No more VAIOs: Sony sells PC business to JIP, to focus on phones, tablets and TVs
posted by Daniel P. / Feb 06, 2014, 1:58 AM
End of an era, folks, as Sony just announced it is selling the Vaio computer business to Japan Industrial Partners. The beautifully designed VAIOs have been a loss-maker for the company for a while now, including the newer ones, like the thinnest Win 8 tablet, Vaio Tap 11, so Sony decided to get rid of that business.
This comes hot on the heels of an ex-Sony exec revealing how Steve Jobs was once waiting for him at the end of a golf course, and offering Sony to be the only other company besides Apple to offer computers with Mac OS, since Jobs loved Sony designs. Everything was geared towards Windows machines, however, the guy said no, and the rest is history.
On the bright side, Sony getting rid of the PC business is precisely so that the company can focus on smartphones and tablets, as well as on its TV line, so hopefully we will get screen panels with better viewing angles in the next Sony flagships.
We kid, but divesting the Vaio brand is truly the end of an era in PC-land, and a sign of the times. The move comes with the typical restructuring, layoffs, and shuffling of manpower, but the actual price of the deal is not disclosed. Sony's Spring 2014 lineup will be the last VAIOs to come out of the company, and afterwards JIP will only sell the gear in Japan, unless there is demand in other regions.
Sony Announces Plans to Address Reform of PC and TV Businesses
Sony to sell PC business and concentrate mobile business on smartphones and tablets Sony to accelerate shift to high-end models and transition to a more efficient and dynamic structure in the TV business
Sony Corporation ("Sony" or "the Company") today announced significant new measures to address reform of its PC and TV businesses aimed at accelerating the revitalization and growth of its electronics business.
Sony has been aggressively implementing a reform strategy across its electronics business, as originally announced in April 2012. In the imaging, game and mobile businesses that Sony identified as the three core businesses that would drive the growth of its electronics business, Sony has made significant progress in executing this strategy. Sony has launched high value-added products that bring together the best of Sony's technological strengths and introduced new market-leading platforms and business models. At the same time, Sony identified PCs and TVs as businesses for which profitability improvement would be a key priority and implemented various reform measures. The reforms executed within the TV business have significantly enhanced its operational structure and product competitiveness. However, Sony now anticipates its target of returning the TV and PC businesses to profitability will not be achieved within the fiscal year ending March 31, 2014 ("FY13").
As a result of the circumstances described above, Sony is now also taking further significant steps to address reform of the PC and TV businesses, while at the same time moving forward with further optimization and streamlining of its manufacturing, sales and headquarters/indirect functions, and concentrating resources in growth businesses.
Sony and Japan Industrial Partners Inc. ("JIP") today concluded a memorandum of understanding confirming the parties' intent for Sony to sell to JIP Sony's PC business currently operated under the VAIO brand.
Following a comprehensive analysis of factors, including the drastic changes in the global PC industry, Sony's overall business portfolio and strategy, the need for continued support of Sony's valued VAIO customers, and future employment opportunities for personnel involved in the VAIO business, the Company has determined that concentrating its mobile product lineup on smartphones and tablets and transferring its PC business to a new company established by JIP is the optimal solution. Sony and JIP will now proceed with due diligence and negotiate detailed terms and conditions of the business transfer, targeting the conclusion of a definitive agreement by the end of March 2014. Following reevaluation of the product lineup, the new company is expected initially to concentrate on sales of consumer and corporate PCs in the Japanese market and seek to optimize its sales channels and scale of operations, while evaluating possible further geographic expansion.
As a part of the business transfer to JIP, Sony will cease planning, design and development of PC products. Manufacturing and sales will also be discontinued after the Spring 2014 lineup to be launched globally. Even after Sony withdraws from the PC market, Sony customers will continue to receive aftercare customer services. Approximately 250 to 300 Sony Corporation and Sony EMCS Corporation employees involved in PC operations, including planning, design, development, manufacturing and sales, are expected to be hired by the new company established by JIP. Sony will also explore opportunities for other employees to be transferred to other businesses within the Sony Group. For employees of Sony Corporation and Sony EMCS Corporation that are not hired by the new company or transferred within the Sony Group, Sony plans to also offer an early retirement support program to assist their reemployment outside of the Sony Group.
Sony has been engaged in various cost reduction initiatives for the TV business, as outlined in its TV business profitability improvement plan announced in November 2011. These initiatives include enhancing LCD panel-related cost efficiency and rationalizing R&D expenses, while also strengthening product competitiveness and operational efficiency in order to improve marginal profit ratio. Due to these measures, losses from the TV business, which amounted to 147.5 billion yen* in the fiscal year ended March 31, 2012 (FY11), were successfully reduced to 69.6 billion yen in FY12, and are now anticipated to be reduced further, to approximately 25 billion yen in FY13.
*Not including 64.1 billion yen equity in net losses of affiliates from the S-LCD joint venture.
