It's not only Philips that has bitten the dust, there's been a succession of other large Western electronic companies that have either gone out of business or that are now only a shadow of their former selves. Here's a partial list:
Pye Industries, UK
EMI (Electric & Musical Industries), UK
Marconi, UK
AWA (Amalgamated Wireless Australiasia), Australia
Telefunken, Germany
Thompson CSF, France
HP Hewlett Packard, USA
Kodak, USA
Polaroid, USA
Varian Associates, USA
Ampex, USA
General Radio, USA
Philco, USA
Admiral, USA
RCA (Radio Corporation of America), USA
Philips, NL - as mentioned
I used to work for RCA and back then it was the largest electronics company in the world and Philips was second. When RCA failed, Philips became the biggest but unfortunately its time at the top was short-lived.
There's several things that seem to characterize many of these failures, the first is that when founders leave or die companies often seem to lose drive and direction, and second companies become too big and diversification seems to kill their R&D/innovation.
For example, RCA lost its direction and fell apart when its founder David Sarnoff died and his son took the helm. Similarly, another spectacular failure was Hewlett Packard when its last founder died.
That said, there are exceptions such as Apple—but then it may not have been in existence long enough to tell, it hasn't been around anywhere near as long as say, Philips has. Moreover, it's highly dependent on Asian manufacturing, in the long-term, that may be Apple's Achilles's heel.
Still, I think that's only part of the problem. Manufacturing and innovation in Western countries are now in a state of malaise and they're being quickly overtaken by Asian countries such as China. Like it or not, the West generally is in a state of decline.
Here are some others - Zenith, and Motorola too - both exist in some form, but are shadows of their former selves. Also, notably - Western Electric.
Zenith was quite successful, and was making TV sets in the US until the early 90's - but eventually the lower cost of overseas manufacturing caught up with them.
Motorola and Western are the saddest though, Motorola made everything, soup to nuts used in their products, and then bit by bit sold off the bits util they were left with two way radios (Motorola Solutions is the survivor of the original Motorola Inc). Western never really figured out divestiture, there are bits of pieces of it left, if anything Avaya is the closest to a spiritual successor to it (part numbering styles and engineering style).
Delves deeper into the "lower cost of overseas manfuacturing" as cause of death for the US TV industry, with a focus on Zenith. Zenith saw this coming and tried to avoid it by investing in technology and R&D - and unfortunately chose to invest in technically superior but unpopular or uncommoditizable technologies like Betamax, digital signal transmission standards, and early analog HDTV. Heck, they paid to develop the standard for stereo TV broadcast audio, then gave it away royalty-free.
I had a Zenith tv growing up. I beat the hell out of that thing. It was indestructible. I was always hooking and unhooking my game systems to it and I’m told often you would hear loud crashes as it went slamming into the ground but it never broke. Eventually we changed over to flat screens and we got rid of the tv, and I’m not sure what happens to that tv. Someone might still be using it today. I wonder if the downfall of Zenith is that they made their products too well.
> Zenith was quite successful, and was making TV sets in the US until the early 90's - but eventually the lower cost of overseas manufacturing caught up with them.
Zenith's TV engineering business was bought out by South Korea's LG, and Zenith's role as main guiding force behind North America's ATSC digital TV broadcast system was grandfathered to LG with many of the same people.
There have been many books written on why companies succeed/fail. The general observations that you make all concur with agreed wisdoms on this matter: small startup = mobile, creative, innovative and fast moving. Estabslhsed blue-chip company = the opposite.
So... how does a large monolith renew itself? One solution with a reasonable track record is to 'replace from within', much as a cuckoo replaces its host.
1. Set up a small unit within your (monolith) company.
2. Staff it with your best and brightest.
3. Physically separate this unit from the rest of the company, but not so much that they forget 'who they belong to'.
4. Establish a line of direct communication between this unit and a high-level manager, bypassing middle managers.
5. XXXX
6. Profit!
XXXX is the problem part. How to graft the young onto the old? Failure to capitalize = Kodak (invented the digital camera but could not make it 'happen'), Palm and its development of WebOS (could have been a contender, but let down by poor hardware and other stuff), Palo Alto and Xerox ('nuff said).
This is how Sony launched Playstation over the resistance of traditionalists in Tokyo not interested in making "toys" -- they set up an independent company in Europe.
Like it or not, the West generally is in a state of decline.
"In 2000, Europe had 41 of the biggest 100 companies. Now it only has 15. A 63% decline in just two decades. The Economist says the "most striking" reason is the lack of successful startups.
63% declines are something you can't repeat too many times without creating the kind of situation historians give names to. Two more such periods, and Europe only has 2 of the top 100 companies."
This measurement is relative. Does it indicate decline in Europe or development in Asia?
It's unreasonable to expect a region with 1/16 of the world population to have 4/10 of the largest companies in the long term.
Also, is "company size" really that good a measure of economic success? Seems like it could have to do with the local conditions encouraging smaller economic entities.
The west, particularly the USA, sacrificed so many industries on the alter of globalization. We gutted our workforce and told ourselves we were keeping the best jobs for ourselves. The loss of all those jobs and economic activity has contributed significantly to the wealth gap IMO. I don’t think that having lots of cheap trinkets available on Amazon has been worth it, to be honest.
