Two heads are better than one: Philips splits into two separate entities to tackle Internet of Things

Royal Philips, traditionally known for lighting components (see: hue) and more recently recognized for healthcare and consumer lifestyle products, announced it is splitting into two companies: one focused on “HealthTech” (combining healthcare and consumer technologies) and the other on lighting solutions. While both companies will continue to leverage the Philips brand, each will operate autonomously, focusing on unique opportunities in the Internet of Things.

HealthTech will set its sights on the emerging market shift of consumers proactively managing their health.

“Philips is uniquely positioned to help reshape and optimize population health management,” said Philips CEO Frans van Houten in a statement. “The combination of our Healthcare and Consumer Lifestyle portfolios and the integration of the data from the connected products on Philips’ cloud-based digital health platform illustrate our opportunity to capture growth in an increasingly connected world.”

Already the global leader in a growing lighting market, Phillips will focus its new lighting solutions business on the shift of lighting markets from product-centric to systems- and services-centric, a trademark transition in the Internet of Things arena. This lighting solutions company will not include Philips’ Lumileds (LED components) and automotive lighting businesses, as plans were already in the works to sell these off as a separate lighting components company.

This announcement comes after consecutive warnings from Philips of lower-than-expected operating profits in the second half of 2014. The segments making up HealthTech combined for sales of EUR 15 billion in 2013, while the lighting solutions businesses raked in EUR 7 billion the same year. Shares were up on news of the split.

Additional: Blog Post