Signify, the parent company of popular smart lighting brands Philips Hue and WiZ, recently announced a significant restructuring initiative in response to market volatility and uncertainty. This move comes as the company aims to focus more on developing products for consumers and businesses, while reducing its efforts in manufacturing for other brands and specialty lighting applications. The restructuring includes the establishment of a new customer-centric organization and substantial cost reductions.
A Customer-Centric Approach
In its press release, Signify stated that it plans to organize its company around four vertically integrated businesses. Three of these businesses will have a clear focus on customers: Professional, OEM (Original Equipment Manufacturer), and Consumer. The fourth business unit will be dedicated to conventional lighting technologies. This strategic realignment emphasizes Signify’s commitment to meeting the evolving needs of its diverse customer base.
As part of the restructuring, Signify expects to achieve annual savings of over €200 million (approximately $218 million). To achieve this, the company intends to streamline its operations and make structural changes. While Signify has not provided specific details on the number of job losses, it has expressed the need to bring non-manufacturing costs within the range of 25-29% of sales. These cost reduction measures are aimed at ensuring the company’s long-term viability and ability to navigate the ever-changing market landscape.
Reversing Recent Changes
Interestingly, Signify is undoing some of the changes it made as recently as 2020. At that time, the company shifted from three business groups to four in response to declining sales due to the longer lifespan of LED lights. Now, Signify is refocusing its efforts on its core businesses and revenue streams. Philips Hue and WiZ have expanded beyond smart lighting into smart security, introducing security cameras and cloud service subscriptions. The company is capitalizing on the growing demand for holistic smart home solutions.
The Importance of Account Creation
Another noteworthy development is Hue’s plan to require customers to create an account to utilize its products, a shift from its previous model where an account was only necessary for specific features. Signify claims that this decision primarily stems from security concerns and assures customers that data will not be shared without additional consent. While this change may create inconvenience for some users, it highlights the company’s dedication to maintaining the privacy and security of its customers.
Both Philips Hue and WiZ have shown their commitment to interoperability and compatibility by embracing the new Matter smart home standard. Matter, formerly known as Project CHIP, enables seamless integration and communication among various smart home devices. However, the implementation process has encountered delays and challenges, with Hue experiencing a significantly longer rollout than initially anticipated. Despite these setbacks, Signify remains committed to offering its customers the benefits of a unified smart home experience.
Signify’s restructuring initiative marks a significant shift in its priorities and business approach. By aligning its organization around customer-centric principles, concentrating on key revenue-generating activities, and implementing cost reduction measures, the company aims to thrive in a highly competitive market. With its established brands, innovative products, and commitment to privacy and security, Signify is well-positioned to continue leading the smart lighting industry into the future.
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