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Philips sells home entertainment division, sees a future in lifestyle products

Philips has announced that it is to exit the consumer electronics business, selling that section of its business for €150 million in order to better concentrate on its more profitable lifestyle divisions.

The company, which entered the consumer electronics industry more than 80 years ago, told the Wall Street Journal that the profits were no longer there: "Our consumer lifestyle business was margin dilutive to the group, so it was time to decide to move away from consumer electronics," claimed chief executive Frans van Houten. "Since we have online entertainment, people do not buy Blu-ray and DVD players any more."

To help get the company back into the black, Philips has sold its consumer electronics division - responsible for Blu-ray players, DVD players, set-top boxes, HDTVs and the like - to Japanese rival Funai Electric Company for €150 million, using the funds to better concentrate business sectors such as medical imaging equipment and lighting - where Philips has proven a big player in low-energy lighting solutions.

Although Philips will continue to produce select items for use in the home - including coffee machines and electric razors - the sale of what was once its core business to Funai is the end of an era: the new company holds a five year license to the Philips brand, but after that it's possible the name will stop appearing on home theatre equipment after more than 80 years in the market.

Philips consumer electronics products have always stood out from the competition, with features like AmbiLight seen in its Philips 7000 Series Smart LED TV to paint the walls with immersion-improving colour-matched light.

Thus far, it has not been made clear what will happen to Philips AmbiLight technology: with Funai at the helm, it's possible the standard will be licensed to third-party manufacturers to add the system to their own TV sets.

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