Reality check

2 min read

Innovations such as high-definition TV are forcing the consumer electronics industry to rethink its business model, says Rudy Provoost.

All too often we have seen innovation driven by technology for technology’s sake, whereas simplicity should be at the heart of the consumer experience.

Our research results and consumer insights suggest the public is tired. Tired of not being able to record a TV programme, tired of spending hours reading an instruction manual, tired of complexity for its own sake. Our lives are too complex already. We want simplicity in our relationship with technology — technology that gets the job done without us even being aware of it.

Our belief is that there are three fundamental principles for a product or service to pass the simplicity litmus test. It should be designed around the user’s needs, it must be easy to experience and it must be advanced and innovative.

Coupled with this, in an increasingly converging world, simplicity has to be the ‘string’ that ties consumer experiences together. Whether it’s taking pictures on a digital camera and sharing them with friends and family via a TV, or taking digital music files and plugging them into a car stereo, the experience must be intuitive and seamless.

So delivering simplicity is not only about products and services, but also about the way that the consumer electronics industry does its business. We need to work together to ensure the consumer gets the packaged yet intuitive experience he or she is looking for.

I am going to use high-definition television (HDTV) as the case study for breakthrough business transformation and realising simplicity. HDTV is the reason people are saying ‘let’s not go to the movies, let’s stay at home and watch TV’. It’s not just that HDTV gives up to five times more detail than ordinary analogue TV, though that’s important too. It’s because HDTV is forcing a metamorphosis of the whole consumer electronics value chain, bringing added benefits and forcing us to rethink what we do and why we’re here.

Whether watching nature programming, movies or sport, HDTV truly is the killer application. I say killer because it forces our industry, broadcasters and content providers, operators, retailers and even policymakers and regulators in the EU to wake up and see the transformation it will bring.

The 2006 FIFA World Cup is where we believe HDTV is going to acquire critical mass. Within the consumer electronics industry we’re all familiar with HDTV, but consumers don’t know much about it yet. That’s all about to change, and the World Cup will be a major booster of consumer awareness.

HDTV needs top-quality images from broadcasters for the difference to become visible, so Philips is teaming up with content providers and distributors. We’re reaching across traditional boundaries to form new business models.

On the content side, we are partnering with Host Broadcast Services to promote the World Cup in HDTV to broadcasters as well as other industry partners. HBS will deliver pin-sharp digital images for distribution.

And distribution is also vital. That’s why next summer Philips will be teaming up with Germany’s leading pay-TV service to bring exclusive World Cup coverage. Philips provides the set-top boxes in this partnership, and of course we have the HDTV screens to match.

The rationale is to create new integrated value marketing propositions for consumers. Too many of us are used to looking at grainy large-scale projection images of football matches in cafes and clubs. We want clarity. We also want interactivity and other digital services, such as multiple camera angles, real-time sports data and electronic programme guides.

It’s all part of the bigger picture, in which content, services and the combination of software and hardware, serving as our interface, all become part of a seamless whole. So you’re not buying a stand-alone electronic box any more, but a ticket to a wealth of consumer experiences.

Rudy Provoost is chief executive of Philips Consumer Electronics. This is an edited version of a speech to the IFA technology fair in Berlin.