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Sharp has a better shot at PC reboot than Toshiba
SHARP should be able to reboot PCs better than Toshiba could.
The US$13 billion Japanese company is buying control of its rival's personal computer business for just four billion yen (S$48.6 million). While Toshiba was an industry pioneer, the last thing it needs now is to keep fighting in what has become a cut-throat, scale-dependent and low-growth market.
It is a humbling outcome. Toshiba introduced an early laptop in 1985, and at its peak in 2007 sold one in 10 of all portable PCs worldwide. As with televisions and handsets, though, the industry has become competitive and commoditised. Growth tailed off, thanks partly to the rise of the smartphone, with Gartner forecasting PC unit sales will rise just one per cent next year.
Former rivals such as Sony have already called it a day.
Meanwhile, a broader crisis at Toshiba meant little attention or resources for peripheral operations. The main subsidiary that Sharp is buying lost 8.2 billion yen on sales of 147 billion last year, although Toshiba has previously reported slightly different figures for the wider business.
This removes a distraction for new chairman and chief executive Nobuaki Kurumatani. He is trying to help Toshiba bounce back from an accounting scandal, a US bankruptcy, and the fire sale of a prized memory unit. That means revamping core businesses such as energy generation and public infrastructure, not tinkering with side bets.
Stepping into the fray makes a bit more sense for Sharp. It is controlled nowadays by Taiwanese tycoon Terry Gou, in part through his contract manufacturing giant Foxconn, or Hon Hai Precision Industry. Margins on branded laptops may not be great, but they could beat those from churning out devices on behalf of Apple and others. Foxconn could also help the PC business cut costs.
There are few instances, however, of successful comebacks in consumer electronics. And this business is miniscule compared to HP, Lenovo or Dell, which makes competitive pricing hard. PCs no longer computed for Toshiba; they might not add up for Sharp either. REUTERS
- The author is a Reuters Breakingviews columnist. The opinions expressed are his own.