Toshiba Corp.’s U.S. electronics unit, headquartered in Irvine, has exited the consumer PC business in a major strategic shift that underscores the changing habits of end-users and lingering challenges facing legacy manufacturers in Japan and across the world.
The move follows big job cuts at Toshiba America Information Systems Inc., which shed 200 workers in March, or roughly 20% of its work force. The unit primarily handles marketing and sales operations in the U.S. for the Tokyo-based conglomerate.
“Moving forward, Toshiba will concentrate on the commercial PC market in the U.S. and globally by developing, manufacturing and selling its Tecra and Portégé brands to corporate and education customers,” a Toshiba spokesperson told the Business Journal.
The company said it plans no further local job cuts.
The dramatic, though not unexpected, abandonment of the consumer PC market was reflected at this year’s CES trade show in Las Vegas, where Toshiba forewent a booth on the showroom floor as it traditionally has had, opting instead to hold smaller meetings off-site.
Mainstay’s Decline
The Irvine unit, which is comprised of five divisions, has been based in Orange County since it was established in 1985, the same year it launched mobile computing products, primarily PCs.
Toshiba’s largest local unit posts annual sales of about $3 billion. Its products include laptops; LCD and LED televisions; Blu-ray players and DVD players; camcorders; imaging products for the security, medical and manufacturing markets; storage products for the automotive, computer and consumer electronics sectors; and telecom equipment and related applications.
The unit had been in the consumer PC business for 21 years, and like most of its competitors, its global sales have diminished for the better part of the past decade as smartphones became ubiquitous and their processing power improved to handle many of the daily tasks and applications PCs had provided.
Last year was a particularly rough year for the industry as global PC sales fell below 300 million units for the first time since the darkest days of the recession in 2008, according to a sobering report by Framingham, Mass.-based market tracker International Data Corp.
Five of the six largest PC makers in the world—Lenovo, HP, Dell, Asus and Acer—posted declines for the year.
PC shipments last year totaled 288.7 million units, down 8% from 2014. Several factors contributed to the slowdown, including the popularity of tablets; weakened global currencies; upheaval in Asian markets; longer PC life cycles; a surge in sales of quality low-priced PCs in 2014; and lackluster adoption of the Windows 10 operating system.
Apple Inc. in Cupertino was the only PC maker in the top six to post a sales gain, up 5.8% to 20.7 million units.
Company Troubles
The latest Toshiba development comes amid some internal tumult at the unit’s local outfit and at its parent.
The Business Journal last month reported that the company plans to put its 26-acre office and industrial campus at Irvine Spectrum up for sale. The two-building property at 9740 Irvine Blvd. employs about 800.
The main Irvine office had housed some employees of Toshiba Corp.’s medical systems operating unit, which makes diagnostic imaging systems and was recently sold to Canon Inc. in a $5.9 billion deal.
Toshiba executives said they’re looking for a new location for existing operations, preferably close to the current campus.
The campus is projected to fetch a sales price of $80 million to $100 million, according to real estate sources familiar with the property.
Longtime company veteran Satoshi Tsunakawa this month was nominated for the top post at Toshiba Corp. following an accounting scandal that prompted the resignation of the former chief executive, chairman and eight board members, leaving the conglomerate financially battered, facing record losses, deep job cuts and other potential divestitures.
