IBM is promising its PC customers it remains committed to them, despite the disastrous results suffered by its personal systems group (PSG) last year and negative comments about the PC sector from chief executive Louis Gerstner.
David Thomas, senior vice president of PSG posted an open letter on IBM?s website today, to reassure customers that the company that invented the PC intends to remain focused on it as a platform.
Speculation that IBM will decrease its focus on the PC business was intensified after changes in US accounting regulations last week forced it to reveal that PSG lost nearly $1 billion last year. Chairman and chief executive Louis Gerstner then chose the annual report, released last week, to proclaim in his letter to shareholders that, "The PC era is over." (see Newswire 25 March)
In his letter, Thomas placed the blame for PSG?s difficulties on a number of factors, including market pressures, the Asian economic crisis and changes in distribution models.
However, he insisted that IBM was not complacent about its PC business.
?Let me be clear: I do not condone or excuse any business shortfalls...The PC industry is strong, and we?re in it to win...We are determined to return PSG to profitability, not only because of our rich heritage and the pride we have in ourselves, but because of our commitment to IBM shareholders and customers,? he stated.
Analysts have speculated that IBM will outsource at least some of the manufacturing of PCs to a third party, as it already does with Taiwan?s Acer. This would also fit in with IBM?s stated strategy of being a supplier of technology to other companies, such as its agreement last week to supply rival EMC with storage technology and components.
Thomas however points out that not only did IBM manage to return its PC business to profitability in the fourth quarter of last year, but that sales of PCs enabled IBM to generate revenue and profit in associated areas including services, software and storage.
Tom Bittman, analyst for Gartner Group, is among those observers who believe IBM will increasingly switch focus away from hardware to software and services.
The problem for IBM is that if it wants to retain control of its corporate accounts, it still needs to have some form of PC offering - even if it outsources the manufacturing - so that it can offer users a complete package of products.
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