> Still, I think that's only part of the problem. Manufacturing and innovation in Western countries are now in a state of malaise and they're being quickly overtaken by Asian countries such as China. Like it or not, the West generally is in a state of decline.
It’s also worth connecting this to the economic stagnation in Western Europe since 2008. GDP per capita has not budged in the UK, France, and Italy in more than a decade.
I think you mean Real GPD per capita, not GDP per capita alone as the former is also adjusted for inflation.
GDP per capita definitely grew, but once you subtract inflation, it's close to zero for some countries or even negative for countries like Greece, Italy compared to their pre-2008 numbers. Ouch!
Most of the growth has been in Eastern Europe and the very wealthy ones like Netherlands, Luxembourg, etc.
"seem to lose drive and direction", thats what happen to the company I work (until they close our factory by the end of 2023). For several years, there had been many ideas what to do and to change. But really just ideas, nobody did really decide and said "ok, let's do it". For years I used to say we have no idea where we like to go with our company. Now I know, our factory get closed be the end of 2023.
> For example, RCA lost its direction and fell apart when its founder David Sarnoff died and his son took the helm. Similarly, another spectacular failure was Hewlett Packard when its last founder died.
> That said, there are exceptions such as Apple—but then it may not have been in existence long enough to tell
Apple would be about the same story: it hasn't created anything really meaningful since Jobs, it mostly lives on the legacy that has been set. Luckily for Cook the company has a good storytelling and aura, but major innovation hasn't been there for a long time, and when the wave slows down it may well end up like the others you listed.
That is just not true. Apple is the most valuable company in the world, with the largest market cap. Steve Jobs died twelve years ago. The Apple Watch and Air Pods have been huge successes, so has their push into services. They also have the largest profit margins of any manufacturer. They are incredibly well run and have not lost their way. They also didn’t have to have massive layoffs as they didn’t over hire in the pandemic.
Apple Watch is an entirely Tim Cook creation. Apple Silicon, too.
Apple TV is the only non-scummy streaming box. It doesn't sell your viewing data to advertisers (though individual apps may).
Apple TV+ has the highest signal-to-noise ratio of any non-niche streaming service. I don't think there's a close second.
The latest HomePods and software iteration has made an appreciable positive difference in the quality of my life -- the intercom feature in particular is huge. This may not be unique to Apple, but it's well implemented.
You can kvetch about bugs, declining software quality, etc (we certainly did when Jobs was running the place) -- but "meaningful"? Apple is more meaningful to more people than ever before.
Apple silicon is biggest innovation in mainstream personal computing in at least a decade. Their upcoming move into AR/VR indicates that they're at least maintaining a presence at the frontier.
> There's several things that seem to characterize many of these failures, the first is that when founders leave or die companies often seem to lose drive and direction, and second companies become too big and diversification seems to kill their R&D/innovation.
The latter is the downfall of most conglomerates. Kodak invented the digital camera and then failed to capitalize because they were afraid it would cannibalize their film division. Which was true -- it did -- but then the digital camera business went to someone else. Leadership needs to be able to make hard calls like that before it's too late.
> Like it or not, the West generally is in a state of decline.
I don't like it! I think the first indicator of the west's downfall was our declining production of bricks. My parents warned me of how poor I would one day be because our steel production was in decline. Now I prepare my children to live in the poverty of the United States where they have no hope of ever working in a radio factory.
While others have tackled the thesis as whole here, and I generally agree with the overall sentiment that the value chain just moved and manufacturing electronics is a really global and competitive business that makes it hard to differentiate, I want to poke specifically at Kodak.
Kodak patented and had provable manufacturing runs of fiber optic, flexible printed motherboards for computers
This, as I understand it, is (was?) the "next moment" for computing because fiber optics can dramatically increase the bandwidth of hardware components.
Yet, it went nowhere, and to this day, I don't understand why. Never was able to find follow up about it other than the original demos in a news broadcast
The research that went into things like this was so intense and demanded very rare individuals to become deeply engaged in the applicable aspects of natural science, that key progress was made in scattered areas after leaving the rest of the world's equally-qualified technologists in the dust.
The companies were built as manufacturers of consumables, based on cheap materials, labor, and mass production.
All this had occurred with wartime stakes and urgency.
With the arrival of transistors, a new generation of researchers was deployed and the vacuum tube people continued their momentum not that much longer.
Different kinds of fabrication facilities were needed for transistors, and mainly for supplying OEMs, these were also not consumable like bulbs in sockets.
The strong urgency could not be re-established and I think a lot of the manufacturers had difficulty navigating technology migrations like this. A number of pivots did not include continued component manufacturing.
Interestingly, a big vacuum chamber is where they make the semiconductors, carefully vaporizing solid-state materials in the process. And when the silicon comes out, you can make a radio without needing the little bulbs containing your own personal vacuums.
Take a look at the comments here for some 21st century readings of an EF50:
> Still, I think that's only part of the problem. Manufacturing and innovation in Western countries are now in a state of malaise and they're being quickly overtaken by Asian countries such as China. Like it or not, the West generally is in a state of decline.
Not really. China is low end manufacture and has not moved meaningfully out of that niche at all. In fact they are losing their advantage with no alternative to fall back on. Chinese assembly is not nearly as cheap as it was and their playbook is being copied by other countries (India, Vietnam).
