Thank you Dr. Göke Ladies and Gentlemen It’s a real privilege to deliver the opening keynote at IFA 2009. Since I delivered a keynote here a year ago, the global economy has undergone a dramatic crisis. Today, our industry is calling out for vision and plenty of optimism; Vision to see that while the global economy has received a terrible jolt, it will recover; Optimism to realize that by focusing on delivering value to our consumers, we will emerge stronger from this crisis than before. Walking around IFA yesterday, I was pleased to see evidence of both. Last year, my first remarks were about the revised format of IFA – with a strong presence from the home appliances industry. In 2009, IFA is again presenting a lifestyle marketplace, where the consumer as well as the technology, is front and centre. Our mission at Philips is the same – we are about experiences as well as technologies. We are about improving how people live their lives through meaningful innovation. We promise sense and simplicity, with solutions that are designed around the consumer while being easy to experience and advanced. And, we are no longer limited by traditional boundaries – we choose to play in the domain of health and well-being, a domain that unites our three sectors. Last year, I also told you about the birth of the Philips Consumer Lifestyle sector, the sector I am responsible for. As we move towards our second birthday, in January 2010, we are more and more focussed on health and well-being. Within this vast domain we have identified four key platforms for innovation and growth. We call them; healthy life, personal care, home living and interactive living, and I’ll come back to this later. For a moment, let’s talk about this crisis. We all know that the world has changed in the last year. Forecasts about the impact of the financial crisis on consumer industries remain unclear, but there are some small indicators of improvement. For instance, in the second quarter of 2009, the downward trend in consumer confidence which began in the middle of 2007 started to show small signs of improvement, in some markets. Overall, it remains relatively low, but we expect at least stabilization. We are seeing new consumer behaviours appear. People are shopping differently. They are turning more and more to the Internet to find better offers. They are focusing more on the essentials – so some luxury goods are seen as indulgent. They are cocooning at home – including more people spending their holiday time at home. With lower purchasing power, consumers are also looking to do things on their own rather than hiring experts – performing small home improvements, cooking at home with friends instead of going to a restaurant. That’s why we’re hearing reports of double digit growth in some markets for products like kitchen appliances and espresso machines. That’s why the personal care market is growing in some markets, with people taking better care of their teeth and hair to prevent visits to the dentist and hairdresser. Being close to consumers and understanding these dynamics provides opportunities for our industry to grow and prosper, even during the crisis. So ultimately, to emerge stronger we need to return to the basics – delivering superior value to consumers, identifying new markets, creating new categories and running leaner organizations. Over the last year we have seen dramatic activity in our competitive landscape; acquisitions, alliances, bankruptcies. To survive, we need focus and we need speed, because an economic downturn may slow consumption, but it accelerates transformation. Philips has been able to weather the storm because our transformation began already ten years ago. We have transformed from a complex electronics company into a leaner company focused on Health and Well-being, while delivering sense and simplicity. This applies across our three sectors, Healthcare, Lighting and Lifestyle. And because we created Consumer Lifestyle right before the crisis began, we started the process of transformation earlier than competitors so we are able to react better. At a company level, our strategy is guided by a belief in four fundamental drivers. The first is that healthcare costs globally will become unsustainable. This is because of population growth, aging, higher healthcare aspirations and lifestyle related diseases. For instance, it is expected that within 40 years, one in every four people will be over 60. Without changes to the healthcare system, 25% of the working population would be needed to provide today’s Western healthcare level by 2040. So Philips Healthcare is investing in people centric, more affordable healthcare solutions focused on the fundamental health problems people are confronted with, like heart failure and cancer. The second driver is an increasing consumer focus on health and well-being. This is the result of increased welfare and changing lifestyles, and was the basis for the creation of our consumer lifestyle sector. The third driver is the demand for energy efficiency and sustainability, linked to the fundamental need to reduce our eco-footprint.
