Siemens exiting Fujitsu PC partnership: Mobile phones more promising than PCs?

Fujitsu-Siemens Computers (FSC) may soon lose one of its parent companies.

The Wall Street Journal is reporting that Germany-based Siemens has advised its partner Fujitsu that it wants out of the PC venture. According to the WSJ report, Siemens is looking to end its work in the nine-year-old venture in part because it sees more promise in mobile phones than it does PCs. 

PC sales were noted by the SIA this week as a strong and continuously growing driver for semiconductor sales, but, to be true, FSC isn’t the force behind that. Dell and HP continue to duke it out and reduce pricing as we enter the back to school and coming holiday seasons. Apple continues to gain users for a multitude of reasons, including Vista avoidance, adding to the already intense competition for consumer dollars (and euros and yen and …). And when it comes to shipments, FSC usually falls behind Toshiba’s fifth place ranking.

While competition is nothing new, no doubt, the PC industry is changing, favoring not only smaller price tags but smaller machines. Lenovo, the company that bought IBM’s PC line for $1.75 billion in 2004, announced plans for a $400 Intel Atom-based “netbook” (a low-grade PC that’s the size of a paperback book and focuses on Internet connectivity) this week and Intel, itself, has announced plans for a $350 Classmate netbook.

We’ve also seen many PC industry OEMs and semiconductor industry players exploring the burgeoning MID (mobile Internet device) opportunity. By Forward Concepts definition, for a mobile device to be considered a MID it must serve the gap between high-end smartphones and UMPCs (ultra-portable PCs). Analysts are predicting shipments of MIDs will skyrocket from 305,000 units in 2008 to almost 40 million in 2012, reaching $12 billion in revenue. 

Truth be told, FSC hasn’t kept up with its rivals moves to smaller and cheaper, nor does it have much brand value with the average consumer. So it’s not hard to see why Siemens would exit the venture, especially when you consider it recently took much more drastic action in announcing nearly 17,000 job cuts as it looks to ward itself against the negative economic climate.

But are Siemens beliefs that mobile phones hold more promise than PCs on target or is it just a question of FSC and its Siemens parent not in flow with the changing market?

The WSJ also notes that Fujitsu has a right of first refusal to buy Siemens’s 50% stake in FSC. If Fujitsu isn’t interested in FSC, which saw 2007 revenue at about $10.3 billion, other PC makers could place offers with WSJ pointing to Lenovo as a possibility. Number four by shipments, Lenovo has been aggressively pursuing third-place Acer since its Gateway buy for the spot, but would an FSC buy be a step in the right direction or would too many Lenovo resources be swallowed up for its incorporation?

Voice your opinions below.

–Suzanne Deffree, Managing Editor, News