Look on the back of your iPhone or MacBook. Where does it say it's manufactured?
Apple and others don't build their stuff in China anymore because it's the cheapest option. Far from it. The electronics supplier I used to have as a customer would assemble stuff in Ukraine(pre-war) because the worker wages there were lower than in China. But they didn't assemble iPhones there or anything close to that quality, complexity or volume. If you just need a country to assemble pre-made components as if it were LEGOs, that's not dealing with super high volumes and high complexity, like white goods for example, then even Eastern Europe is cheaper than China.
They build stuff in China because of the entire supply chain supporting the manufacture and assembly of such cutting edge devices in high volume. Stuff like machining millions of small aluminium/steel frames, batteries, tiny screws, custom flex cables or connectors. It's much easier to ramp up production of iPhones when a lot of these parts (outside the semiconductor chips which need to be imported) are developed and manufactured right next door to the final assembly and testing plant, instead of another country. Also, it makes your prototyping much faster since you can have the next iteration of a part on your doorstep in less than 24 hours.
Now China is already gaining significant market share in cutting edge OLED display market to muscle out Samsung and LG. Look up BOE. Apple used their displays in the iPhone 14 series and will use even more in the iPhone 15. China was also pushing strong in cutting edge chip manufacturing but US & allies made sure to knee-cap them in time to slow them down.
Scuffing off China as just a country for cheap manufacturing is a gross underestimation that hasn't been true in over 10 years.
> China is low end manufacture and has not moved meaningfully out of that niche at all.
Eh, just about everything is manufactured in China. It's hard to find anything that cannot be manufactured there. It's however easy to find things that cannot be manufactured in Europe or America anymore (at least at scales above lab volumes).
Just in the tech world Xiaomi and Huawei invalidate your position. I have personally own several Xiaomi products from smartphones, smartwatch, robot vacuum, electric scooter, etc, and they are both better and cheaper than their western competitors. Not copies either, they come with their own designs and features. The most surprising for me where the vacuum robot who navigates better at 200$ with only a front facing infrared sensor that 1000$ western products with 360 degree laser.
why is HP on the list? its revenues are on par or slightly below competitors in the sector and if you add the enterprise revenues its more of a 1 to 1. Hp consumer revenue 60 billion, HP enterprise revenue 30 billion in comparison to dell 100 billion and lenovo 70 billion in annual revenue the two include enterprise revenues which isn't spun off like with HP. All three are at peak revenues. Aside from that cisco, ubiquiti, nvdia, amd, intel(ish),LAM, AMAT, micron are the best in their fields honestly its seems like EU companies are in shambles not US take a look at ericsson vs huawei idk if the US has any real competitors in telecommunication hardware cisco is more of a networking company nowadays.
"Manufacturing and innovation in Western countries are now in a state of malaise and they're being quickly overtaken by Asian countries such as China. Like it or not, the West generally is in a state of decline."
I think this has a lot to do with ever stricter environmental regulations; construction is hitting the same roadblock, environmental assessments are onerous in many places of the West. As a result, manufacturing moves to Asia and housing doesn't get built at all.
Software, which doesn't face the same hurdles, flourishes in the West. A typical consumer combo is Asian hardware with European/American software. I don't think we are out of innovative spirit just yet, we rather have to prune the regulations a bit, because well-intentioned or no, one can regulate himself to complete stagnation.
I think you are on to something, but I would phrase it a little differently. Trade policy has clearly been designed to allow large multi-nationals to take advantage of lack of regulation in developing countries - little to no labor, environmental or other restrictions. (You know, the things that generally make western life bearable.) It was clear what the result of this would be: A lot of money being made off the decline of the West. I view it similarly to the way a C-Suite can bleed all the investment out of a successful company, making money hand over fist while they drive it into the ground. (G.E. & Sears come to mind.) Turns out you can do the same things with a country, or even a group of countries. A huge amount of wealth has been transferred to powerful individuals by extracting the decades of investment that built the world-leading economies of the West.
Siemens is still huge in all sorts of markets not readily visible to the general public: electricity generation and transmission, industrial automation, medical equipment, rolling stock (trains etc), and much more.
The whole home appliance business is now owned by Bosch (it used to be a joint-venture between those two companies previously).
Consumer electronics so, everything from cameras to radios and TVs, was eaten in the 80s by Japanese companies. Then Korean companies stepped in, with actual manufacturing being outsourced across East Asia, from China and Taiwan to Vietnam and Thailand, and everyone between, left and right. Now Chinese companies entered the market not just as suppliers, but as actual brands, e.g. Huawei.
Siemens is an enormous high-tech conglomerate and their most visible consumer arm is quite irrelevant next to they production of precision manufacturing tools, nuclear reactors, etc
Australia is politically aligned with the "western" world (USA's sphere of influence) rather than with russia's ("Eastern bloc" at least until it fell apart) and it's quite typical to see it listed as such, despite its location on the planet.
As we're discussing manufacturing, the opposite of the western world nowadays would be China (and India, Vietnam, etc)
Australia has always been part of the west. It feels culturally like a mix of US and UK. "The west" has never been geographical. It is named like that because the center of gravity has is western Europe and the US and perhaps more importantly in was named in opposition to the Soviet union and so looking from Europe is looks like "the west".
