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    Talks to Merge Toshiba, Vaio, Fujitsu PC Units May Be Falling Apart

    By
    Jeff Burt
    -
    April 14, 2016
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      In February, Japanese system makers Toshiba, Fujitsu and Vaio reportedly were a month away from announcing a joint venture that would combine their respective PC units into a single business that they hoped would be able to better compete with Lenovo, HP Inc., Dell and other top OEMs.

      In March, reports surfaced that the deal would come later, probably around June. Now The Wall Street Journal is reporting that negotiations around merging the PC units are on the verge of collapse, with Japan Industrial Partners—which has a controlling interest in Vaio—walking away from the talks and the remaining two vendors unable to agree which company would assume a majority of the joint venture.

      A breakdown in negotiations would leave the three system makers in the same position they’ve been in for years, essentially falling further behind in an already difficult global PC market in which Japanese companies once had a very strong position. The hope was that a new vendor that combined the PC businesses of the three companies would not only be a more significant player in the global market, but also would enable Toshiba, Vaio and Fujitsu to save money in everything from R&D to supply chains to production.

      The PC market already is difficult enough. Since late 2012, shipments of PCs worldwide have declined sharply due in large part to the rising popularity of other devices, in particular smartphones and tablets. In addition, the strong dollar—and resulting higher prices—and the lack of compelling new products have kept consumers and business users from buying new PCs. OEMs also have been victims of their own success: PC users are finding that the systems they bought three to five years ago are still sufficient for their needs.

      According to analysts with IDC and Gartner, PC shipments worldwide fell between 9.6 percent and 11.3 percent in 2015 over the previous year, and they don’t see things improving until later this year and into 2017. The top vendors—Lenovo, HP and Dell—saw declines in shipments during the year, while Apple and Asus either also had declines or showed slight growth.

      The analysts believe the industry’s downward spiral may slow and possibly turn around later this year as more systems running Microsoft’s Windows 10 and powered by Intel’s latest 14-nanometer “Skylake” processors hit the market and emerging form factors—such as two-in-ones and convertible PCs—grow in popularity. System and component makers are hoping more consumers and business users will want to refresh their PCs, hundreds of millions of which are as old as five years.

      The combination of the PC businesses from Fujitsu, Vaio and Toshiba would not necessary challenge the dominance of Lenovo, HP or Dell, but it would give the three vendors a better chance of competing at the lower end against the likes of Asus and Acer on a more global basis. The downturn in the market has been particularly difficult for Japanese vendors, who Roger Kay, principal analyst with Endpoints Technologies Associates, has said have failed to gain traction outside their own home market.

      The vendors for years focused more on the Japanese market than on global opportunities, and the Japanese market is not large enough to support all three. In addition, they also have to compete with a joint venture that Japanese OEM NEC created with Chinese tech giant Lenovo in 2011. The new company is now the largest vendor selling PCs in the Japanese market.

      A combined PC business also would ease some issues the companies are facing on their own. In particular, Toshiba is still trying to regain its footing after an accounting scandal that has shaken the company. A joint venture also would come after Fujitsu officials in December 2015 announced they were spinning out the company’s struggling PC and smartphone businesses to create two new companies—Fujitsu Client Computing for PCs and Fujitsu Connected Technologies for smartphones.

      According to The Wall Street Journal, Toshiba may feel less pressure to help create a PC joint venture after announcing in March that it is selling its medical-equipment business to Canon for $6.3 billion, a price that gives the company some financial breathing room. The news organization also said that Vaio—which in one scenario would take majority control of the new joint venture—left the negotiations after officials believed little was getting accomplished.

      Avatar
      Jeff Burt
      Jeffrey Burt has been with eWEEK since 2000, covering an array of areas that includes servers, networking, PCs, processors, converged infrastructure, unified communications and the Internet of things.

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