NEC to slim further, move to global market with HP

NEC Corp. remains committed to its restructuring plan and will continue to spin off, merge or integrate business units as it deems necessary, Koji Nishigaki, president and chief executive officer (CEO) of NEC, said in Tokyo on Wednesday.

In addition, the Tokyo company will tighten its alliance with Hewlett-Packard Co. (HP) of Palo Alto, California. Details are due at a news conference expected to be held by NEC’s Nishigaki and HP Chairman and CEO Carly Fiorina in Tokyo on Thursday.

The largest spin-off by NEC, the separation of its loss-making semiconductor division into a separate company called NEC Electronics Corp. in November, represented one of the biggest decisions Nishigaki has had to make, he said in a keynote speech at NEC’s C&C User Forum. [See ” NEC to spin off semiconductor division in November,” July 25.]

NEC separated its chip division because it wanted to strengthen the division’s marketing and fund raising capabilities. As a model, Nishigaki said he followed the marketing strategy of France’s STMicroelectronics NV (ST), where top managers constantly visit clients with updated road maps.

The new president of NEC Electronics has visited customers and Nishigaki says he hopes the company can beat ST at its own game. “Now I expect this company to become a threatening competitor to ST,” he said.

NEC in the last two years also separated its PDP (plasma display panel) division, merged several similar units at group companies and integrated its electronic component division with Tokin Corp., one of its subsidiaries.

“These processes are all about closer relationships with our customers. If we stayed a giant corporation, it would’ve been nothing but an obstacle for customer service,” Nishigaki said. Therefore, NEC hopes to keep slimming down the company, focusing on a few main businesses in network and system engineering, he said.

The alliance with HP is part of NEC’s plans to expand outside Japan. The companies plan to announce the second phase of their tie-up on Thursday.

“We are changing this alliance with HP from a product-based one to a solution-based one. The partnership with HP will become very close,” Nishigaki said.

In May this year, NEC and HP formed a product alliance aiming to create a new product that includes HP server hardware running NEC’s OpenDiosa middleware. The target is high-availability applications on nonmainframe servers for large-scale mission critical systems. Initially targeting customers in Japan and the U.S., the two companies hope to push the products worldwide by the second quarter of next year.