Philips is looking to grow positioning in the TV market this year with its expanded flat-panel TV lines, according to Philips North American president Stewart Muller. TWICE spoke with Muller for his insights into the upcoming holiday season during its Holidays In June media event, here, last week. (See product coverage on p. 4, 8 and 70.)
TWICE: How are you preparing for Black Friday this year?
Muller: We are going to go after Black Friday with things like our DVD, our audio systems, MP3 and possibly plasma if we do anything in TV. Quite honestly, we and a lot of our retail partners hope to possibly not see the Black Friday this year that we saw last year. The consumer won, and that's always good, but I think it got a little too irrational where we hit price points that weren't necessary. The longevity and sustainability of the industry gets called into question when things get that crazy. There are going to be places where we pursue Black Friday opportunities, but I wouldn't think at this point they would be in our core LCD line. We need to make a mark with our TVs this year and we are doing it with picture quality and design.
TWICE: How big a factor are MAP policies going to be this holiday season?
Muller: I can't speak for the rest of the industry, but I hope there is going to be some semblance of order. Ultimately, it doesn't even do the consumer any good if things are given away below cost, because pretty soon you are not going to have a sales channel and people won't be able to get what they want. My philosophy on it is we have to have a set of products that has a MAP program associated with it for 40 percent of the TV line, and then 60 percent of the TV line is just open retail. The beauty of it is if you have a MAP policy that doesn't change, or changes rarely as new ways of going to market evolve — that's like a constitution with some amendments — but your MAP listing can change every month based on price moves and new introductions. The policy stays the same, but what you put on the list can change much more regularly. If the industry stabilizes, you put more on it. If it doesn't, we have some flexibility.
TWICE: A lot of your distribution emphasis seems to be on the larger national accounts, what message do you have for the smaller A/V specialists?
Muller: I want them because of the way we go to market to focus on the 40 percent range [covered by MAP policies] in our line. In the future our entire Ambilight range should be on the MAP listing.
TWICE: Your emphasis is on the Philips brand here, but how is the role of Magnavox changing?
Muller: Wal-Mart is still our biggest Magnavox player. We are also offering it to the office superstore channel and Home Depot, which has done well with Magnavox, and that will continue for the foreseeable future.
TWICE: What will be Philips' breakout product this Christmas?
Muller: We have a pretty big product portfolio from audio to peripherals and accessories, but let's face it, as TV goes, we go. And that's really the voice of your brand. So the products I'm most excited about our 42- 47- and 52-inch 1080p LCD TVs. They are easily the best TVs we've ever made. As far as picture quality and design they will compete with anything on the market.
TWICE: Where do you see the future of plasma TV in the Philips TV line?
Muller: We are going to look at LCD as strategic direction and plasma as an opportunistic purchase. We've relied on an asset-light infrastructure. We have an LCD fab investment, but other than that we source in our supply chain, so we have no capital expenditures or investments in plasma. If an opportunity opens up in a certain screen size in plasma and a retailer wants to do that screen size with us, we'll do it as a tactical measure.
TWICE: Why aren't you doing more TV business with Circuit City?
Muller: Circuit City is still an important partner for us and we do a lot of business with them, but last fall as they were putting together their TV assortment, they struggled where they saw how Philips and Magnavox fit it. They had their ideas and we had ours. They are revising their strategy as we speak, and they blamed a lot of their problems on the TV business last Q4. Well, we weren't in the TV business with them. So, I think they are continuing to look at their partners. We may or may not be a part of that this year, but we maintain an open dialog, and I make no bones about it, I hope to be back in with them.
TWICE: What's your plan for Blu-ray Disc this year?
Muller: We are staying committed to the Blu-ray camp. We are a founder. As far as hardware, we are waiting for our next generation player to start pushing it.