Sony is getting out of PCs. The technology firm announced Thursday it would sell its once-promising Vaio PC brand to a Japanese investment firm.
The firm, Japan Industrial Partners, will set up another company to make and sell the Vaio PC to consumer and business users, but only in Japan for now. The financial terms of the deal were not made public, although some news reports suggest the deal is worth as much as $494 million. Sony will have a 5 percent ownership of the new Vaio company.
Sony will also spin off its TV unit as a wholly owned subsidiary to focus on the 4K Ultra High Definition TV market that could prove promising, although currently 4K sets are very expensive. Sony President and CEO Kazuo Hirai has told news media that "the 4K market segment is expected to grow," with the TV subsidiary better positioned to respond quickly to market conditions. Sony's smartphones are handled by Sony Mobile Communications, and its PlayStation video game consoles by Sony Computer Entertainment, both of which are wholly owned subsidiaries.
The Vaio brand, launched in 1996, attempted to set a new standard for multimedia computers -- Vaio reportedly came from the acronym for Video Audio Integrated Operation -- but the PC unit has been unprofitable in recent years. Several hundred PC-related employees at Sony will move to the new company, and existing PC customers will continue to receive after-care customer services for an unspecified amount of time.
Overall, Sony will reduce its workforce by 5,000 positions by March of next year because of this restructuring, in addition to reducing costs at its headquarters by nearly a third. The company has a total workforce of 145,000.
On the devices front, Sony will focus now on mobile, including tablets as well as smartphones, with its last Vaio PCs being offered this spring. In the announcement of its PC spinoff, Sony said its three core businesses are now imaging, games and mobile. In its most recent financial period, the company reported a "significant increase" in smartphone sales and in operating income from its game division.
According to industry research firm Gartner , Sony's share of the shrinking PC market had been 1.9 percent worldwide last year, decreasing from 2.1 percent in 2012.
Sony's restructuring comes as the company faces an expected loss of about $1.1 billion for the year ending in March. This is the fourth major restructuring the company has undergone since 2005.
Charles King, an analyst with industry research firm Pund-IT, told us he is "not surprised" at Sony's move. He recalled the "Vaio name had a certain cachet in the '90s, but there's been a rise in style and product quality in the last five years that has whittled that away."