The negotiations went on smoothly. It was also because Thomas was impressed by Wind and Rain’s “strength” and gave lots of concessions.
In terms of branding and electronics industry, Philips was much stronger than Wind and Rain Electronics and Wind and Rain Home Appliances.
But Feng Yu made it very clear. If Philips were to work with Wind and Rain, they will be able to develop many electronics products which would change the world. The VCD, Super VCD, the uing DVD and optical drive forputers and even the home appliances like vacuum robots, lightwave microwave oven, etc. will bring lots of profits to Philips.
Because of these profits, Thomas and Philips agreed to Feng Yu’s terms. They will cooperate fully and will set the industry standards together. They will poprize the VCD and DVD together and will also introduce the rest of the new home appliances.
Wind and Rain Electronics and Wind and Rain Home Appliances will let Philips have ess to their technologies. Philips will share its optical disc technology, TV technologies, LCD disy technologies, and opticalmunication technology with Wind and Rain. Technologies will be shared between bothpanies at no cost.
Thepanies will still retain the patents they own, but the other party will get to use it for free. All new patents developed from the rted technologies will still be owned by thepany.
Feng Yu had made serious considerations before exchanging the VCD technologies with Philips. He had thought why the VCD developments were not as fast as his previous life. There was only one reason. It was because there were only twopanies in the market, producing VCD yers, and bothpanies belong to him.
Feng Yu could notpete with the severalpanies who worked together in introducing the VCD yers in his previous life. His marketing and distribution channels were not sufficient to poprize this product. In his earlier life, most of the top Japanese electronicspanies own VCD technology. They were the ones who discovered that this technology was not patented, and they rushed to apply for patents.
This was why, in the future, the Chinese VCDpanies still had to pay patent fees to those Japanesepanies. The Japanesepanies used the fees collected to develop better technologies and became the best in the industry.
In this life, this patent belongs to Feng Yu. Japanesepanies will not share this pie. But the VCD was not growing as fast as Feng Yu’s previous life. But it was still the same as history. All thepanies were trying to develop DVD yers to rece VCD.
DVD will rece VCD in time toe. The technology and user experiences were better than VCD. Thepanies had acted fast, but Wind and Rain Electronics were still able to develop thetest DVD technology before them.
It was like the gaming industry. Nintendo and ditched Sony and Sony used the next 2 years to develop the yStation gaming console. In the end, Sony upied most of the market share and profits!
Aiwa had beaten Sony in the Walkman industry, but that was because Sony’s focus at that moment was on the Columbia Pictures. Columbia Pictures was their most significant investment in the 1990s. It was still an overseas investment. Nothing must go wrong with this investment.
Once Columbia Pictures start to make money, Sony would have more time and resources to fight against Aiwa. But Feng Yu was not worried about this. By the time Columbia Pictures makes profits, Walkman will be almost obsolete. If Sony wants to get back the Walkman market at that time, they can have it.
But now, Sony and Toshiba had teamed up and wants to set the industry standards. They realized this DVD is better than VCD. It will ultimately rece traditional VHS yers. Also, this was what Sony wanted for their Columbia Pictures. With this technology, they would be able to sell their films on DVD.
Columbia Pictures owns the rights to an enormous volume of movies. If Sony was able to introduce a good DVD yer and those movies in DVD formats, then Columbia Pictures’ profits will increase. This will revive this struggling productionpany.
So, Sony would definitely increase its investments on its DVD research and developments. Feng Yu knew that if he were to go against Sony head-on, he might still win in the end. All he needs to do was to increase his investment into Aiwa and Wind and Rain Electronics. But it was not worth doing this.
There’s a lot of advantages by coborating with Philips. Especially one specific term in the contract. Bothpanies will help the other party manufacture products.
Aiwa only has a factory in London, and it was manufacturing Walkman. That factory had to fulfill the orders for the whole of West Europe, and the factory had no more space to produce VCD yers. Aiwa and Wind and Rain brand of VCD yers were all manufactured in China. The cost was high due to the transportation of the goods to the Europe and US markets.
Those VHS yer manufacturers had lowered their retail prices topete with VCD yers. All VHS yers manufacturers were working together to prevent VCD yers from gaining poprity in the western countries.
Feng Yu got to admit that thosepanies were influential and could stop VCD yers from bing popr overseas. Although there was still profits, it was still a different feeling from monopolizing the market.
In Feng Yu’s previous life, the VCD market was doing very well. The manufacturers were selling an astronomical number of VCD yers every year. But now, after Feng Yu had monopolized the VCD market, the sales of the yers remained low and Feng Yu was worried.
But now, with Philipsing into the picture, the VCD yer sales will surely shoot up due to its distribution channels in Europe and the US. Thomas also had the same thinking as Feng Yu. He also wanted to introduce the Super VCD immediately. He did not want to introduce the old VCD yers. This way, it will widen the gap between VCD and the traditional VHS. It would be easier to kick them out of the market!
Feng Yu had only authorized Philips to use his technology. Once Feng Yu got hold of newer technologies, his VCD technologies’ authorization could be given to morepanies, and it would be a collective effort to open up the VCD market. But the biggest slice of the pie still belongs to Wind and Rain Electronics.
The returns from setting the industry standards cannot be seen anytime soon. But the profits from producing Super VCD was immediate. Thomas also epts Feng Yu request for manufacturing Wind and Rain Electronics for him. This will lower the cost for Wind and Rain VCD and Aiwa VCD yers. It will shorten the time taken to introduce newer models and open up the market.
In China, Feng Yu’s main focus was still Wind and Rain VCD yers and Aiwa VCD yers. For the overseas, Feng Yu would use AIWA VCD and Wind and Rain VCD yers. Aiwa brand was used to target China and the Southeast Asia markets.
(Aiwa = Ai Hua, Chinese characters for Aiwa brand. Feng Yu had set up a sub-brand for Aiwa, which is in Chinese characters. This is to target the China market. AIWA is the international brand and its written in English characters.)
Philips will also benefit from this deal. They will also get profits from the Super VCD yers and the future DVD yers. Also, there will be profits from other innovative home appliances.
With so much more profitsing in, Philips would be able to increase their R&D funds for their medical equipment. They would be able to overtake Siemens in the medical machines industry!
After knowing Feng Yu had a Pager manufacturingpany under the Aiwa brand, Philips felt that they could also cooperate on telmunication devices and develop mobile phones. Philips also felt that mobile phones would rece pagers in the future.
Philips felt that it would take at least 10 years for mobile phones to rece pagers, but Feng Yu felt pagers would be a sunset industry in 3 years. In the next 5 years, it would be reced by mobile phones!
Thomas felt Feng Yu was too radical. He even made a bet with Feng Yu that if the demand for pagers start to decline in 3 years, and mobile phones reced pagers in the next 5 years, he would agree to one condition set by Feng Yu!
After signing the agreement, Thomas returned to Hond immediately. They had no time as the race to set the DVD industry standards had started!