Hitachi to Exit Home PC Business, Refocus on Servers

While Japanese consumers have associated the Hitachi name with personal computers since 1978, recently it was more for historical reasons than practical ones. The company barely shipped half a million units worldwide between March 2006 and March 2007, with only 130,000 of them ending up in homes, according to Asahi Shimbun. Today, Hitachi decided to close a chapter of its history, discontinuing production of its Prius PC line apparently effective immediately.

The exit may not make much of a ripple in the consumer PC business, but it could later have an impact in servers. Hitachi assembled its Prius line at its principal Toyokawa factory in Aichi prefecture. That's one of the crown jewels in Hitachi's manufacturing war chest, having been the place where it launched its 1997 entry into the server business, forging a pact with HP, Microsoft, and Intel that extends to this day.

While early Asian press reports said Hitachi was preparing to shut it down, later statements from Hitachi officials made clear it was only suspending production there, probably for retooling, and that the company has no plans for layoffs. (While one report said engineers will be reassigned to producing flat-panel displays there, Hitachi doesn't actually produce flat-panel displays in Toyokawa.)

HP has been helping Hitachi out recently by manufacturing business PCs under the Hitachi brand for sale in Japan; despite reports, HP will probably continue to do so for now. Casting off its failed PC line and letting HP pick up the slack could enable Hitachi to refocus its commitment to the Enterprise Server Division. Documents recently filed with the US Securities and Exchange Commission show Hitachi to have scattered its server production among multiple facilities, Toyokawa among them.

While Hitachi's Data Systems business remains healthy, with its TagmaStore storage networks holding on to as much as 38% of the market by some estimates, threatening EMC Symmetrix' hold on power, Hitachi's Enterprise Server business appears to be struggling to find its footing again. Between the two flagging divisions, Hitachi needed to be able to concentrate on one, and the server business may just be the most potentially profitable one.