From: robert@geoblue.gcn.uoknor.edu (Robert Lindsay)
Subject: Re: IBM, what's wrong?
Originator: usenet@kittyhawk.ecn.uoknor.edu
Date: Fri, 18 Dec 1992 21:28:38 GMT
Organization: Geosciences Computing Network, University of Oklahoma, Norman, OK

In article <BzG13A.2sq@news.iastate.edu> barrett@iastate.edu (Marc N. Barrett) writes:
>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.

All very nice, but what's you point? (As usual)

>   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?

You might have a vision for the future. The mid-80's IBM sure as hell didn't.

>   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.

I'm sure HP will sit on their hands and let IBM take the printer market. A 
reason that IBM has been doing this (according to a ex-IBM executive I know)
is that this way at least their is some accountablity in the system.

>   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.

This is all very nice, but the 60,000 ex-IBM employee's aren't thrilled to be
known as "fat". And from what I've heard, the number will reach 100,000 
before it's through. And just because you invent something, doesnt mean you
make money off it. Do the words "Xerox PARC" ring a bell? IBM is in big trouble.
Big IBM style iron is doomed. Don't believe me? I have a freind working at 
American Express. They are looking at replacing their big iron with multiprocessor
workstations. It's not going to happen this year, or next, but it will happen.
IBM is in a real tough spot. Over the next 10 years they are looking at their
core business being wiped out. Nice little thing like printers and RS/6000's
aren't going to cover it all. Remeber IBM once had 90% of the PC market. Now
they have 7%.

Don't get me wrong, I love my RS/6000, but IBM is in big trouble.

>   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
>--------------------------------------------------


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