A nod to the past with firm eye on future

By CHRIS BARTON

Philips New Zealand has marked 75 years of operation in this country by closing a time capsule that it plans to break open after its 100th year of business here.

The celebration included the unlocking of a capsule laid down in 1982 at Philips Tower in Wellington.

Many curious items came out of the box, including a classic three-head Philishave and a Philips lightbulb. But sadly there wasn't a Video 2000 tape.

It really should have been there because Philips launched it in 1980, although it may not have made it to New Zealand in significant numbers.

The V2000 was an also-ran challenger in the videotape wars that were in full swing in 1982. In many ways Philips' VCR and tape were ahead of Sony's Betamax and JVC's VHS formats, as its tapes could be used on both sides.

But the technology was recalled by Johan van Splunter, chief executive for Philips Asia Pacific region, who was in Auckland for the occasion.

"We learned from the failure with our VCR. Even though it was the better, we couldn't dominate the market, so we had to make sure that didn't happen again."

The hard lesson led to a joint venture with Sony to launch the CD in 1983. The partnership model to make sure you do not lose a market completely and to share risk has stayed with Philips ever since.

But format wars continue even with partnerships. On the recordable DVD front, Philips and eight heavyweights, including Sony, are pushing the DVD+RW format, which allows discs to be used on host of other players.

Other recordable formats such as Panasonic's DVD-Ram will play only on DVD-Ram players.

It is also the same in the audiophile market, where super-audio CD, promoted by Philips, is battling with DVD audio for the ears of those who crave multi-channel surround sound.

One of the newest partnerships, between Philips and Nike, will bear its first "wearable computing" fruits here in October-November with a range of co-branded portable MP3 and MP3-CD players for sporting use.

Another partnership includes Hitachi, LG Electronics, Matsushita, Pioneer, Samsung, Sharp, Sony and Thomson Multimedia, who along with Philips, are seeking to increase CD storage by way of blue-laser technology. Last month Philips demonstrated a prototype miniature disk-drive that uses a coin-size disc capable of storing nearly twice as much as a standard CD.

Philips' biggest challenge in both DVD and CD formats is how to tread the fine line on copyright protection. When Sony put out Celine Dion's latest CD with protection to stop it being used on PC CD-Rom drives, Philips warned record labels that non-standard CDs cannot carry the "Compact Disc" logo that has been stuck on every audio disc since Philips and Sony agreed on the standard in 1980.

Van Splunter said Philips could take a more independent view of the market because it no longer had a stake in the content part of the industry. In 1998 it sold EU Polygram to Seagram, which was renamed Vivendi.

Philips' 3.5 per cent stake of the troubled French company is likely to be written down by €1.6 billion ($3.2 million).

Although Philips is opposed to copyright protection embedded in CDs, it is very careful about saying how far it will go.

Asked if Philips would maintain the original CD standard if Sony and others developed a new copyright protected standard, van Splunter checked with head office for the official diplomatic line: "Philips has always been active in finding solutions to prevent illegal copying and also encouraged others to do so as well.

"However, we are concerned about applying technologies that limit the playability of the CDs."

Philips worldwide is struggling to recover from last year's 15 per cent sales fall - due in part to a downturn in cellphone and IT-related industries - and a loss of €2.604 billion.

New Zealand faired a little better, with revenue falling slightly, from $172.8 million to $170 million last year.

Chief executive Errol McKenzie said profit, which was $7.4 million in 2000, was flat last year.

He said the company had seen a strengthening in consumer electronics, which accounted for 54 per cent of sales last year, due to sales of its widescreen TV and DVD players.

Van Splunter said the worst of the global cost-cutting, involving about 7000 layoffs, was over, and further savings would come through the use of regional shared-service centres for accounting, salary and expenses administration, and HR functions.