...the American road map. You need heavy hitters like Ambilight. [Ambilight adjusts the light on the screen with ambient light to optimise viewing conditions.]
In reality, we are running a business right now that in 2002 and 2003 was two-thirds the size it is today. We were doing that with 1,000 people, and now we do it with 250. It is a pretty significant change. The growth in 2005 in the first nine months was 30 percent.
It's interesting that you're going after Asia. It seems like you'd run into a big feeling of "buy local" in a lot of countries.
We partner with a lot of ODMs and OEMs. If you want to win in Asia, you have to use your global scale and power. Our Ambilight TVs are sold in Asia. In most Asian markets, we are a prominent top three player and often the most prominent foreign brand.
You also have to customise for local markets. We had double-digit growth in Asia for the past three years. Over the next 24 months, we want to bring China to a €1bn level. We want to bring India — total Royal Philips Electronics — to that level too. The nice thing is that the brand is very powerful in Latin America and Asia.
In North America we had to rebuild that equity, which we successfully did. Now it is no longer an awareness game; it is a preference game, and it is a sales conversion game with retailers. This has allowed us to refocus our marketing investments
How does this manifest itself on the product design level?
The sense and simplicity brand promise contains three major cornerstones: The product needs to be designed around the consumer; it has got to be a unique experience; and it has got to have an advantage, some innovation, and not tech for its own sake.
If you take a product like an Ambilight TV, the three things merge together. It is a great design. It is a great immersive experience, and you see the results on the screen. If you take our sales right now of all flat TVs above 42 inches, one of two is an Ambilight TV.
Do you license the technology?
No, we use it for our own purposes.
What will be the big product categories for Philips?
We have four elements. First, connected displays. That is $5bn of the $10bn. Then the second part is the entertainment solution. That includes surround sound home [cinema] systems as well as MP3 players and home video. The third part is networking: VoIP and IPTV . We are close to the Microsoft's. That's where we made some inroads with leading operators in Europe — like BT. In North America, we work with DirecTV.
And the last area is peripherals and accessories. The Nokias, the iPods of the world, all need accessories. It's high margin and high growth. One example is the acquisition of Gemini. Gemini was a leading cable company in the States, a $200m company. We acquired the company three years ago.
What's different than in the past is that we are reaching out to other companies. That is different than the Philips of the past. We are working very closely with the studios in the Blu-ray discussions. Companies like Fox and Disney are our partners. We are reaching out to the operators. Over time, you could think about premium downloadable software or pre-packaged media.
LCD, SED or plasma — where do you stand?
We are very much believers in LCD. It will be the growth of the market. In the 42-, 47-inch area there will be space for plasma, but with our partnership with LG in LCD we believe we are well-positioned.
LCD will go up in size, and the whole flat TV market will of course will grow. We think LCD will double this year compared to last year in volume. But we do have a plasma offering. A lot of lamplight TVs are plasma.
We also have a pretty aggressive innovation road map. If you want to...
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