Philips retools ultrasound marketing, will sell SD 800 only in package deals

February 4, 1998

Restructuring applies to North American marketPhilips Medical Systems has changed its sales approach to the North American ultrasound market after years of trying to build a position in the modality. The Dutch vendor will continue selling its SD

Restructuring applies to North American market

Philips Medical Systems has changed its sales approach to the North American ultrasound market after years of trying to build a position in the modality. The Dutch vendor will continue selling its SD 800 Plus scanner in North America, but only as part of multimodality packages or when otherwise required by customers. The mid-tier system will not be marketed alone in the region.

"With respect to North America, we have said by the first of January this year (1998) we will not be involved in actively selling this unit anymore, but in those cases where customers require us to deliver ultrasound, either in package deals or as isolated deals, we will offer them SD 800," said Martin van Herk, director of the program management center for CT, MR, ultrasound, and integrated clinical solutions in Eindhoven, the Netherlands.

SD 800 Plus is manufactured by Hewlett-Packard as part of a joint venture begun in 1992 between HP and Philips (SCAN 11/18/92). Philips had hoped the relationship would provide the company with a less expensive way to build its ultrasound position than if it continued ultrasound R&D in-house. Originally, the agreement was expected by many in the industry to give each company a technological boost in its primary market, HP in cardiology and Philips in radiology.

SD 800 was rolled out at the 1994 Radiological Society of North America meeting as a mid-range scanner that offered a high level of technical performance (SCAN 12/14/94). The product seemed to revitalize Philips' presence in ultrasound, which had been sullied by such under-performers as the Platinum, Sterling, and P700 products of the late 1980s and early 1990s. Philips sold several hundred units in 1996, but the system never achieved more than a single-digit market share for the company.

Despite the change in marketing strategy, HP will continue to offer upgrades for the installed base of SD 800 users as well as for new customers, as specified under the relationship between the companies.

"They (HP) have the contractual obligation to do so, and that obligation, of course, enables us to tell customers who buy a system that they will be fully supported by both companies, the original supplier (HP), as well as by Philips Medical Systems," van Herk said.

Philips plans to continue actively marketing SD 800 Plus through standard channels in international markets, and has appropriate arrangements in place with HP to ensure deliveries of the system, according to van Herk.

In the months ahead, owners can look forward to a new upgrade, Release 2.1, which will include a transesophageal echocardiography probe and several other, as yet undisclosed, developments, according to John Steidley, director of clinical support for Philips Medical Systems North America, which is based in Shelton, CT. The new enhancements will complement last spring's release, the Expander package, which provided improvements in gray-scale, color, and angio imaging modes.

HP is not interested in incorporating SD 800 Plus into its own line of products, according to David Kolstad, manager of product marketing for general imaging at HP, of Andover, MA. The company already sells ImagePoint, a mid-tier radiology scanner. HP may, however, be considering ways to boost the capability of its product line in radiology.

HP opened a "technology corner" in its booth at last year's RSNA exhibit floor to test the interest of radiologists in technologies currently available on its high-end cardiac system, Sonos 5500. Kolstad reiterated the company's interest in multispecialty systems, such as ImagePoint, which offers radiology and cardiac capabilities. He cautiously avoided any comment that might indicate HP is planning to enter the high-end ultrasound market in the U.S.

"I'm hesitant to disclose too much about the direction we want to take because, to some extent, not laying it all out helps us in terms of dealing with our competitors," Kolstad said.