Philips quietly re-enters PC market in Europe

After nearly a decade of absence, Philips is quietly re-entering the PC market in Europe. But this time, the Amsterdam-based electronics giant is not building computers but rather slapping its well-known consumer electronics brand name on machines manufactured by others.

Philips has joined forces with UK electronics retailer, Dixons Group, to launch a new range of PCs targeting the emerging digital home entertainment market. The product range, called Philips-Freeline, consists of four desktop computers and two notebooks, which are preconfigured to work with Philips' Streamium range of wireless and broadband-enabled home entertainment devices, such as its MX600i wireless home entertainment system.

Dixons has begun to market Philips-Freeline products at its stores in several countries, including Ireland, Italy, Spain, the UK, Denmark, Finland, Norway and Sweden.

"We aren't pitching these computers in the broad context of the PC market," Philips spokesman, Simon Poulter, said. "They aren't business machines with a full scope of functionalities. Rather, we see opportunities, together with Dixons, to add computers to our growing portfolio of home entertainment devices."

While the desktop computers are being supplied by a European manufacturer, the notebooks are coming from an Asian producer, according to Poulter. He declined to provide the names of the computer makers.

The desktop PCs will include several Philips components, such as liquid crystal display (LCD) monitors, DVD+RW drives and multimedia speakers. Both the desktops and notebook computers are preinstalled with Philips Media Manager software to provide interoperability with the company's Streamium products. These products, for instance, allow consumers to stream audio-visual digital content from their PCs to stereos or TVs via wireless LAN connections.

Philips has no plans to launch a range of home entertainment computers similar to Freeline in other markets, according to Poulter.

"But we don't rule out the possibility to work with other retailers and other hardware manufacturers," he said.

The move by Philips to market -- not make -- computers comes as Gartner projects in a recently published report that three of the world's top 10 computer vendors will drop out of the market by 2007.

Of the current top 10, including vendors such as HP, IBM, Fujitsu and Toshiba, only one, Dell, has been consistently profitable in the past several years, according to Gartner.

The PC divisions of HP and IBM could be spun off if their drag on margins and profitability were deemed too great by their parent companies, the market research company said.

Philips is one of a handful of large European electronics manufacturers including Siemens and Thomson that project higher margins in the emerging market for digital home media devices.

Last year, the Dutch company unveiled Connected Planet, its strategy for a range of advanced consumer products and technologies that enable people to access and enjoy digital content anywhere in their home.

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