still shopping for what are essentially luxury goods--TVs, GPS systems, cameras, phones, and notebook PCs.
But it's only a slight comfort because Best Buy's chief competitors aren't handling the current situation nearly as gracefully. Circuit City is having a rough time of it, and CompUSA was killed off late last year, only to be resurrected in January by Systemax.
Best Buy does have some things going for it that its rivals don't. For one, it's cornered the market as the place to shop for a PC at retail. It's the only big-box retailer that offers every single major PC brand--Hewlett-Packard, Dell, Lenovo, Apple, Sony, Toshiba, and Acer.
