The rumors were true. After just a day of speculation concerning the fate of its PC business Sony announced that it’d entered into a formal agreement to sell Sony VAIO to a Japanese investment firm. Since rumors of the potential sale first hit the internet yesterday, computing industry insiders have clamored over themselves to list reasons why getting out of the PC business is good move for Sony.
Most would agree that the PC business just found itself lost in a sea of Sony’s other businesses. Others have pointed to the decline in sales that most PC makers are seeing. None of that’s up for debate.
What’s more interesting is that most seem to think that Sony’s leaving the PC industry is bad for Microsoft, that this somehow reveals just how weak PC sales are expected to get as tablets and smartphones change the way casual users get tasks done. That’s certainly one aspect, but there’s another way to look at this news: Sony’s selling its PC business is actually great for Microsoft.
That’s because when most users think of PCs, they think of mostly low-end devices that get the job done. They think of products from Acer and HP that exist only to provide an entry-level point for users who need something portable with a mouse and keyboard. What they mostly fail to realize is that Sony VAIO almost exclusively dealt in high-end PCs. These PCs usually cost upwards of $800. They were meant to be both tools and art. In effect, Sony meant for VAIO to be what the Mac is for Apple’s ecosystem.
Ironically, that’s exactly what Microsoft is hoping to do with its Surface line of PCs and tablets. That much isn’t speculation. It’s not something the company has just hinted at. That the Surface is intended to allow Microsoft to reel in PC users looking to pay a premium has been something the company is very open about. Former Microsoft CEO Steve Ballmer said exactly that during an exit interview with ZDNet.
“[Ballmer] knew that it would not be the simplest discussion to have with our partners, who(m) I wanted to stay our partners.” Ballmer decided to go through with the project because he felt that Apple’s dominance in the high-end computing space left Microsoft vulnerable. It was Microsoft’s belief that its hardware partners were having a hard time “investing in and competing with the higher-end brand.”
Today’s developments would seem to validate Microsoft’s original arguments for the Surface’s existence, that by offering its own high-end PCs to users it’s better able to guarantee a decent experience for users who are willing to pay for it. Sony’s financial health has been in question for years and reports indicate that the VAIO PC business simply wasn’t making money at the time it was sold.
To be fair, Sony’s only selling VAIO. However, the plan is to have its new owner focus on moving PCs in Japan first. All indications are that the new company won’t have new products to offer in the United States in the foreseeable future.
With VAIO gone, Microsoft presumably has the opportunity to grab even more market share in the high-end PC space. Thanks to its other operations, Microsoft can afford to bankroll high-end PC operations without making a profit in the short-term.
In fact, Sony selling its PC business isn’t just good for Microsoft’s efforts to reinvent itself, it’s great for Microsoft’s efforts to reinvent itself . The company’s decision to produce Surface hardware and its predictions about how the market is moving were all just validated in one day.