Philips Sees Opportunity in Digital Home Networks

BANGKOK (05/31/2000) - Building on its years of expertise in the consumer electronics and Internet markets, Philips Consumer Electronics Corp. is aiming to offer alternative, yet affordable, products to end users as society sits on the verge of entering the age of the in-home digital network.

Philips executives recently espoused how the Internet and home networks were on the brink of coming together. Frans Van Houten, executive vice president, Philips Consumer Electronics, Asia-Pacific, Middle East & Africa, said that "major opportunities" had emerged as the line between products began to fade.

"Philips Consumer Electronics (CE) sees the convergence between the Internet and the so-called digital home network as a major opportunity. This will be in the form of the TV, home networking, voice, audio and image convergence and Internet applications," he said.

The Dutch electronic giant considers the digital network as a major opportunity as we enter the millennium, targeting its digital home and the new economy (Internet-based) that is expected to emerge in the near future.

"The driving force behind this move include the digitalization of functions, convergence of Internet, audio and video, improvements in wide-screen TVs, flat TVs, intelligent TVs as well as the vast amount of storage solutions out there.

Wireless technologies will also become more prevalent with ADSL (asynchronous digital subscriber line) and set-top boxes improving the experience, while speech recognition and artificial intelligence (AI) will change the user interface," he said.

The step of the home digital network will come once the present method of transmitting television signals passes from analog to digital format. This change will create a vast improvement in what content can be transmitted and of how much.

The second phase will cover the convergence between the dominant platform of today, the television, to the champion-elect of tomorrow, the Internet. When these two key elements are brought together the digital home will commence.

The third and final step to achieve would be the connecting of household appliances to the network, such as PCs, set-top boxes and the like. Based on the technologies of individual countries the format for future transmissions will then be spread across a wide spectrum of delivery options from terrestrial communications through wireless, cable and satellite.

"Within the A-P (Asia-Pacific) region, we see a huge market opportunity in countries such as China and India, followed by other, not so big countries.

Also, Philips sees five areas for the digital technology for tomorrow's lifestyle -- a connected planet, DVD video recorder, super audio CD (SACD), and the personal TV," added Van Houten.

Philips, he added, would inject around US$80 million into the scheme to help create brand loyalty and awareness across the region over the next 12 months.

Products that received the most attention during the three-day conference included the Philips Personal TV, Digital TV, mobile telephone with WAP (wireless application protocol) capabilities, Super Audio CD, DVD and even Philips' own MP3 player, RU.S.H. Each product was presented with a clear direction and message.

According to Aron Boey, vice president of Marketing at Philips, the company would place more priority on the "digital youth" or Net generation of today -- those aged between 18-34, as this group would be more likely to purchase the products.

Boey added that according to research conducted by Roper-Starch, last year, out of the estimated 1.86 billion young people in the region, two-thirds of the Net generation preferred the Internet to TV and preferred to communicate over the Web rather than the phone.

"The youth of today tends to want to change their minds, they want more options, more customization and innovation. They also want to try before they buy and need to be connected to the Web."

Philips' products aimed at the youth market are made up of CD players, mobile phones, DVD players, personal computer monitors, mini system, digital cameras, and the MP3 player, RU.S.H. RU.S.H is said to be the first step for Philips in the convergence of PC-based equipment and home entertainment audio technologies. The unit comes in a very stylish packaging and its small design is offered at an affordable price.

As for the digital TV, Andrew Eng, Digital Networks manager at Philips, said the personal television is the way of the future as everyone wants to watch what he or she wants, when they want. "It's all about personalization and flexibility."

"Personal TV is a revolutionary way of watching TV - which means that you're able to watch programs at your own convenience. You get a choice of what to kind of programs to watch. You have control over the shows, you can pause them, rewind them, use slow motion, a number of things can be done. Overall, though, it is the convenience factor that wins."

Personal TVs require more than just an aerial to function. The system requirements include, a set-top box connected to the TV with either an antenna if its terrestrial or a cable if its satellite, a box to digitize TV signals and to store data on a hard disk and a box that receives all the relevant program listings.

Additionally, Personal TVs need to work with service operators that broadcast the service, Philips will launch its products in 2001.

This type of equipment is doing well in the more mature markets of North America and Europe, although in the U.K. there has been a slower take up due to taxes. Presently in the U.K., to watch television, viewers must purchase a license for black-and-white, colour and now digital TVs, all separately priced and all lasting 12 months.

Eng added that Philips has to redefine its own business model and form partnerships with service providers to launch the product and the service together in the Asia-Pacific region.

Also at the conference, Philips unveiled its roadmap for WAP-enabled solutions.

Ronal van Triest, marketing director for Asia-Pacific, said that Philips is currently talking with an American leader in content provider to provide a comprehensive WAP service.

"Philips is not late in the WAP market. Currently, the situation with WAP is a bandwidth issue, which will be resolved with the introduction of GPRS (general packet radio service) infrastructure. This will then allow WAP to grow and we want to see WAP-enabled business grow."

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