Interview: Gerard Kleisterlee, ceo Philips Electronics (page 1 of 2)

Q. Philips had a few troubled years in the 1990s. Are those days now behind you?

A. In the late 1990s, Philips had a few excellent years and a few difficult years when the technology bubble burst.

Q. How did that affect Philips?

A. We have a number of very strong businesses that were not so exposed to the technology bubble. In particular, our medical and consumer businesses are doing very well. The technology side still suffers from a severe decline in demand, particularly the semiconductor sector as a whole.

Q. How is the consumer electronics sector doing?

A. Very well. We have introduced a large range of new products, and we are getting a very good response to those products - both from consumers and retailers.

Q. How has the drop in global markets affected consumer confidence?

A. Significantly. The interesting thing is that despite a drop in consumer confidence, consumers are still spending their money.

Q. Philips has been at the forefront of introducing new products. Will that trend continue in the coming years?

A. That trend will absolutely continue because, as you may have noticed, we have strengthened in particular the marketing side of our businesses, whereas the technology side was always strong. But that technology did not always result in a stream of new, exciting products.

Now, you can see the trend towards change there. At the consumer electronics show in Las Vegas, we introduced a whole range of flat TVs, both in LCD and VDP, and all screen sizes. We introduced wireless web pads, detachable monitors, the next generation of i-streaming, which is an audio system that links directly to the Internet so that you can dial like you dial an FM or AM radio station.

We will extend that range in the near future to also cover video. We introduced our new generation of universal remote controls, the I-Pronto - again a device that has Internet access. But it is too much to summarize in a short time.

Q. You're facing competition from your traditional rivals, the Japanese, but also from Korean companies.

A. You can see that Korean companies, particularly Samsung, are making a very strong effort in the consumer electronics field. You just have to be fast on your feet and continue to innovate and differentiate. Our differentiation is that we do not just focus on the individual projects themselves, but on a whole system.

We talk about the concept of the interconnected home. And we bring products that provide that connectivity and the interoperability between the different pieces of electronic equipment that we have in our houses.

Q. Has the recent rise in the value of the euro hurt Philips?

A. A strong euro is good for some businesses and less good for others. We are a global company that has a fairly good spread, both of its sales across the regions as well as of our industrial and sorting activities.

In general, we can cope fairly well with fluctuations in currencies. What we do not like - and neither does any other company - is sudden change because it creates disruptions that we cannot immediately react to. For the rest, I think we can cope relatively well with the currency movements as they are going on.

Q. How important is the Middle East as a market?

A. The Middle East is a market that is characterized by very different situations. There are a number of countries where there is already developing a middle class that has sufficient income to spend on the kind of products that we provide.