Toshiba announced it will be making big changes to its computer division. The firm will increase its focus on the profitable business PC segment and will significantly downsize its consumer division in an effort to raise its bottom line. Full details in the press release below:
Toshiba Corporation today announced that it will accelerate the restructuring of its PC business to focus on the profitable B2B field, and to control volatility in the B2C business by significant downsizing measures, including withdrawal from certain B2C markets. These moves are expected to support the business in securing consistent profit in the future.
In the B2B market, Toshiba will continue to cultivate new customers and businesses. The company will expand its wide product range, from workstations to tablet PCs, along with its diversified business-user sales channels, and enhance solutions by utilizing the diversity of its business partners in the current business.
The company will also move ahead with actively promoting the IoT (Internet of Things). By fully utilizing its differentiating strengths in PC technologies, including BIOS, security, wireless and high density mounting, Toshiba will offer innovative and appealing IoT products and services in such areas as social infrastructure, the cloud, healthcare and home appliances. By deploying IoT which interconnects technologies in various business domains, Toshiba will accelerate building a business model that is not dependent on sales of PC hardware alone but that incorporates development of core technologies to deliver enhanced services and solutions.
These measures are expected to grow B2B sales to over 50% of all sales in FY2016.
In the B2C market, Toshiba will transition from the current business model, which is volatile and over-dependent on sales scale and volume, withdraw from unprofitable markets, and optimize sales bases in low profit countries and regions. Through these measures, the company expects to reduce the number of sales bases around the world from 32 to 13 in FY2014.
Looking to the future, Toshiba will concentrate B2C resources to focus on developed countries, where it can also expect to promote collaboration with the B2B business. The company will further cut procurement and distribution costs by narrowing the number of platforms, optimizing global business processes, and scaling back the PC business head office by locating some of its functions outside Japan, measures that will establish a thoroughgoing asset-light management.
The restructuring announced today 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, and is expected to cut fixed costs by more than 20 billion yen against FY2013.
As a result of measures initiated last year, the PC business reported positive operating income in the first quarter of this fiscal year. However the PC market is expected to see a continuing trend to modest growth rates, and these transformation measures are necessary to support the business in securing consistent profit.