Close to heels of HCL closing down their personal computer manufacturing business, Wipro also announced yesterday that it will discontinue manufacturing of Wipro branded desktops, laptops and servers.
Wipro PC manufacturing business started in 1982, even before they got into IT services and software business. The 31 year old PC business was still profitable for Wipro, but it was increasingly becoming difficult for them to bring differentiation from other brands. The PC business is become highly commoditized, and with Smartphones and tablets ruling the roost now, home computers were pretty much going out of favour.
In a BSE filing, the company said. “After evaluating the changing market scenario and customer needs, it has been decided to strengthen its position as s system integrator and increase its focus on It solutions and services. As a consequence, the company will discontinue manufacturing of Wipro branded desktops, laptops and servers.”
The company statement also said that Wipro will still be present in the PC market by providing suitable brands as a part of its solution offerings in large integrated deals. Also, even after shutting down the PC business, Wipro will fulfill its warranty and AMC obligations as per the terms of existing contracts with their customers.
The employees affected due to this closure will be redeployed elsewhere in other divisions of the company.
Our Take
Wipro’s PC business closure has exactly the same reasons why HCL chose to shut their business as well. The competition from foreign computer brands is very high and they are unable to sustain due to rupee depreciation, which plays a very important role as nearly 90 percent of the components inside the computers are imported.
Secondly, like Wipro statement said, they did not see their PC business helping them with their other software and services business. With wafer thin margins, it was obvious that PC business was on downhill in the long run.
By closing their PC business, Wipro can now increase their focus on other businesses which have much better future.
