Fujitsu announced that it would spin off its personal computer and smartphone operations into separate wholly-owned subsidiaries. Fujitsu will continue to own the aforementioned business entities, but wants management of the new companies to be fully responsible for their business results. While the move may make sense from financial point of view, it has the potential to be difficult for each business unit to build a unified brand once they are separated.
Throughout Fujitsu’s 80-year history, the firm (like many others) has invested tens of billions in research and development of new technologies and continues to be a major R&D powerhouse. Fujitsu produced Japan’s first mainframe computer in 1954 and subsequently became one of the largest makers of personal computers, together with Siemens.
The company remains one of the globe’s biggest IT companies by revenue, but as the IT business changes, Fujitsu is transforming like many others. Today, the most important parts of the company’s business are IT services, technology solutions, IT consulting and telecommunications. Personal devices, such as smartphones, PCs and others, remain an important part of Fujitsu’s operations, but at this point in time the company believes that it makes sense to spin them off.
Starting from February 1st, Fujitsu’s PC business will be officially called Fujitsu Client Computing Limited, whereas the smartphone subsidiary will be called Fujitsu Connected Technologies Limited. Both subsidiaries will receive the assets, liabilities, contractual status, and other rights and obligations concerned with their businesses. Fujitsu will formally invest ¥400 million ($33.206 million) into each of the newly established units.
Fujitsu has said that desktop and notebook PCs, as well as smartphone products, are facing ongoing commoditisation, which makes it increasingly hard to differentiate own brand products and compete against global manufacturers. The company indicated that splitting PC and smartphone units from the parent would create two integrated systems covering all aspects of research, development, design, manufacturing, sales, planning, and after-sales services.
It is also clear that Fujitsu Client Computing and Fujitsu Connected Technologies will be considerably smaller than their key rivals on the PC and smartphone markets (e.g., Apple, Dell, HP, Samsung, etc.). Also, once Fujitsu’s PC and mobile subsidiaries are independent, it will be easier for the parent company to find new partners, establish joint ventures or simply sell the subsidiaries should the need arise.
Written by: Ajith Ram
