Personal computer business nowadays is a tough thing that does not bring really healthy profit margins as back in the days. Therefore, it is not surprising that some of the players decide to leave the market or reorg their PC business units to ensure positive financial results. Earlier this year Sony Corp. quit the PC business completely and on Thursday Toshiba Corp. announced plans to restructure its PC unit.
In a bid to make sure that its PC unit is profitable going forward, Toshiba will focus on business-to-business (B2B) sales. The company plans to expand the range of corporate personal computers, tablets and workstations, which will help it to be more competitive against companies like Hewlett-Packard, Lenovo, Dell and others. These measures are expected to grow B2B sales to over 50% of all sales in FY2016.
The current business model of Toshiba’s consumer PC unit (B2C, business-to-consumer sales) calls the company to expand market share and forces it to focus on sales scale and volume. The company intends to transit from the current B2C model to a new one, which will focus on higher-end business-like systems designed for developed markets. As a result, the company will withdraw from unprofitable markets, and optimize sales bases in low profit countries and regions.
In order to further cut-down its costs, Toshiba plans to reduce the amount of platforms it offers to customers, which means that the product lineup will get narrower, which is not necessarily a bad thing.
Finally, Toshiba will optimize its business processes and will scale back the PC business head office by locating some of its functions outside Japan.
The restructuring announced on Thursday will reduce the PC business’s global workforce by about 900 employees within this fiscal year, more than 20% of the PC business headcount excluding manufacturing.
Discuss on our Facebook page, HERE.
KitGuru Says: While Toshiba has a lot of competitive products in its PC lineup, in many cases it concentrated on offering the cheapest solutions possible in order to gain market share. Quite naturally, the company lost money. However, instead of withdrawing from low price bands and concentrating on higher-end models (like Apple does with its Macs), Toshiba wants to focus on B2B sales first and try to offer similar business-like PCs to consumers. While B2B type of operations ensures stability and profitability, it contradicts the BYOD (bring your own device) trend. At the end, if Toshiba’s PCs are not loved by consumers, the company’s shipments will inevitably shrink.