Interview with Philips CEO Gerard Kleisterlee: 'In Some Markets, the Collapse Was Brutal'

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SPIEGEL: Has Philips given up its former claim to being the number one firm in the consumer electronics sector?

Kleisterlee: Times change. We certainly don't want to be a consumer electronics company with a particularly wide product range any more. Then we would also have to offer cell phones, navigational systems, digital cameras and many other products. In all these categories, however, there are only one or two strong market leaders, leaving the rest empty-handed. So it makes more sense for us to strengthen our position in terms of interesting products like razors and toothbrushes than to take on the competition from Asia in the consumer electronics sector.

SPIEGEL: Isn't the competition much closer on your heels if you concentrate on razors and toothbrushes instead of high-tech products?

Kleisterlee: Not at all. Technology still plays a large role in medical electronics and lighting, but not in consumer products -- marketing is now the deciding factor there. What's important is how user-friendly a device is and how precisely it satisfies the customer's desires.

SPIEGEL: So what distinguishes Philips' irons, "Wake-up Light" alarm clocks or baby monitors from the competition?

Kleisterlee: Ideas and outstanding product quality. Just think of our Senseo coffee machines. We came up with the idea of coffee pads. That created an enormous market that didn't exist before. Technology played only a secondary role there.

SPIEGEL: So what idea is behind Philips' new sex toys that are now being sold in Germany and the UK, among other countries?

Kleisterlee: The idea came from a group of young people working intensively on the topics of health and well-being. It became clear that there are major differences in what people consider to be well-being. In India or China, where clean drinking water or air pollution play a large role, well-being means something different than it does in Europe. For some people here, it means being able to sit down on the couch and watch television after a hard day at work. For others, sexual satisfaction is part of it.

SPIEGEL: The idea that sex sells is hardly new. But in a traditional company like Philips, there must have been considerably more resistance to these innovations than to the launch of water purifiers in India.

Kleisterlee: The team working on the product had that same expectation and naturally the board had long discussions before we gave it the go-ahead.

SPIEGEL: What were your reservations?

Kleisterlee: We analyzed very carefully, for example, whether such products would damage our brand, especially with our medical technology customers. The reaction was consistently positive. Our sensual massagers are completely different from ordinary sex toys. They're objects that you can leave lying around without feeling ashamed.

SPIEGEL: What significance does the market in "relationship care," as you call it, have for Philips?

Kleisterlee: We're still in the learning phase and I can't say precisely where it will lead in the end. But Philips' future certainly doesn't depend on it. For us, it was partly about showing our own people that unconventional ideas are also welcome, if they satisfy certain requirements. They must be suitable for the market, the products must be high quality, and it must be possible to sell them in normal retail markets. We have plenty more ideas for improving well-being, especially for people suffering from chronic illnesses.

SPIEGEL: For example?

Kleisterlee: We can't and don't want to stick all chronically ill people in hospitals and all senior citizens in nursing homes. That makes remote monitoring of illnesses and infirmities increasingly important. Technologically, that's no problem, but society still has significant reservations. We're working on several pilot projects in this area.

SPIEGEL: Robots are being used in caring for the elderly in Japan. Could you imagine something similar for Europe?

Kleisterlee: No. If robots were to replace friends and neighbors, that would no longer be my society. Nevertheless, an aging society certainly poses questions, such as will there be enough people in the future willing to provide this kind of care and how we can afford it.

SPIEGEL: And what is your answer?

Kleisterlee: Technology will by necessity play a larger role in care for the elderly. But I'm thinking more of practical aids, for people who want to continue living independently and who are able to do so with the support of specially designed and easy-to-use equipment. And we are working on that.

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• Part 1: 'In Some Markets, the Collapse Was Brutal'
• Part 2: 'Our Sensual Massagers Are Completely Different from Ordinary Sex Toys'