Philips eyes 10% of RI electronics market

Philips eyes 10% of RI electronics market

Johannes Simbolon
The Jakarta Post
Bangkok

The Dutch technology giant Philips is targeting to increase
its market share in Indonesia's electronics market to 10 percent
this year, believing that affluent Indonesians will pay greater
attention to its products.

The company has almost tripled its market share in the
Indonesian market over the past three years, up from 2.5 percent
in 1999 to 6.5 percent last year.

"Three years ago, our market share in Indonesia was very
small. Since then, our market share has been going up very
fast ... We are now targeting 10 percent of the market," Frans
van Houten, executive vice president of Philips Consumer
Electronics for Asia Pacific, Middle East and Africa said last
Wednesday in Bangkok during the company's annual meeting with the
regional press.

Van Houten said Philips was also targeting a 10 percent market
share in other Asia Pacific countries.

According to company data, Philips' electronics market share
is still less than 10 percent in all the Asia Pacific countries,
except for three, New Zealand, Singapore and Pakistan, where it
has a 24.3 percent, 14.8 percent and 21.3 percent market share
respectively last year.

In Indonesia, Philips' electronics products have been
available for many years but the company has thus far failed to
compete with Japanese brands for various reasons, including a
weak marketing strategy. Until 1999, it distributed its products
through a joint venture operation with a local firm.

The economic crisis sparked by the sharp depreciation of the
rupiah against the U.S. dollar in 1997 and 1998 dealt a further
blow to the company, pushing up the prices of its products, which
are all imported. At that time, Philips' spare parts became
difficult to find in Indonesia.

The company then reviewed its marketing strategy. It acquired
its local partner's share in the joint venture operation in late
1998 so that it could wholly run the franchise, which is now
called PT Philips Electronics Indonesia.

Since then, despite the lingering economic crisis, Philips has
been involved in an aggressive campaign to promote its products.

"Three years ago when I came to this region, one of the first
decisions that I took was that Indonesia would be a priority
despite the economic crisis.

"One of the first acts that we did was to establish a new
company, Philips Electronic Indonesia, as a vehicle to reenter
the market," van Houten explained.

He said Philips would focus on consumers in Jakarta and other
big cities before moving into the rural areas.

He ruled out the possibility of producing products for the
lower end of the market, saying Philips would maintain its image
as a producer of quality products for middle and high income
buyers.

He dismissed consumer worries about its after-sales service,
saying that Philips' spare parts were plentiful on the local
market, and that there were numerous service centers in big towns
authorized by the company to repair any broken equipment.

The company imports all its products, and van Houten ruled out
the possibility of setting up a manufacturing plant in Indonesia
for the moment, citing Indonesia's currency fluctuations, social
and political instability, and the lack of skilled workers in the
country.

During the two-day press event, Philips also announced some of
its latest products that would soon hit the electronics stands in
the Asian market, including Indonesia.

One of the new products is the Matchline TV series using Pixel
Plus technology. This technology doubles the horizontal
resolution of standard TVs and increases vertical resolution,
thus bringing sharpness, detail and depth to pictures on screen.

Another product is the Streamium MC-1 2000, an audio product
that enables consumers to choose music stations available on the
internet through broadband access.

Thus far, Philips has inked agreements with seven top online
music providers to make their services available on the new
Philips audio product. The music providers are AOL Music, Launch,
Andante, MP3.com, MUSICMATCH, Radio Free Virgin and iM Networks.

Philips also launched its new digital video disc (DVD)
product, called the DVDR890 recorder. This is equipped with a
number of facilities that makes it easy to use, and produces
excellent pictures.

The company also announced during the press event its
collaboration with sport footwear, apparel and equipment maker
Nike to produce and market "smart" products that combine audio
technology with sport footwear, apparel and equipment. Athletes
wearing Nike products can now comfortably use Philips's audio
players during sporting and fitness activities.