Sony Exits PC Business, Agrees To Sell Off Vaio Division

After years of struggling to make inroads and profits, Sony has finally left the PC business.

The Japanese technology giant announced Thursday that it agreed to sell its Vaio PC business to Japan Industrial Partners (JIP) for an undisclosed amount. The two companies signed a memorandum of understanding for the proposed sale and will negotiate terms with a targeted completion date of the end of March.

In the announcement, Sony stated that a number of factors, including "drastic changes in the global PC industry," led the company to pursue a sale of the Vaio division. Sony said it will continue to concentrate on its smartphone and tablet products.

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Sony said it will cease all manufacturing, sales and product development following the global launch of Vaio's spring lineup. JIP, meanwhile, will form a new company around the Vaio business that will focus on consumer and corporate PCs in the Japanese market, according to Sony. While Sony said the new company will evaluate "possible further geographic expansion," the sale effectively ends Vaio's presence in North American channel.

Joe Lore, sales director at Sunnytech, a PC reseller based in Woburn, Mass., said Sony never made a strong partner push in North America around Vaio. "The Vaio sale isn't going to hurt the channel because Sony wasn't interested in building a real channel," he said.

Lore said despite the Vaio's overall design quality, demand was low for Sony's PCs. "Sony was probably lowest on our list of vendors. When customers call about PCs, Sony Vaios were always the last brand they asked about, if they even asked about them at all," Lore said. "I think a big issue for Vaio was they were priced too high. Sony was charging Apple prices for PCs, and it wasn't working."

Roger Kay, principal analyst at Endpoint Technology Associates, said Sony struggled with Vaio pricing for years as the division continued to lose money for Sony." Sony was initially a formidable player in the PC business many years ago, but they got out of position on pricing," Kay said. "Vaio PCs aren't bad, but what was the niche? They couldn't compete with Lenovo and ThinkPad in the corporate market, but they were priced too high to compete in the consumer market."

As for the decline of the traditional PC market, Kay said Sony's move may spur other PC manufacturers to take a harder look at their businesses. "This is a watershed moment for the PC business in the sense that Sony is one of the old-line technology giants in this market," he said. "Will there be a continued exodus from the PC business? I think the answer is yes."

PUBLISHED FEB. 6, 2014