While Sony now anticipates that its target of returning the TV business to profitability will not be achieved within FY13 largely due to unexpected factors such as the slowdown in emerging markets and declining currency rates, the reforms executed within the TV business over the past two years are putting the business on a path to turnaround. In particular, Sony has significantly enhanced product competitiveness and accelerated its shift to high-end models, especially in the area of 4K, where Sony has secured more than 75% market share in Japan (as of the end of December 2013, based on Sony research). Sony has also taken the number one market share in the US for 4K models (during calendar year 2013, based on revenue). TVs continue to play a vital role as the centerpiece of the home viewing experience. Sony aims to leverage the wealth of technological expertise and assets accumulated within this business as key differentiation technologies across its entire product lineup. In light of the TV business' continued importance within Sony's overall strategy, the Company has decided to execute the additional reform measures detailed below, with the aim of establishing a structure capable of delivering stable profit beginning in the fiscal year ending March 31, 2015 ("FY14").
First, Sony will shift its product mix and focus on increasing the proportion of sales from high-end models in FY14. Sony plans to reinforce the company's leading position in the 4K market by strengthening its product lineup while also bolstering its 2K models with wide color range and image-enhancing technologies. In emerging markets, Sony will aim to harness market expansion by developing and launching models tailored to specific local needs. Second, Sony will accelerate and broaden its on-going cost reduction and operational improvement measures, focusing attention across all functions relevant to the TV business, including manufacturing, sales, and headquarters/indirect functions (as outlined below). In addition, to help transform this business into a more efficient and dynamic organization, optimized in size and structure for the current competitive business environment and fully accountable for its operations, Sony has decided to split out the TV business and operate it as a wholly-owned subsidiary. The targeted timeframe for this transition is July 2014. By implementing these measures, Sony is aiming to further enhance its TV business' profit structure and return the business to profitability during FY14.
In view of these strategic decisions about the PC and TV businesses, and the increasingly aggressive process of selection and focus being implemented across Sony's electronics business, the Company plans to optimize the scale of the manufacturing, sales, and headquarters/indirect functions that support these businesses.
In terms of electronics sales companies, Sony plans to identify focused product categories for each specific country and region, rationalize support functions, and proactively implement outsourcing and other efficiency measures with the objective of achieving total cost reductions of approximately 20%** by the fiscal year ending March 31, 2016 ("FY15").
With respect to manufacturing sites, Sony will proceed with the further optimization of manufacturing and other operations.
Sony will also streamline Sony Corporation headquarters and support functions and expects to achieve cost reductions of approximately 30%** by FY15 within these operations.
**Compared to FY13.
Anticipated Costs and Benefits of Headcount Optimization/Restructuring
Due to the implementation of the above measures across Sony's TV and PC businesses, and its manufacturing, sales and headquarters/indirect functions, Sony is anticipating headcount reduction of approximately 5,000 (1,500 in Japan, 3,500 overseas) by the end of FY14.
In order to execute these measures, Sony is allocating an additional 20 billion yen (approximate)*** in restructuring expenses in FY13 and a further 70 billion yen (approximate) in restructuring expenses in FY14. Sony expects these measures to result in annual fixed cost reductions of more than 100 billion yen (approximate) starting in FY15.
***Total restructuring expenses in FY13 are expected to be 70 billion yen (approximate) including 50 billion yen (approximate) originally allocated.
In addition to all of the above measures, Sony will also be accelerating its process of business portfolio realignment, and refining its R&D project selection process across its electronics businesses.
yea but those Ultrabooks are whats called a GIMMICK.
they were Sloooower, many had unexpandable memory, if u dropped it, it (the screen) was over,, and had a Smaller battery. the only reason they "lasted" longer on a charge (many didnt, and still dont) is their brain, or processor is Slooowwweer. it jus cant keep up to normal laptops. if anything, Good looking computers can be called apliences, and computers that are the top of the performance field are TOOLS. im a dude n I Like Tools :D
i NEVER considered a viao kuz i KNOW better when it comes to computers. ppl who by tech for looks over performance jus dont get it i guess. (yes if it lt performs gud AND looks good ill get it, but it still has to work)
I love how people always say a product is "overpriced".
(without knowing the work put into one)
Apple Macbook = worth the money (lol)
Sony Vaio/Pro = overpriced (wat)
Asus Zenbook Infinity = overpriced (:D)
Samsung Ultrabook = overpriced ('-')
Apple does not set the price of the industry!
(a lot of these are nicer than a Macbook, so they can be priced higher)
Well, maybe they can put some of the extra resources into making a few high end WP devices.. Maybe a low end device as well... Either way, Sony could give the Lumia brand some serious competition if they really tried..
I know that many people have an emotional connection with Vaio but from personal experience I found Vaio to be overpriced and disapointing. Comparing my Vaio with the Toshiba that I had earlier I found Toshiba to be a lot better. Saying this while I got a few Sony products... Sony DSLR, PS3's, TV's and other stuff.
it better, for 150 dollars more, you get a capacitive touch screen hybrid tablet/notebook, NFC and 1080p screen. While the only advantage the MB Air has is a longer battery life. All the other specs are a match.
I dont see how its not logically priced?
If they can bring their great experience to tablet division and price them more logically, then it would be a great success.
From now on they must use VAIO brand for their tablets and leave Xperia to phones. Sony must not kill the VAIO name.
If you wanted a laptop, you got Dell, Acer, HP, Lenovo etc., but if you wanted a beautifully designed laptop, you got an Apple or a VAIO. Its sad the only one bundling Windows in the package does not exist anymore...
VAIO, you will be missed...
Sad to see Sony leave the PC market. But they can always buy back if they want to one day. Now when they can focus on smartphones, tv and tablets I expect some truly amazing things to come out. Especially the phones to be top notch. Make a tablet that will be like a PC! Problem solved..
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