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See Hue later: Philips to spin out its lighting division to focus on connected health

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Dutch conglomerate Philips has voted to split itself into two separate companies: the consumer and medtech group and a lighting group. The two divisions will still both use the Philips brand, but the goal is to eventually split the lighting division off into its own company, Philips announced Tuesday.

According to the release [company]Philips[/company] will then take the new lighting company and, “consider various options for alternative ownership structures with direct access to capital markets.” The lighting group includes Philips’ popular Hue lights, which are a staple in many connected homes. But as the internet of things changes the business landscape, it’s clear that Philips sees the biggest advantage in the consumer and medical worlds — or more appropriately, the convergence of the two.

Philips thinks there is a 100 billion-euro-a-year opportunity represented by increasing reliance on technology that can span the hospital to the home, and it has already started with a big partnership with Salesforce.com to tie patient data from connected devices to a cloud platform accessible by medical professionals. We’ll hear more about the platform and the challenges of getting the medical and consumer worlds to converge at our Structure Connect event October 21 and 22 where Todd Pierce, the SVP of Healthcare and Life Sciences at [company]Salesforce.com[/company] and Philippe Schwartz, the president of [company]Withings[/company] will speak.

As for lighting, Philips noted that the field is changing from selling individual units to selling lighting systems — an astute observation about the value of connected technology and bringing the dividends of digital innovation to the home, farming and even building design. In splitting the two companies, Philips aims to let the lighting division become more agile. I’m not sure if that will happen, but Philips isn’t the only conglomerate looking at the coming era of ubiquitous connected devices and repositioning its business. Earlier this month GE sold its appliance division to Electrolux, a move that signals once again that the value is in the system, not the individual devices.

And when you are selling a system, standardization and consolidation are your friends. So it’s likely that we’ll see the big get bigger, but only along lines that make sense for each system-level market these big corporations have decided to carve out.

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