Fujitsu Spins Off Smartphone and PC Divisions
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 has 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 1, 2016, Fujitsu’s PC business will be officially called Fujitsu Client Computing Limited, whereas the smartphone subsidiary will be called Fujitsu Connected Technologies Limited. Both newly formed companies will issue 8,000 ordinary shares, which will belong to Fujitsu. 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.
As with most company splits, Fujitsu is also announcing the revenue each new subsidiary would have generated had it been a separate entity beforehand. Fujitsu Client Computing Limited would have had revenue of ¥303.3 billion ($2.5178 billion) in FY2015 (ending in March 2015), which indicates that would be a a big supplier of PCs and tablets. Total assets that the new subsidiary will get from its parent are worth around ¥26.1 billion ($216.66 million). Earnings of Fujitsu Connected Technologies in FY2015 totaled ¥157.1 billion ($1.304 billion), and the subsidiary's assets will worth ¥11.9 billion ($98.787 million).
Fujitsu has said that desktop and notebook PCs, as well as smartphone products, are facing ongoing commoditization, 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”. Besides this, the plan will help to “clarify management accountability” should aid Fujitsu to enable management decisions quicker than before, and the goal being to increase efficiency.
While certain companies can operate more efficiently when independent rather than as parts of huge conglomerates like Fujitsu, 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.). At present, one of the plus points Fujitsu likes to promote are their in-house unique technologies - under the new system, implementing these might increase the red tape and financial agreements between the R&D side as the projection side. However, 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.
It is noteworthy that while Japanese companies like Sony and Fujitsu are splitting their PC and smartphone businesses, whereas U.S.-based Apple, Microsoft and Google view rich ecosystems of devices as their competitive advantages. Spinning off or selling commoditizing businesses units is not something unusual for Fujitsu. The company used to produce its own hard disk drives, but sold the operations to Toshiba back in 2009. Fujitsu also sold its microcontroller and analog business to Spansion in 2013.
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Price Check: Intel's Core i7-6700K CPU In Short Supply
Officially, the recommended customer price of one boxed Intel Core i7-6700K processor (four cores with Hyper-Threading, 4.0GHz/4.20GHz, 8MB cache, Intel HD Graphics 530 core, unlocked multiplier) is $350, according to Intel’s ARK. The recommended price of the Core i5-6600K chip (four cores, 3.50GHz/3.90GHz, 6MB cache, Intel HD Graphics 530 core, unlocked multiplier) is $243. However, at the moment it is not easy to buy thse CPUs without overpaying in the U.S. In fact, not all retailers even have the chips in stock, something that rarely happens to products released over three months ago.
For their part, Amazon does not currently have any Intel Core i7-6700Ks directly in stock. Instead the only 6700Ks available via Amazon are through their third-party marketplace sellers, starting at $499.99, which is nearly $150 higher than the recommended customer price. According to CamelCamelCamel, a price-tracker that monitors Amazon and its partners, the price of the chip began to increase in early October. Meanwhile Newegg sells the Core i7-6700K for $419.99, a smaller increase than Amazon but still higher than both Intel's original price recommendation and the price Newegg was charging at launch. Looking at Newegg's pricing history over at PriceZombie, it looks like Newegg increased the price of the chip beginning in November.
As for Intel’s Core i5-6600K, it's available at Amazon and Newegg for $289.99 and $279.99, respectively. The price of the chip has been fluctuating in both stores and at present the product costs slightly above its $243 MSRP.
Given these prices, it is noteworthy (and somewhat surprising) that Intel’s Core i7-5820K processor (six cores with Hyper-Threading, 3.30GHz/3.60GHz, 15MB cache, unlocked multiplier) is down to $389.99 these days, which makes it cheaper than the Skylake 6700K. The fact that the 5820K has to be paired with more expensive LGA2011-3 motherboards as well as quad-channel memory kits ultimately drives up the price of the total kit compared to a Skylake system, but that a still very performant hex-core CPU (ed: with solder!) is cheaper than Intel's flagship quad-core is something we rarely see. If nothing else it's a sign of just how unbounded quad-core pricing has become, though at the same time it thankfully provides a reasonable alternative to the 6700K and some counter-pressure to keep i7 prices from getting even higher.
When we asked Intel about what was going on with Skylake prices, they said in an emailed statement that they had not increased the MSRP of the 6600K/6700K - in other words, they had not increased prices on their end. Instead they suggested that select stores might have increased their prices because of strong demand for such chips, which is a pattern we've seen before with video cards and other components.
It goes without saying that retailers do not usually increase prices without a reason, as the intense competition among the online PC component retailers makes it difficult to hold too large of a margin under normal circumstances. All of this in turn points to an insufficient supply of microprocessors, with demand significantly exceeding supply. In fact, according to Nowinstock, which monitors availability of various products, many well-known U.S.-based stores did not have high-end Intel Skylake CPUs in their stocks at press time.
Intel has previously mentioned that the costs of producing CPUs on their 14nm manufacturing process were higher than the costs of 22nm CPUs due to initially lower 14nm yields. However, the company has never revealed whether yields are a reason why higher-end Skylake-S processors are currently in short supply, or if the problem lies elsewhere in the production chain. With any luck we may find out a bit more once Intel hosts their next earnings conference call in January.
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