Fujitsu, Toshiba Reportedly Could Merge PC Businesses

One report says that Vaio also could be involved in the deal as vendor consolidation in the struggling PC market continues.

PC consolidation

Japanese tech vendors Toshiba and Fujitsu reportedly are considering merging their struggling PC units in an attempt to create a stronger company in a shrinking market and to save costs by ridding themselves of unprofitable businesses.

Reuters and Asian business daily Nikkei reported that the companies are about to begin negotiating an agreement that could lead to the launch of a new company that would integrate everything from products and staff to global operations, R&D and sales.

Nikkei reported the negotiations would involve a third company, Sony spinoff Vaio, and that the merged company would come under the control of Vaio and retain the Vaio name. However, a Vaio spokesperson told Reuters that the Nikkei report was speculation and that the company was not talking with any other companies about its PC operations.

Citing unnamed sources, Reuters reported that the vendors are in the "early stages of exploring" an agreement and that there was no guarantee that a deal would be reached. Nikkei reported that the three companies will soon begin negotiating specifics of a deal, and that a basic agreement could be in place as early as this month. A combined company could launch in April 2016, the new site said.

The vendors hope to reduce indirect costs and strengthen their positions in the supply chain through a merger, but Nikkei also reported that the plan could be ditched if they decide it would not result in significant benefits. A combination of the three companies could create a vendor that would hold more than 30 percent of the Japanese market, more than the 26.3 percent currently held by leader NEC Lenovo Japan Group.

The reports come at a time of rapid change in the global PC market. Unit shipments have steadily declined since 2011 due in part to the rapid growth in popularity of such mobile devices as smartphones and tablets. IDC analysts in August reported that they expect PC shipments this year will fall 8.7 percent, and that a hoped-for upturn driven by new systems powered by Intel's 14-nanometer "Skylake" chips and running Microsoft's Windows 10 may not happen until 2017.

There's also been a lot of movement among system vendors trying to reduce their reliance on a struggling PC market. Hewlett-Packard on Nov. 1 broke into two companies as it separated its enterprise business and its PC unit. HP Inc. now sells PCs and printers; Hewlett Packard Enterprise focuses on enterprise IT solutions and services.

Sony in 2014 as part of a larger restructuring plan spun out its Vaio PC business to focus more of its efforts and money on mobile devices. Toshiba officials later in the year announced the company was shifting the focus of its PC business from consumers to commercial systems, and that half of the company's revenues in 2016 will come from businesses-to-business products.

Roger Kay, principal analyst with Endpoint Technologies Associates, said a merger is a predictable next step for vendors that have never gained a lot of traction in the worldwide PC space.

"The Japanese [companies] have been out of the game for a long time," Kay told eWEEK, noting that the focus of their efforts had remained primarily on the Japanese market. "They basically never really got beyond being a Japanese company. They were building products by Japanese for Japanese and the market is not big enough for all of them. … The Japanese never really got international."