Toshiba Restructures PC Business to Focus on Commercial Systems

By Jeffrey Burt  |  Posted 2014-09-21 Print this article Print

Officials say the moves will make the company more profitable and save expenses, but it also will cost 900 workers their jobs.

Toshiba is shifting the focus of its PC business from the consumer segment to commercial systems, a move that officials said will ensure that more than half of the company's revenues by 2016 will come from its business-to-business products but cost the jobs of more than 900 people in the PC business.

Toshiba officials said the company is putting its money and efforts into the part of the PC space that is growing, and is lessening its exposure to a global consumer market that is still seeing worldwide sales contract as buyers put more of their technology dollars toward new computing devices, particularly tablets. They also said it will lead to more consistent profits.

The strategy will include withdrawing from some consumer markets and reducing the number of sales bases worldwide by more than half, from 32 to 13, officials announced Sept. 18. The company also will reduce the number of consumer platforms, scale back on the PC business's head office by moving some of the jobs outside of Japan, and focus more of its consumer client efforts on developed countries.

The 900 lost jobs will touch on every part of the consumer PC business except for manufacturing and will reduce the headcount by more than 20 percent, Toshiba officials said. They expect the restructuring to save the company about $186 million in reduced fixed costs.

As part of the initiative, Toshiba officials said the company will continue its efforts to find new customers and businesses, expand its business product portfolio—not only PCs, but also workstations and tablets—and grow its business sales channels.

Toshiba also will push more aggressively into the burgeoning Internet of things (IoT), leveraging its capabilities in such areas as BIOS, security, wireless technology and high-density systems to create products and services aimed at such segments as health care, home appliances, cloud computing environments and social infrastructures. The efforts in IoT will not only make Toshiba a player in a market that IDC analysts have said will grow to $7.1 trillion by 2020, but also will reduce the company's reliance on the volatile PC hardware market and use the development of core technologies to expand in new business segments.

The global PC market has seen sales steadily decline since 2011, as consumers now have a broader range of computing devices—including smartphones and tablets—to choose from. Analysts have said those devices are being used more for such functions as content creation and Web surfing, but that for content creation, PCs are still the best option. However, users are extending the life of their PCs by a year or two, which is contributing to the slower sales.

But in recent quarters, while the consumer PC space has continued to drag, buying in the commercial client segment has picked up, driven by such factors as Microsoft's decision to end support of the Windows XP OS in April, new form factors such as two-in-one systems—which can be used as both a traditional notebook and a tablet—and corporations refreshing their aging fleet of PCs. Analysts such as Bob O'Donnell at TECHnalysis Research expect annual commercial PC shipments to stay consistent over the next several years, making it an attractive target for the myriad tech companies that do business in the PC market.

Toshiba is not the only tech vendor to shift its focus from consumer to commercial PCs. For example, chip maker Advanced Micro Devices, which traditionally has supplied silicon to the consumer segment, is making a concentrated push into business clients with accelerated processing units (APUs) that are sold under the Pro A-Series brand, which launched in June.

Toshiba officials did not elaborate on what consumer PC lineups would be impacted by the restructuring. Currently the company sells systems under the Kira, Satellite and Portege brands.



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