> Like it or not, the West generally is in a state of decline.
Europe is in a state of decline. The US is doing fine. The difference between the US and Europe is that we went up the value chain ( Microsoft, Apple, Google, Facebook, Netflix, Nvidia, etc ). Europe did not.
Consumer electronics is relatively low level tech. It was "gifted" to the japanese and then the koreans and eventually the chinese while we moved up the chain to the more valuable internet, social media and software development.
Where is europe's microsoft? Their apple? Their facebook? Their google? There is no "the West". No more than there is "the East".
Edit: Also, it isn't consumer electronics that's the issue. It's the future ( the next rung up the value chain ) - AI, big data, quantum computing, bio-tech, green energy tech, etc. Will europe even participate because currently it looks like it will be only the US and China competing.
This is just strange thinking to equate decline with some sort of technological leadership.
Counterpoints:
- The US is still at a trade deficit with Europe despite the strength in dominating Internet technologies.
- US society is much more polarized than Europe both in economic equality and political affiliation.
- Europe has some tech unicorns. Some like Spotify or Arm might ring a bell. But then again does it really matter where something is incorporated? Financial markets are very globalized anyway. So a European citizen can buy Apple stock and profit in the same way as an American one. Some holds the other way. The German car makers raking in billions each year are owned by international investors all over.
Last on Greentech: there are players such as Vestas and Siemens very much involved in renewables.
> Where is europe's microsoft? Their apple? Their facebook? Their google? There is no "the West". No more than there is "the East".
One place to start looking would be their local Apple, Meta and Google offices.
This is true, in a sense. Big tech giants are headquartered in the USA because the USA made a bunch of choices that make it easy to start a tech company there. But as they grow, they become multinational giants. There is a *ton* of FAANG revenue moving into and through Europe in all directions. Europe is just fine.
I mean, this is like asking why California fell so far behind Delaware in startup valuation. It's true, but not meaningful.
The FAANG companies are 25 years old at this point, they aren't that relevant to today's situation. Europe has had many large companies going, but most got acquired by their US competitors. In part because they could use offshore assets and also avoid taxes once acquired.
But that is also only partly relevant, because the same is true of the US. If the US is doing so well by that metric where are the next US FAANG companies? The reality is that neither Europe nor the US moved up the value chain but sideways to primarily offer services.
That isn't because of manufacturing. Many think so because they don't know much about manufacturing. It is because of the cost of living. Western economies can't support a knowledge based ecosystem. I can have things made in Europe, or China. It doesn't matter. Where can I go and develop a product for years, or work my way up in a product company, or eventually hire a hundred people to do it, all without suffering? The answer is nowhere because the market is dominated by service focused companies that require less start time and have a less variable success rate. In China, its almost in every decent city.
Electronics (consumer or otherwise) isn't "low level tech." This isn't a game where there's a definitive tech tree. Electronics design and manufacturing is not a solved problem and innovation is getting wild these days (esp in consumer devices, like wearables, XR, IOT, etc).
Something to keep in mind is that consumer electronics are at the leaves of the industrial tree - AI, big data, energy, quantum computing, etc - those are branches.
> Manufacturing and innovation in Western countries are now in a state of malaise and they're being quickly overtaken by Asian countries such as China. Like it or not, the West generally is in a state of decline.
China is pretty good at manufacturing, and pretty terrible at everything else. Research and innovation in particular are very much China's weak point.
I grew up in Eindhoven, the birthplace of Philips. It was everywhere in the city back then. My entire family worked for Philips: dad, grandfather, uncles.
I don't really think it's a bad thing what happened to it. Many viable components have been spun off and sold in various ways; the business is essentially fine, just not under the Philips name and management. Does that really matter? I don't think it does. And giant companies are not a good thing: the bureaucracy in Philips was legendary and giant companies don't tend to be good for consumers.
It is hard to underestimate how much influence Philips has had on the history of Eindhoven; it turned a small medieval town to the city it is today (technically its had city rights since 12-something, but it was really just a small town until 1920). It's also easy to be romantic and look back with rose-tinted glasses, or to transpose activities from the past to today.
IMO where Philips went wrong is selling off their name for everything they weren't interested in to cheap brands, totally undermining their name. TVs (Philips CRT tubes) were legendary in the 80s, now they're made by a budget OEM from Hong Kong. Pretty much all home electronics in the end. Very bad strategy, with minor short-term rewards and killing the brand long-term.
The name game with Philips goes back many decades because there was once a vacuum tube manufacturer in the U.S.A. named ''Phillips'' (two ls), so they were forced to adopt new trade names for the lucrative North American market: the Norelco name for consumer appliances and the Maganavox name for consumer electronics. Their reputation for quality was excellent back then. Oddly, Canada's Bell Telephone subsidiary Northern Electric did not push Philips away from using the Norelco name. Nowadays those names have almost no connection to their original organization.
Perhaps but selling their brand to the lowest bidders was just dumb.
But I think they could have continued. They certainly had a thing with Ambilight. And whatever the Hong Kong company does now, they could have done themselves in the same place (and thus for the same wages). I think it's just a lack of strategy vision.
Yes!
I stopped buying Philips products and have actively advised people to avoid the brand after owning 2 different products with questionable quality.
