Faced with the accusation that Olivetti Personal Computers floundered because it was a little on the conservative side, chief executive Bernhard Auer smiled and asked: ?What risks would you like us to take then? The PC industry is too volatile to take risks.?
Auer sat coolly, deciding to sip full strength coke, not the diet stuff, and not opting to indulge in a Mai Tai. He then started talking almost confidently about the prospect of getting the new Olivetti Personal Computers back on the rails within 12 months.
That?s the timescale that the investors that make up the PC company's new parent, Piedmont International, have agreed on, but it won?t be easy. Perhaps he would have been better sipping the Mai Tai.
So what about job cuts? If the company is still restructuring and the countdown has started for the company to turn itself around, surely cutting overheads will continue to be a major consideration?
?The streamlining has been done. There will be no more job cuts,? Auer said. ?If there are any, most likely due to changes in technical and product strategy, they will be made up in other areas by recruitment. There will certainly be no situation like there was in 1995-6 when we reduced our staffing levels from 3,000 to 1,700.?
Auer admitted that the past 12 months have been ?exhausting? in trying to keep the business afloat but could not elucidate on those potential ?changes in technical and product strategy.? It was merely a future assumption thing, although he admitted that cost of ownership and the Internet were ?avenues of interest? and that users may eventually pay a licence for a PC, ?a little like a telephone tariff".
The 12-month recovery goal is one that Auer believes can be achieved by playing safe. That means no foraging into network computer territory, at least not yet. ?We did a study last year on the NC and came to the conclusion it was too early. We have no plans, although I am convinced it is the next step in IT networking development.?
Instead, servers and notebooks will be the backbone of Olivetti?s recovery programme. So does the company intend to sell its way back into profitability, relying entirely on products to remove the red ink on the balance books?
?Servers currently account for three per cent of our business and we are expecting growth in the region of 30 per cent, this year,? he said. ?Notebooks account for 24.4 per cent of the company?s revenue and we are expecting to reach 50 per cent growth this year.?
The company is certainly making a go of it. Auer outlined deals with eight server vendors, including Intel, Novell, Netscape, Oracle and SCO, to join its strategic Olivetti Server Club. There is also a deal to pre-install NT 4.0 on all products, with a view to targeting sales at the small to medium enterprise market.
Auer talked fondly about the loyalty that many customers have shown to Olivetti and one glance at Dataquest figures, giving the brand a 5.3 per cent share of the European notebook market - up 90 per cent on 1995 - supports this notion. However, company financials have not yet been released and Auer is not yet aware of how much the drawn out sell-off process last year has eaten into the company's profits. We will also have to wait until the end of March for the Piedmont takeover to be finalised and for detailed investment information to be released.
One thing is certain. The UK is crucial to the company?s success. ?It accounts for 11 per cent of our business and is growing. We are not re-emphasising markets where we have a good presence but we have put the Benelux and Nordic countries into a sales group with the UK, because they did not justify a full blown sales, marketing and support team.?
So can Olivetti Personal Computers succeed? ?Given our product mix and a fairly conservative growth, the rational is that with the new investment and restructure, we have the momentum to broaden our product range and turn the company around.?
It?s a conservative answer from a conservative man running a conservative company. The fact that customers have stayed loyal and protected the Olivetti brand name suggests that things may turn out all right and the past may well and truly be shaken off, but don?t expect any innovations. For the next year at least, this is a play safe, me-too PC vendor.
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