Thomson Leaves Struggling Home Phone Market

By Greg Scoblete -- TWICE, 11/17/2008

INDIANAPOLIS — Thomson said last week that it would exit the residential home phone market in the Unied States, effective immediately.

Thomson, which supplies GE-branded phones in the U.S., has suffered declines in its telephony business of 18 percent year-on-year.

According to the company, roughly 140 jobs will be cut worldwide as a result of the move.

According to a statement released by the company, the "decision reflects CEO Frederic Rose's commitment to exit businesses that are unlikely to contribute to improving Thomson's profitability in the short to medium term."

Executives at Thomson's Indianapolis and Paris offices declined to be interviewed for this story.

Thomson's retreat comes on the heels of another year of steep loses for the retail telephony market. According to The NPD Group's point-of-sale data, unit sales of cordless phones have dropped 20 percent year over year, while dollar sales have fallen 16 percent.

Through September, Thomson ranked fifth in unit and dollar sales in the category.

"It's been a challenging market and a shrinking category as we continue to see more consumers opt for a cellphone as their primary phone," said Ross Rubin, industry analysis director, NPD.

While Thomson had pushed through a number of new technologies, including last year's launch of a combination phone and digital photo frame, "the division may have been difficult to sustain at a parent company that was clearly not interested in staying in consumer electronics," Rubin said.

The loss of Thomson, and its GE-branded phones, positions the company's remaining rivals to pick up share, Rubin said, but "over the long term, major brands need to consider how viable the category is going to be particularly as there doesn't appear to be a successor to DECT" to spur upgrades.