At this point I wouldn't buy any of their products, so it's hard for them to convince me again, even if they improve.
Sad.
What happened to Phillips is something that proved beneficial in the long run.
Legacy of Philips is now ASML, NxP, pretty good startup scene in Eindhoven, and a few other companies.
The only victim here is the name. If Philips tried to move as one company they would have probably dragged down their chip related businesses by siphoning money into the fields they were losing.
Of course one could argue that the company under Philips name should have chose different direction and spun off consumer or medical market, but at the end of the day it's just a name.
I believe in hindsight this will be a way better outcome for everyone than the one we'll see from big tech if they're not broken up. There are already too many examples of them killing competition by leveraging their monopolies or buying it up and killing it off.
Phillips also helped spawn FEI, which was then bought by Thermo Scientific and have a near monopoly on Transmission Electron Microscopes, as well as being competitive in other EM fields. Without Phillips Electron Optics, most cutting edge structural biology couldn't be done.
Not mentioned in the video is that Philips Ventures is effectively buying up MedTech companies with proven tech, and hovering up the IP into their portfolio as an 'innovation' strategy.
Effectively it's a zero risk venture for big corp companies that depend on innovation, they don't have to sink money in research projects in their own R&D labs. Just find someone with something interesting which has already been de-risked, with proven feasibility, buy them out and develop for manufacturing.
For clarity all big MedTech companies are doing this not just Philips.
> Not mentioned in the video is that Philips Ventures is effectively buying up MedTech companies with proven tech, and hovering up the IP into their portfolio as an 'innovation' strategy.
Why is that bad? Unless there's something underhanded about the sale, it sounds like it's exactly what a lot of startup founders want: make an MVP, get noticed, get bought, take your pile of money and make another business or go sit on a beach or whatever you want to do.
I think the issue is that companies like Philips aren't just buying a rising star, they are also buying out fractions of early startups or creating 'accelerators' for early startups. They are reaching out and grabbing earlier and earlier in the pipeline.
To me this is bad from two angles. For startups, they start to get influenced and stiffled by big corp 'this is the right way' too soon, which stiffles innovation. For big companies it gives suits an easy cost down to defund internal R&D and externalize that cost, this means that all the deep pocket research you had in the golden days of Bell Labs cannot be replicated, which again stiffles innovation.
I agree all big MedTechs do this and I wonder what other (better way exist)?
Typically these giants have more cash and heavy process instead of small nimble engineers who can freely use their potential.
PS: I work directly with two ex-venture Philipps people, thats why I ask.
I mean there probably isn't much of a way out. It all comes down to funding.
It is very rare for MedTech startups to have funding to actually establish themselves in mature market, most of them will have funding to get pass regulator hurdles or just create an IP moat around the business, then the VC's expectation is that another giant will buy them out who will then have the purse to take products to market at scale.
My worry is that more and more the bigger companies are buying or owning parts of startups sooner and sooner in the technology readiness pipeline. That will probably limit how much we actually innovate, both from the startup side that now has oversight and from the internal R&D ranks at big corp, that become glorified PMs and strategists rather than researchers.
The only way forward is for VC's to stay for longer horizons, but specially in MedTech if you are selling something that involves a widget or hardware it will probably never scale in a way that would make it an interesting business for VC's. Perhaps the exception now is MedTech with SaaS type business models or cloud based services.
I have a old Philishave Philips shaver who is made in the netherlands. Replaced the old shaver with a newer Philishave shaver made in China. Turns out the old shaver is better than the new. The old shaver shaves more closely to the skin for a better result more smooth shave.
Don't we consider ASML a tech giant? A spin-out of Philips btw, as is NXP for example.
Edit: Should have watched the movie first. To answer my question: I guess we don't. And, it's electronics not tech indeed, otherwise it could have included Siemens for example.
Readit News
Pye Industries, UK
EMI (Electric & Musical Industries), UK
Marconi, UK
AWA (Amalgamated Wireless Australiasia), Australia
Telefunken, Germany
Thompson CSF, France
HP Hewlett Packard, USA
Kodak, USA
Polaroid, USA
Varian Associates, USA
Ampex, USA
General Radio, USA
Philco, USA
Admiral, USA
RCA (Radio Corporation of America), USA
Philips, NL - as mentioned
I used to work for RCA and back then it was the largest electronics company in the world and Philips was second. When RCA failed, Philips became the biggest but unfortunately its time at the top was short-lived.
There's several things that seem to characterize many of these failures, the first is that when founders leave or die companies often seem to lose drive and direction, and second companies become too big and diversification seems to kill their R&D/innovation.
For example, RCA lost its direction and fell apart when its founder David Sarnoff died and his son took the helm. Similarly, another spectacular failure was Hewlett Packard when its last founder died.
That said, there are exceptions such as Apple—but then it may not have been in existence long enough to tell, it hasn't been around anywhere near as long as say, Philips has. Moreover, it's highly dependent on Asian manufacturing, in the long-term, that may be Apple's Achilles's heel.
Still, I think that's only part of the problem. Manufacturing and innovation in Western countries are now in a state of malaise and they're being quickly overtaken by Asian countries such as China. Like it or not, the West generally is in a state of decline.
