Signify, the parent company of popular smart lighting brands Philips Hue and WiZ, is undergoing a significant restructuring process to adapt to the volatile and uncertain market conditions. This strategic move reflects a shift in focus towards developing and marketing products for consumers and businesses, while reducing its involvement in manufacturing for other companies and specialty lighting applications. The restructuring aims to streamline operations and maximize profitability while aligning the organization around customer-centric business units.
Eric Rondolat, the CEO of Signify, emphasized the need for transforming the company in response to the changing industry landscape. In a recent press release, Rondolat stated, “After the major transformation we achieved through the past decade, we are taking the next step by organizing our company around four vertically integrated businesses. Three of these will focus on customers: Professional, OEM, and Consumer. The fourth will be dedicated to conventional lighting technologies.” This customer-centric approach highlights Signify’s commitment to meeting the unique needs of its diverse customer base.
Cost Reduction and Savings
As part of the restructuring process, Signify aims to achieve significant annual cost reductions. The Netherlands-based company expects to save over €200 million (approximately $218 million) through these measures. While no specific numbers were provided, it is clear that job losses are imminent. Signify plans to optimize its non-manufacturing costs, aiming for a range of 25-29% of sales. These cost-cutting initiatives are vital for improving efficiency and sustaining profitability in an increasingly competitive market.
Interestingly, Signify’s current restructuring efforts involve undoing some changes implemented as recently as 2020. At that time, the company expanded from three business groups to four in an attempt to mitigate declining sales caused, in part, by the longevity of LED lights. Now, the focus is on further diversifying revenue streams. Both Philips Hue and WiZ have expanded beyond smart lighting into smart security, launching security cameras and cloud service subscriptions. Additionally, Philips Hue now requires customers to create an account to access its products, a change primarily driven by security concerns and data protection.
Embracing the New Standard
Signify’s commitment to innovation and adaptability is also evident in its adoption of the new Matter smart home standard. Despite initial delays, both Philips Hue and WiZ have embraced this interoperable platform as part of their growth strategy. While the rollout process has been slower than anticipated, Signify recognizes the importance of staying at the forefront of industry advancements.
Signify’s restructuring reflects the dynamic nature of the smart lighting industry and the need to continuously adapt to market demands. By prioritizing consumer products and embracing new technologies, the company aims to strengthen its position in the smart home market. While job losses may be an unfortunate consequence, the strategic changes undertaken by Signify are crucial for sustainable growth and profitability in an ever-evolving industry. As the restructuring process continues, it will be interesting to see how Signify’s renewed focus on customers and cost savings impacts its market presence and future innovations.
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