From: barrett@iastate.edu (Marc N. Barrett)
Subject: Re: IBM, what's wrong?
Organization: Iowa State University, Ames, IA
Date: Fri, 18 Dec 1992 07:06:44 GMT

In article <1992Dec17.230739.15447@athena.mit.edu> fihsu@athena.mit.edu (Hsu I-wei) writes:
>Sorry.. I know this doesn't strictly belong in c.s.a.a. (but hey, surely more
>relavant than the threads about legalizing drugs, firearms, etc. ;) Are IBM
>and Dec history? I just read that IBM's stock fell to an 11-year low (a $6
>billion loss in market value) and that it's probably going to drop even more
>in the coming weeks. Not only massive job cuts, but with IBM cutting 1 billion
>in R&D in addition.. how bad of shape is IBM in exactly? Are investors
>overreacting just a bit? What shocked me the most was reading that IBM's
>market value at $29.77 billion is no longer that much bigger than Microsoft's
>at $23.68 billion. Oh..  more importantly, are IBM's troubles going to have
>an impact on the development of the PowerPC?  (sorry if this is sounding like
>a Marc Barrett style article) Also, is there a newsgroup where what I've just
>mentioned is being discussed?
>
>To bring this a little closer to the tradition of .advocacy..  so MARC BARRETT,
>if you read something like this about a company named Commodore, I'd expect to
>see a 10 page diatribe about how C= is doomed. But since this is IBM, which
>you have been so fond of recently (praising their ValuePoint computers and
>laser printers) I'll be surprised if I don't hear a zealous defense of IBM
>on your part.

   OK, I might as well fulfill your prophecy.

   IBM is a victim of their own success.  IBM has been around for more than a
century.  In the past 100 years, their revenues have skyrocketed.  It got to
the point where, in 1985, IBM's total revenues exceed the Gross National 
Product of East Germany.  At that time, if IBM had been converted into a 
nation, it would have been in the top 20 nations in the world in GNP.

   The real problem for IBM was: where do you go from up?  When you are
already one of the biggest companies in the world, how do you improve?

   IBM is doing some things right, but a company so successful is bound to
accumulate a big corporate beuracracy.  One thing that IBM is doing is
pulling a "GM" by spinning offwholly-owned-but-independent subsidiaries.
GM did this with the Saturn Corp., and Saturns are selling like mad.  IBM
did it with Lexmark, and Lexmark has HP running scared in the very printer
technologies that HP used to control with a tight grip.  For instance,
Lexmark produces color PostScript inkjet printers that are faster, have
higher resolutions, and lower prices than any similar color inkjet printers
that HP produces.

   IBM is bound to rebound.  The losses that IBM is experiencing can be blamed
partly on the recession.  Trimming the company of payroll fat will allow the
company to be more competitive.  IBM has been spending too much on R&D for
them to be out forever.  IBM has a lock on many key technologies, such as high-
temperature superconductors and the primitive technologies of moving around
individual atoms, that could pay off BIG someday.  Other technologies are
paying off even as IBM takes losses.

   BTW, IBM is well balanced to weather the world-wide recession.  Unlike
Commodore, IBM did not put all of its eggs in the European basket.  IBM has
ties in both the U.S. and Europe, and other countries as well.  As the U.S.
comes out of its recession, IBM is in a great position to take advantage of
the renewed growth.  Commodore is heavily entrenched in Europe, has almost
no market over here, and Europe is showing no signs of economic recovery yet.

---
| Marc Barrett -MB-  |  email: barrett@iastate.edu
--------------------------------------------------
Newsgroups: comp.sys.amiga.advocacy