Here our lighting business can play a significant role as almost one-fifth of global electricity consumption is used for commercial and domestic lighting. We could almost cut this figure in half simply by replacing existing lamps with energy-saving ones. The fourth driver is related to all our sectors and is the increasing relative importance of emerging markets in the world economy. These markets already produced 28% of global nominal GDP in 2009 and could represent as much as 36% by 2013. To be more specific about our sectors. Philips Healthcare works to simplify and improve healthcare for people. Good health is a prerequisite for quality of life and the sector focuses on introducing innovations that contribute to improved healthcare, at lower cost, around the world. Healthcare operates in both home and professional environments in areas like independent living, remote patient monitoring, radiology and oncology. The Philips mobile ECG is just one example of how Philips healthcare is innovating to save lives. Let’s take a look: Now to talk about lighting. Light has a tremendous impact on quality of life. It enables us to achieve and experience more, it affects our mood and improves our well-being, it can be used as a healing therapy, and is therefore a vital part of making our lives more productive, safer and brighter. Light is also a major consumer of scarce energy. Our Lighting sector operates in both home and professional environments, developing energy-efficient solutions to help people to make a personal contribution to fight climate change, whilst improving their health and well-being. OK, so today, I would like to focus on how the Consumer Lifestyle sector is innovating to meet the changing lifestyles of our consumers. This year, we undertook what we believe is one of the largest-ever consumer research studies in the field of health and well-being. We interviewed more than 8,000 consumers across the world. They confirmed that for most consumers health is a rational concept, while well-being is a more emotional concept. Health is about physical health – being sick or healthy. Well-being is about the little events in everyday life; sharing time with family and friends, having time off from a hectic schedule, moments of comfort, fun and caring. Like taking time off to listen to your favourite music or to watch your favourite movie. We also gained deep consumer knowledge and understanding of the Health and Well-being space. This deep understanding enabled us to solidify our strategy for the coming years and is the basis of the innovation roadmap we have identified for our sector. This roadmap has resulted in four Consumer Lifestyle platforms for innovation and growth. The first one is our Healthy Life platform, which includes categories such as dental care, preventive health diagnostics, mother and childcare and lifestyle management. The second is Personal care. It’s about looking and feeling good and includes solutions in the areas of skincare, shaving, grooming, haircare and sleep. The third platform is Home living which includes categories like coffee, water and air, indoor and outdoor cookery and floor care. And finally, Interactive Living which includes categories like TV, home cinema, audio entertainment and lifestyle accessories. When we look at these four platforms, we see a mix of existing businesses and embryonic or emerging growth areas. In order to capture opportunities in all these areas, we need to leverage resources and creativity within the Philips network, in a well coordinated way. This includes Philips Research, the international research organization that has made Philips into one of the most innovative companies in the world for decades. We stay fully aligned with them in the context of our platforms. We also fully embrace open innovation, by doing things like: involving suppliers earlier in the development of materials and packaging; leveraging experts, for example in areas like coffee and relationships; and partnering with industry leaders like Sara Lee and NIVEA. Also, we realized that we need a place for small embryonic ideas to be nurtured and developed. So we created incubators, one per sector, that function like venture capital funds. These funds allow small but promising innovations to thrive and develop, and prevents them from being suffocated by the sheer size of Philips. Of course not all growth is organic. Philips also innovates through the acquisition of strong companies, companies which can accelerate our position in a specific category. A recent example is our acquisition of Saeco International Group of Italy, one of the world’s leading espresso machine makers. This move makes us the leading coffee appliance manufacturer in the world, in a category that has a very direct relationship with the well-being of people. As an Italian I knew already for years, but in the last 20 years the rest of the world has discovered that drinking espresso is a moment of enjoyment, not just a hit of caffeine! Obviously we continue to innovate in existing categories. Yesterday in our press conference you saw innovations in traditional categories like TV, kitchen appliances, audio, and video. Take movies and television. Last year I said that Philips TV would continue to focus on driving differentiation. We think there is a brilliant future for TV, if we as an industry get out of the commodity mindset, understand consumer segmentation better, and try to give consumers exciting, new, differentiated experiences. Five years after its launch in 2004, Ambilight continues to be a great success. In 2007 we introduced the first Aurea and yesterday launched the third generation Aurea. This year we also introduced Cinema 21:9 – the first TV that is built to give you the real cinema experience at home, especially when combined with a Philips Blu-ray player. And we focus on other insight driven innovations like remote controls that are designed to be as exciting as the TV and Net TV services as a standard function on Ambilight TVs, built on local language content. To demonstrate that we can innovate in the way we communicate around our products, our launch campaign for Cinema 21:9 placed Philips on a global stage – winning the Film Grand Prix award at this year’s Cannes Lions International Advertising Festival. The Robust collection is another example of maintaining leadership, this time in the kitchen. The development of the range sees the culmination of a two and half year design and engineering revolution, with eleven innovations all with patents pending. Now I would like to also