Lenovo, Fujitsu Confirm Talks Regarding PC Tie-Up

The two companies are negotiating a "strategic cooperation" to create a Fujitsu-branded client business to better compete in the PC market.

Lenovo PCs

Officials with Lenovo and Fujitsu confirmed that they are in talks regarding the future of Fujitsu's PC business, but what the result of those negotiations will be remains unclear.

The companies said in a joint statement that Lenovo, Fujitsu and Fujitsu Client Computing—the subsidiary created by Fujitsu in February to house the PC business—that they are considering a "strategic cooperation" in the areas of PC research, development, design and manufacturing. Details of what the cooperation will be are under discussion, they said.

They did say that the end result will include Fujitsu's keeping its brand on PCs. According to a Reuters report, the alliance with Lenovo "is aimed at strengthening our brand and business," Fujitsu President Tatsuya Tanaka said during a press briefing in Tokyo after the company released its latest quarterly financial report.

The news comes after reports earlier this month that Lenovo, the world's top PC vendor, was in negotiations to buy Fujitsu's client business to bolster its position in the struggling global PC market while getting the client unit off Fujitsu's books. However, it remains to be seen what the final strategy between the two companies looks like.

Bob O'Donnell, principal analyst with Techalysis Research, told eWEEK a deal with Fujitsu could be a boon for Lenovo. Fujitsu at one point was a top PC maker, but in recent years its market share has shrunk significantly. However, "the Fujitsu brand of PCs has a small but strong niche market with a dedicated set of customers," O'Donnell said.

Despite its relatively small size, Fujitsu's PC business—which includes both PCs and thin clients—has been able to develop a range of interesting form factors, including two-in-ones, and has strong customer relationships in such areas as education and public safety. In addition, the company still has a significant presence in markets in both the United States and Europe, where at one point it was part of the Siemens Fujitsu Computers, he said.

The idea of keeping the Fujitsu brand going would be a smart decision, given the dedicated number of customers it still has, O'Donnell said.

"I don't see any downside" to a pairing of the two companies, he said.

The global PC market has been contracting for more than four years as consumers and business users have turned their attention and tech dollars to such devices as smartphones, tablets and phablets. The slowdown has impacted OEMs and component makers and had led to a consolidation in the space. Lenovo continues to hold a slight edge in PC shipments over HP Inc., according to third-quarter market numbers from IDC and Gartner.

Lenovo has been looking to drive consolidation in the market. The company in July announced it was buying most of NEC's stake in a joint PC venture the two companies created five years ago to grab more of the Japanese market. Lenovo officials said they were spending $195 million to buy 44 percent of NEC's share of Lenovo NEC Holdings, which will give the Chinese company 95 percent of the joint venture.

Some earlier reports have speculated that a deal between Lenovo and Fujitsu could result in a situation similar to what Lenovo has with NEC.

Fujitsu officials for several years have been trying to figure out what to do with the struggling PC business. In February, Fujitsu spun out the PC and smartphone units into separate businesses, including Fujitsu Client Computing. In addition, Fujitsu reportedly was in negotiations with fellow Japanese PC makers Toshiba and Viao—which was created when Sony spun out its PC business—to create a joint venture that would merge all their PC businesses into a single company that could better compete with the likes of Lenovo, Acer and Asus. However, those talks reportedly fell through several months later.

According to Lenovo and Fujitsu officials, a strategic cooperation between the companies would combine Fujitsu's global sales, customer support, R&D and manufacturing capabilities with Lenovo's operations to create a more competitive Fujitsu PC brand. They would continue a Fujitsu-branded PC portfolio, they said.

They are continuing negotiations and talking with the Development Bank of Japan regarding financial and strategic support.