Zenith was quite successful, and was making TV sets in the US until the early 90's - but eventually the lower cost of overseas manufacturing caught up with them.
Motorola and Western are the saddest though, Motorola made everything, soup to nuts used in their products, and then bit by bit sold off the bits util they were left with two way radios (Motorola Solutions is the survivor of the original Motorola Inc). Western never really figured out divestiture, there are bits of pieces of it left, if anything Avaya is the closest to a spiritual successor to it (part numbering styles and engineering style).
https://spectrum.ieee.org/zenith-tv
Delves deeper into the "lower cost of overseas manfuacturing" as cause of death for the US TV industry, with a focus on Zenith. Zenith saw this coming and tried to avoid it by investing in technology and R&D - and unfortunately chose to invest in technically superior but unpopular or uncommoditizable technologies like Betamax, digital signal transmission standards, and early analog HDTV. Heck, they paid to develop the standard for stereo TV broadcast audio, then gave it away royalty-free.
Zenith's TV engineering business was bought out by South Korea's LG, and Zenith's role as main guiding force behind North America's ATSC digital TV broadcast system was grandfathered to LG with many of the same people.
So... how does a large monolith renew itself? One solution with a reasonable track record is to 'replace from within', much as a cuckoo replaces its host.
1. Set up a small unit within your (monolith) company.
2. Staff it with your best and brightest.
3. Physically separate this unit from the rest of the company, but not so much that they forget 'who they belong to'.
4. Establish a line of direct communication between this unit and a high-level manager, bypassing middle managers.
5. XXXX
6. Profit!
XXXX is the problem part. How to graft the young onto the old? Failure to capitalize = Kodak (invented the digital camera but could not make it 'happen'), Palm and its development of WebOS (could have been a contender, but let down by poor hardware and other stuff), Palo Alto and Xerox ('nuff said).
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63% declines are something you can't repeat too many times without creating the kind of situation historians give names to. Two more such periods, and Europe only has 2 of the top 100 companies."
https://twitter.com/paulg/status/1400777576965185539
It's unreasonable to expect a region with 1/16 of the world population to have 4/10 of the largest companies in the long term.
Also, is "company size" really that good a measure of economic success? Seems like it could have to do with the local conditions encouraging smaller economic entities.
I'd argue the total market cap (or maybe revenue, etc) of top-500 might be a better measure. Surely it has gone down but maybe by less
Also China's growth was the exceptional thing here
(but yeah European management of those classic big companies fumbled a lot)
It’s also worth connecting this to the economic stagnation in Western Europe since 2008. GDP per capita has not budged in the UK, France, and Italy in more than a decade.
GDP per capita definitely grew, but once you subtract inflation, it's close to zero for some countries or even negative for countries like Greece, Italy compared to their pre-2008 numbers. Ouch!
Most of the growth has been in Eastern Europe and the very wealthy ones like Netherlands, Luxembourg, etc.
Apple would be about the same story: it hasn't created anything really meaningful since Jobs, it mostly lives on the legacy that has been set. Luckily for Cook the company has a good storytelling and aura, but major innovation hasn't been there for a long time, and when the wave slows down it may well end up like the others you listed.
Try telling that to everyone who has an Apple Silicon laptop.
I haven't had a performance boost like that since the move to SSDs.
Apple TV is the only non-scummy streaming box. It doesn't sell your viewing data to advertisers (though individual apps may).
Apple TV+ has the highest signal-to-noise ratio of any non-niche streaming service. I don't think there's a close second.
The latest HomePods and software iteration has made an appreciable positive difference in the quality of my life -- the intercom feature in particular is huge. This may not be unique to Apple, but it's well implemented.
You can kvetch about bugs, declining software quality, etc (we certainly did when Jobs was running the place) -- but "meaningful"? Apple is more meaningful to more people than ever before.
The latter is the downfall of most conglomerates. Kodak invented the digital camera and then failed to capitalize because they were afraid it would cannibalize their film division. Which was true -- it did -- but then the digital camera business went to someone else. Leadership needs to be able to make hard calls like that before it's too late.
Which founders tend to be better at than MBAs.
I don't like it! I think the first indicator of the west's downfall was our declining production of bricks. My parents warned me of how poor I would one day be because our steel production was in decline. Now I prepare my children to live in the poverty of the United States where they have no hope of ever working in a radio factory.
Kodak patented and had provable manufacturing runs of fiber optic, flexible printed motherboards for computers
This, as I understand it, is (was?) the "next moment" for computing because fiber optics can dramatically increase the bandwidth of hardware components.
Yet, it went nowhere, and to this day, I don't understand why. Never was able to find follow up about it other than the original demos in a news broadcast
The manager championing it moves, Business shows a low TAM, there is a bad quarter and the CEO needs to appease investors, etc.
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https://en.wikipedia.org/wiki/EF50
Used for TV, and then for radar in WWII.
Added:
http://www.r-type.org/articles/art-021.htm
The research that went into things like this was so intense and demanded very rare individuals to become deeply engaged in the applicable aspects of natural science, that key progress was made in scattered areas after leaving the rest of the world's equally-qualified technologists in the dust.
The companies were built as manufacturers of consumables, based on cheap materials, labor, and mass production.
All this had occurred with wartime stakes and urgency.
