VAIO Con Dios: Sony Exits PC Market

VAIO Con Dios: Sony Exits PC Market

How the mighty have fallen

In a bid to overhaul its consumer electronics offerings, Sony announced today that it will sell off its ailing PC business, split off its TV business, and cut 5,000 jobs. The news came as part of a revised financial disclosure in which Sony revealed that it now expects to post a loss of over $1 billion for its most recent fiscal year.

"Sony is now taking significant steps to address reform of the PC and TV businesses," a statement from the firm notes. "Sony [previously] identified the imaging, game, and mobile businesses as the three core businesses that would drive the growth of its electronics business."

That leaves out PCs and TVs, of course.

Related: "Sony Sold More Than 4 Millions PlayStation 4s in 2013"

Leaving the PC business was an "agonizing decision," Sony CEO Kazuo Hirai said. "We stirred up the PC market."

Sony's VAIO line of PCs will be sold to Japan Industrial Partners (JIP), which will set up a new company—of which Sony will own 10 percent—to sell the devices going forward. "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 says. "As a part of the business transfer to JIP, Sony will cease planning, design, and development of PC products."

The sale of the PC business—which controls less than 2 percent of the worldwide PC market—is expected to conclude by the end of March, and the new firm will sell PCs primarily to the Japanese market. Sony plans to continue to support VAIO customers for an unspecified time period, however.

Exiting PCs isn't a cure-all. Sony's smartphone and tablet businesses aren't big successes either, and Sony just reduced its expected smartphone sales for the year from 42 million units to 40 million units. That said, its flagship Xperia phones have been generally well-received and differentiate from the competition with waterproof shells and Sony's angular, black styling. (Sony is rumored to soon launch a Windows Phone handset, as well.)

As for the TV business, Sony noted that it has undergone "various cost-reduction initiatives" since April 2012, and though the business will not be profitable in this fiscal year as expected, its losses have decreased dramatically. "The reforms executed within the TV business over the past two years are putting the business on a path to turnaround," Sony noted. "In light of the TV business's continued importance within Sony's overall strategy, the Company has ... decided to split out the TV business and operate it as a wholly owned subsidiary."

The spin-off approach is somewhat controversial: Sony previously spun off its gaming and mobile phone businesses, and each has undergone difficult financial periods. But as a separate business, Sony TV can move more quickly to address changing market needs.

Sony expects cost savings of almost $1 billion by March 2015 related to the changes noted above and the 5,000 job cuts. Many of those cuts will come from Sony's PC and TV businesses, with 1,500 of them coming within Japan and 3,500 internationally.

Related: "Is Sony Edging Ahead of Microsoft in Next-Gen Console War?"

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