Consumer Electronics

Sony Admits Defeat and Looks to Stop Selling PCs


Kazuo Hirai, Sony’s chief executive, seems to be serious about dumping some of the Japanese giant’s struggling businesses. For years Sony (SNE) has tried to remain relevant in the PC industry as consumers have moved to tablets. The company doesn’t have much to show for its efforts: Sony shipped just 1.9 percent of the world’s PCs in the third quarter of 2013, according to Interactive Data (IDC).

At last, Hirai seems ready to give up the effort. Sony is in talks to sell the local part of its PC business to Japan Industrial Partners, according to Bloomberg News, citing a person with knowledge of the situation, and Sony may also close its computer business in the rest of the world. Sony and Japan Industrial might announce the selloff as early as tomorrow.

Sony isn’t confirming talk of a deal, which Japan’s Nikkei reports would be worth between 40 billion yen and 50 billion yen ($395 million and $494 million). Sony “continues to address various options for the PC business,” it said in a statement that added no further comment.

Still, news that an end might be near for the no-win business of selling Vaio computers is giving a boost to Sony’s stock. The company’s Tokyo-listed shares, which have dropped more than 12 percent since the start of the year, jumped nearly 4.6 percent on Wednesday, Feb. 5.

Ironically, having waited so long to give up on PCs, Sony might now be exiting just as the industry’s long swoon may finally be coming to an end. While PC shipments dropped 10 percent last year, they’re likely to fall a less traumatic 4 percent this year and then post modest growth from 2015 to 2017, according to an IDC forecast.

“A sale of Sony’s PC business may prove to be bad timing,” writes Bloomberg Industries analyst Anand Srinivasan in a note published Feb. 5. “Though unlikely to post strong growth with the advent of smartphones and tablets, the PC market may afford manufacturers such as Hewlett-Packard (HPQ), Dell, and Lenovo (992:HK) stable profitability through enterprise sales requiring upgrades and package offerings with other products.”

Alas for Sony, it’s in no position to benefit from any stabilization of the industry. To take advantage of the limited growth prospects in the PC business, a company needs a strong foundation among corporate buyers. Consumers may be giving up on laptops in favor of tablets and smartphones, but IT managers still like clunky old PCs for company employees. Sony has had some success targeting businesses in Japan but hasn’t been able to break through against HP, Dell, and Lenovo in other parts of the world.

The question now is what company will be willing to buy Sony’s non-Japan PC business? Until last week, Lenovo would have been an obvious possibility. Then Lenovo announced two acquisitions, of IBM’s (IBM) low-end server business and Google’s (GOOG)Motorola Mobility smartphone division, worth a combined $5.2 billion. The world’s largest PC company may not have an appetite for more deals, given investor unease about Lenovo’s moves. “In an industry when most competitors are attempting to exit commodity hardware businesses,” writes Srinivasan, “Lenovo’s purchases expand the company’s exposure to these markets.”

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Einhorn is Asia regional editor in Bloomberg Businessweek’s Hong Kong bureau. Follow him on Twitter @BruceEinhorn.

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