Philips CEO ‘Puzzled’ at Paramount’s Motives in Backing HD DVD
BERLIN - “I'm still puzzled at the reason why they did it and the way they did it,” Philips Consumer Electronics CEO Rudy Provoost, in an IFA interview Friday with Consumer Electronics Daily, said of Paramount’s decision to support HD DVD only (CED Aug 21 p1). “Every scenario has a degree of probability,” and Paramount’s dropping its Blu-ray support “didn’t rank very high on my scale of probability,” Provoost told us.
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Paramount “apparently had reasons to believe it was worth doing,” Provoost said. Asked if he thinks promises of HD DVD cash swayed Paramount, he said “you'll have to ask people who you think are part of that deal.” Later that day, we asked Toshiba HD DVD point man Yoshihide Fujii if Toshiba pledged money to Paramount to get its endorsement; he confirmed it had. But Fujii said reports putting the sum involved as high as $150 million were “totally wrong” (CED Sept 4 p1).
Asked if the Paramount decision surprised him, Provoost joked, “In this business, nothing is a surprise anymore.” But he admitted, “to be brutally honest,” that he didn’t expect the decision “the way it went and when it happened.”
Having finally announced at IFA introduction of a standalone Blu-ray player for Europe, Philips “will evolve with that market,” Provoost said. But Blu-ray won’t be “a huge source of revenue in the next 12 months,” he said. Philips at last year’s IFA said it would watch market developments before deciding when or whether to jump in with a standalone Blu-ray player for Europe. A year ago, it said a Philips Blu-ray launch could come by the end of Q1 2007, but that didn’t happen. “We said we had a few scenarios in the drawer,” Provoost said, recalling his company’s 2006 Blu- ray strategy. “We said we would take the scenario that was in line with what the market allows us to do or requires us to do. So indeed, we've been waiting.”
One reason for the wait is that the Blu-ray rollout “is going slower than I would have liked it to go,” Provoost said. Still, some 1.6 million Blu-ray have been sold and “I see a Blockbuster or a Target making strong choices, and they are closer to the consumer than the guys upstream in the value chain,” he said. Provoost still thinks “in good faith that the winner is going to be blue,” he said. “And that’s not a technical discussion. For me, it’s a consumer discussion.”
“From a pure Philips perspective, we're basically saying, let the market determine its own destiny” on Blu-ray, Provoost said. “Let the players who have probably more at stake do their jobs,” including game developers and movie studios, he said. “We're going to work together with them to the extent that we can afford it, to the extent that it’s meaningful for our consumers,” he said. That’s why Philips has shared the stage at past IFA shows with Fox Home Entertainment President Mike Dunn and Buena Vista Home Entertainment President Bob Chapek, he said. In Blu-ray, Philips “will continue to tell the world that we believe there’s a format there that makes more sense than the other, but we will do that in a responsible way, both financially and commercially,” he said.
The European Information & Communications Technology Industry Association, which Provoost chairs, has been pushing “voluntary, but collective” green initiatives, Provoost said. Of the new Philips campaign, announced at IFA, to apply a green logo to all environmentally friendly products in the line, “once in a while, you need to lead by example,” he said. Philips has been very aggressive in promoting the green “envelope,” particularly in campaigning for low-watt energy consumption in standby, Provoost said. With the Philips green logo, “we hope that we can kind of drive a European agenda going forward,” he said.
On the Sony Take Back Recycling program recently debuted in the U.S., “I guess I regret that it is an individual initiative,” Provoost said. It goes against “the principle of voluntary, collective agreements where you join forces and think through all the implications and have a consistent offer to the consumer and the retailer,” he said. “That is not really the case” with the Sony program, Provoost added. Asked how that hurts recycling, Provoost said, “I'm not sure there is harm. I'm not familiar enough, to be honest with you, about the specific economics of their decision. At Philips, we're definitely studying what to do next, and harm or no harm, if we should actually join them or not. At this point, it’s difficult for me to judge if this is right or wrong.”