With the arrival of transistors, a new generation of researchers was deployed and the vacuum tube people continued their momentum not that much longer.
Different kinds of fabrication facilities were needed for transistors, and mainly for supplying OEMs, these were also not consumable like bulbs in sockets.
The strong urgency could not be re-established and I think a lot of the manufacturers had difficulty navigating technology migrations like this. A number of pivots did not include continued component manufacturing.
Interestingly, a big vacuum chamber is where they make the semiconductors, carefully vaporizing solid-state materials in the process. And when the silicon comes out, you can make a radio without needing the little bulbs containing your own personal vacuums.
Take a look at the comments here for some 21st century readings of an EF50:
https://www.radiomuseum.org/tubes/tube_ef50.html
Another decade of advances gave us things like the EF96 (6AG5/6186) for much higher frequency use:
https://tube-data.com/sheets/093/6/6AG5.pdf
Well I'm not a radio man but these are great for audio, even though they're a preamp their internal structure is a bit like a beam power tube:
https://www.radiomuseum.org/tubes/tube_6186.html
So pentode, triode, tetrode they are tasty and the sockets are not too unobtainable.
Not really. China is low end manufacture and has not moved meaningfully out of that niche at all. In fact they are losing their advantage with no alternative to fall back on. Chinese assembly is not nearly as cheap as it was and their playbook is being copied by other countries (India, Vietnam).
Apple and others don't build their stuff in China anymore because it's the cheapest option. Far from it. The electronics supplier I used to have as a customer would assemble stuff in Ukraine(pre-war) because the worker wages there were lower than in China. But they didn't assemble iPhones there or anything close to that quality, complexity or volume. If you just need a country to assemble pre-made components as if it were LEGOs, that's not dealing with super high volumes and high complexity, like white goods for example, then even Eastern Europe is cheaper than China.
They build stuff in China because of the entire supply chain supporting the manufacture and assembly of such cutting edge devices in high volume. Stuff like machining millions of small aluminium/steel frames, batteries, tiny screws, custom flex cables or connectors. It's much easier to ramp up production of iPhones when a lot of these parts (outside the semiconductor chips which need to be imported) are developed and manufactured right next door to the final assembly and testing plant, instead of another country. Also, it makes your prototyping much faster since you can have the next iteration of a part on your doorstep in less than 24 hours.
Now China is already gaining significant market share in cutting edge OLED display market to muscle out Samsung and LG. Look up BOE. Apple used their displays in the iPhone 14 series and will use even more in the iPhone 15. China was also pushing strong in cutting edge chip manufacturing but US & allies made sure to knee-cap them in time to slow them down.
Scuffing off China as just a country for cheap manufacturing is a gross underestimation that hasn't been true in over 10 years.
I'd be fairly confident in some rough generalisations, but the specifics and magnitude I have no idea on:
- for the last few decades the west has moved bulk value add manufacturing to China, and we've grown their economy/influence accordingly
- China is definitely doing more high tech manufacturing, wafers and EV tech - basic manufacturing is definitely moving in part to cheaper countries
Eh, just about everything is manufactured in China. It's hard to find anything that cannot be manufactured there. It's however easy to find things that cannot be manufactured in Europe or America anymore (at least at scales above lab volumes).
I think this has a lot to do with ever stricter environmental regulations; construction is hitting the same roadblock, environmental assessments are onerous in many places of the West. As a result, manufacturing moves to Asia and housing doesn't get built at all.
Software, which doesn't face the same hurdles, flourishes in the West. A typical consumer combo is Asian hardware with European/American software. I don't think we are out of innovative spirit just yet, we rather have to prune the regulations a bit, because well-intentioned or no, one can regulate himself to complete stagnation.
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Consumer electronics so, everything from cameras to radios and TVs, was eaten in the 80s by Japanese companies. Then Korean companies stepped in, with actual manufacturing being outsourced across East Asia, from China and Taiwan to Vietnam and Thailand, and everyone between, left and right. Now Chinese companies entered the market not just as suppliers, but as actual brands, e.g. Huawei.
As we're discussing manufacturing, the opposite of the western world nowadays would be China (and India, Vietnam, etc)
Europe is in a state of decline. The US is doing fine. The difference between the US and Europe is that we went up the value chain ( Microsoft, Apple, Google, Facebook, Netflix, Nvidia, etc ). Europe did not.
Consumer electronics is relatively low level tech. It was "gifted" to the japanese and then the koreans and eventually the chinese while we moved up the chain to the more valuable internet, social media and software development.
Where is europe's microsoft? Their apple? Their facebook? Their google? There is no "the West". No more than there is "the East".
Edit: Also, it isn't consumer electronics that's the issue. It's the future ( the next rung up the value chain ) - AI, big data, quantum computing, bio-tech, green energy tech, etc. Will europe even participate because currently it looks like it will be only the US and China competing.
Counterpoints:
- The US is still at a trade deficit with Europe despite the strength in dominating Internet technologies.
- US society is much more polarized than Europe both in economic equality and political affiliation.
- Europe has some tech unicorns. Some like Spotify or Arm might ring a bell. But then again does it really matter where something is incorporated? Financial markets are very globalized anyway. So a European citizen can buy Apple stock and profit in the same way as an American one. Some holds the other way. The German car makers raking in billions each year are owned by international investors all over.