take you through some examples of new categories in their embryonic stage. Firstly, Lifestyle Management. According to the World Health Organization, we’re now less active and more overweight than at any time in history. They recommend daily activity of at least 30 minutes of moderate intensity activity, five times a week. The impact of this reduced activity can be seen in lifestyle related diseases such as cancer, obesity, heart disease and type 2 diabetes, just to name a few. People want to be more physically active, but most can’t find the time. The first step we have made to help people improve their life quality is a personal coaching and service platform called DirectLife. It’s based on the simple idea that “what gets measured gets managed”. DirectLife combines advanced technology - to track activity daily - with proven psychology in the form of step-by-step coaching. Based on your personal profile, it helps you to set balanced, achievable goals to become more active. It’s not about sports, it’s about learning how to gradually increase your everyday activity level and therefore to improve your fitness. DirectLife is being offered to companies on a group basis to boost employee fitness. It provides everything that’s needed to get a company into shape. A second category I would like to discuss is relationship care. Relationship care began life in Philips Research where we were investigating the theme of well-being. We realized that sexual well-being is a fundamental part of it. Over the last few years, we have asked hundreds of people to share details of their relationships. We learned that couples are more open than ever to sexual experimentation within their relationships and that those in happy relationships tend to have satisfying sex lives. To give you some numbers, in several polls in Germany and other European countries, we found a high level of acceptance to the idea of bringing more fun and experimentation into relationships and maximizing pleasure. Around 60 percent of our respondents were couples married or living together. And around 70 percent said they used or would be open to using sex toys or marital aids. We also know that a good sex-life is an important contributor to well-being, so Philips wanted to see how we could help these couples. Our relationship care category is the result. Paula Hall, the very well known relationship therapist from the UK worked with us on the development of relationship care. The final category I would like to discuss is Sleep. Sleep is a primary source of human vitality and health. Sleeping is also one of the top ten activities which contribute to people’s well-being. Busy lifestyles however, come with health risks caused by stress, poor sleep quality, wrong nutrition and lack of activity. In the United States, it’s estimated that 65% of adults experience sleeping issues. Only one in five of those adults seek help with their problem and for those who do, 50% are prescribed pills they find ineffective. Lack of sleep can negatively affect behaviour and relationships. In a recent Philips study we learned that about one fifth of managers we surveyed felt that they were not getting enough sleep. Here in Germany 36 percent said they are sleeping less than they did a year ago, possibly a response to the additional work pressure in an economic downturn. At Philips, we are looking at clinical and non-clinical solutions to this challenge. This provides clear opportunities for cross sector cooperation including Philips Lighting as an enabler. In the professional and home healthcare areas, Philips knows a lot about sleep management, respiratory care and non-invasive ventilation for conditions such as apnea. For those of you unfamiliar with the condition, sleep apnea is where people stop breathing repeatedly during sleep, the result of a blocking of the upper airway. 18 to 20 million Americans suffer from this condition. Our recent acquisition of Respironics has driven our leadership in that field. At the level below clinical need, Philips is also creating solutions for millions of “problem sleepers” or consumers who have occasional issues. Light is a key factor in that strategy with different types of light impacting energy levels and body clock. Our Wake-up Light is one example of how we are positively impacting sleep patterns. The Wake-up light has a function to aid you fall to sleep – the dusk simulation function – and a function to support a better wake-up – the dawn simulation function. Some of you will remember from our Simplicity Event that we have been investigating the benefits of blue light for some time. The recent acquisition of Respironics has brought new expertise which helped us to launch goLITE BLU. goLITE BLU is the product that emits the same blue light as the summer sky. Researchers have shown that blue light is converted into the chemicals which help our bodies be active and energetic and may lead to better sleep in the evening. Blue LED technology was recently used by NASA to adjust researcher’s body clocks to stay synchronized for the Mars probe mission. So, ladies and gentlemen. My objective in speaking here today was to share with you our belief that the broad lifestyle marketplace as defined by the IFA has a bright future. Philips is exploiting this opportunity by transforming quickly into a health and well-being company. We have a unified strategy across our lighting, healthcare and lifestyle sectors, to become the leading company in the health and well-being domain by delivering sense and simplicity to consumers and customers around the world. Since 1891 Philips has been committed to improve the lives of people by introducing timely and meaningful innovations. More than ever, we feel that this is our mission and that we can make a real difference in the health and well-being of people. Thank you very much. |