Fujitsu to Spin Out PC, Smartphone Divisions

December 28, 2015, 9:40 PM UTC

Japan’s Fujitsu Ltd. intends to spin its personal computer and smartphone businesses into two separate companies by Feb. 1.

The move, approved in a board meeting Dec. 24, makes Fujitsu the latest tech giant to separate its technology services, computer server, and networking equipment division from those selling relatively low-margin commodity products. Most recently, the Hewlett Packard Enterprise and HP Inc. split became official Nov. 1, and IBM started the spinoff trend a decade ago, when it sold its PC division to Lenovo in 2005.

Fujitsu’s decision isn’t a surprise, given that the PC shipments are forecast to slip more than 10% this year. “With the ongoing commoditization of ubiquitous products, mainly of PCs and smart phones, it has become increasingly difficult to achieve differentiation, and competition with emerging global vendors has intensified,” the Fujitsu board said in a statement.

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In early December, several new reports suggested that the company was considering a three-way venture with Toshiba and Vaio, a company created when Sony Electronics spun out its PC business last year. That entity would have created Japan’s largest PC maker, but it would have ranked only seventh worldwide in terms of unit shipments.

Toshiba, which has been rocked by an enormous accounting scandal, confirmed its intention to divest its PC division on Dec. 21, but the details of its “revitalization plan” are still in flux.

Meanwhile, Fujitsu’s plan calls for it to transfer the research, design, manufacturing, sales, and support activities associated with its notebook and desktop computers into a wholly owned subsidiary called Fujitsu Client Computing. It will take a similar approach for its mobile phones, moving related assets to a new company called Fujitsu Connected Technologies.

Fujitsu holds more than 97,000 patents. It was a pioneer in using biometrics such as palm recognition for security authentication and helped establish ruggedized tablet computers in the healthcare sector.

The divestiture will allow Fujitsu to double down on innovation related to its core businesses in technology services, where it ranked among the top five suppliers last year; as well as in computer servers, where it has been losing share to aggressive companies such as China’s Huawei and Inspur.

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