Last on Greentech: there are players such as Vestas and Siemens very much involved in renewables.
One place to start looking would be their local Apple, Meta and Google offices.
This is true, in a sense. Big tech giants are headquartered in the USA because the USA made a bunch of choices that make it easy to start a tech company there. But as they grow, they become multinational giants. There is a *ton* of FAANG revenue moving into and through Europe in all directions. Europe is just fine.
I mean, this is like asking why California fell so far behind Delaware in startup valuation. It's true, but not meaningful.
But that is also only partly relevant, because the same is true of the US. If the US is doing so well by that metric where are the next US FAANG companies? The reality is that neither Europe nor the US moved up the value chain but sideways to primarily offer services.
That isn't because of manufacturing. Many think so because they don't know much about manufacturing. It is because of the cost of living. Western economies can't support a knowledge based ecosystem. I can have things made in Europe, or China. It doesn't matter. Where can I go and develop a product for years, or work my way up in a product company, or eventually hire a hundred people to do it, all without suffering? The answer is nowhere because the market is dominated by service focused companies that require less start time and have a less variable success rate. In China, its almost in every decent city.
I don't agree that Europe is on the decline. They are just in a different industry than the US.
Something to keep in mind is that consumer electronics are at the leaves of the industrial tree - AI, big data, energy, quantum computing, etc - those are branches.
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China is pretty good at manufacturing, and pretty terrible at everything else. Research and innovation in particular are very much China's weak point.
Then why in most scientific papers often at least one author has a name of 'Han' origin?
I don't really think it's a bad thing what happened to it. Many viable components have been spun off and sold in various ways; the business is essentially fine, just not under the Philips name and management. Does that really matter? I don't think it does. And giant companies are not a good thing: the bureaucracy in Philips was legendary and giant companies don't tend to be good for consumers.
It is hard to underestimate how much influence Philips has had on the history of Eindhoven; it turned a small medieval town to the city it is today (technically its had city rights since 12-something, but it was really just a small town until 1920). It's also easy to be romantic and look back with rose-tinted glasses, or to transpose activities from the past to today.
But I've never heard of Norelco. Magnavox yes, it was a bit of a B-brand in Europe, similar to Aristona.
But I think they could have continued. They certainly had a thing with Ambilight. And whatever the Hong Kong company does now, they could have done themselves in the same place (and thus for the same wages). I think it's just a lack of strategy vision.
I'm curious, to which companies/products has Philips sold their name to?
But there was probably also a chauvinist aspect to it because I'm from the Netherlands.
Many other brands used Philips CRT tubes though.
What happened to Phillips is something that proved beneficial in the long run.
Legacy of Philips is now ASML, NxP, pretty good startup scene in Eindhoven, and a few other companies. The only victim here is the name. If Philips tried to move as one company they would have probably dragged down their chip related businesses by siphoning money into the fields they were losing.
Of course one could argue that the company under Philips name should have chose different direction and spun off consumer or medical market, but at the end of the day it's just a name.
I believe in hindsight this will be a way better outcome for everyone than the one we'll see from big tech if they're not broken up. There are already too many examples of them killing competition by leveraging their monopolies or buying it up and killing it off.
https://en.wikipedia.org/wiki/Siemens
Effectively it's a zero risk venture for big corp companies that depend on innovation, they don't have to sink money in research projects in their own R&D labs. Just find someone with something interesting which has already been de-risked, with proven feasibility, buy them out and develop for manufacturing.
For clarity all big MedTech companies are doing this not just Philips.
Why is that bad? Unless there's something underhanded about the sale, it sounds like it's exactly what a lot of startup founders want: make an MVP, get noticed, get bought, take your pile of money and make another business or go sit on a beach or whatever you want to do.
To me this is bad from two angles. For startups, they start to get influenced and stiffled by big corp 'this is the right way' too soon, which stiffles innovation. For big companies it gives suits an easy cost down to defund internal R&D and externalize that cost, this means that all the deep pocket research you had in the golden days of Bell Labs cannot be replicated, which again stiffles innovation.
PS: I work directly with two ex-venture Philipps people, thats why I ask.
It is very rare for MedTech startups to have funding to actually establish themselves in mature market, most of them will have funding to get pass regulator hurdles or just create an IP moat around the business, then the VC's expectation is that another giant will buy them out who will then have the purse to take products to market at scale.
My worry is that more and more the bigger companies are buying or owning parts of startups sooner and sooner in the technology readiness pipeline. That will probably limit how much we actually innovate, both from the startup side that now has oversight and from the internal R&D ranks at big corp, that become glorified PMs and strategists rather than researchers.
The only way forward is for VC's to stay for longer horizons, but specially in MedTech if you are selling something that involves a widget or hardware it will probably never scale in a way that would make it an interesting business for VC's. Perhaps the exception now is MedTech with SaaS type business models or cloud based services.
Edit: Should have watched the movie first. To answer my question: I guess we don't. And, it's electronics not tech indeed, otherwise it could have included Siemens for example.
21 billion euros revenue, 5.6 billion net income, 50% gross margin
224 billion euro market cap
Not a giant.
Has a market cap of twice that of netflix but not a giant?
Where do you draw the line?
In that sense Philips’s legacy still underpins every smartphone and computer today.