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Has IBM gone nuts?

Discussion in 'Tech Talk' started by hwyhobo, Dec 3, 2004.

  1. hwyhobo


    Jun 3, 2003
    Silicon Valley
    According to New York Times, IBM is negotiating a sale of its PC business unit to a Chinese company. The sale would include IBM's entire line of laptops. The price being talked about is in the $1-2b range. That's for a unit that generates around $10b annually in revenue. ;P

    IBM put years into developing a name for its laptops, and it seems to me that it should continue to cash in on that name instead of getting rid of it now.

    This is bizarre to me.
  2. Anon1


    Aug 17, 2000
    Industry analyst predictions are that 1/3 of the manufacturers will be gone within three years, IBM was one of those predicted.

    December 01, 2004
    Gartner: Third Of Top PC Vendors Gone In Three Years

    By Gregg Keizer Courtesy of

    Three of the top 10 PC vendors will be pushed out of the business by 2007, research firm Gartner predicted Monday.

    The most likely victims? Hewlett-Packard and IBM, said Leslie Fiering, Gartner's research vice president for its client platforms group.

    Of the top PC sellers, only Dell has consistently shown profits the past several years, Fiering said, citing the PC divisions of HP and IBM as being vulnerable to spin-off if their overall drag on profitability gets to be unsustainable by the parent corporations.

    "Exiting the market may be the only logical choice for vendors bleeding profits and struggling for share," said Fiering in a statement accompanying her prognostication.

    According to Gartner, the top 10 ranked by units shipped are Dell, HP, IBM, Fujitsu, Fujitsu Siemens, Toshiba, NEC, Apple, Lenovo Group, and Gateway. Lenovo, China's largest PC maker, is headquartered in Beijing and is the only vendor in the top 10 not from either the United States or Japan.

    Although PC vendors have seen a resurgence in sales of late--with double-digit growth returning to a business that took it on the chin during the global recession--tougher times lie ahead, said Fiering.

    "Global vendors will be forced to continue maximizing supply-chain efficiencies and, finally, abandon any efforts to differentiate other than on price and service," she predicted. "Vendors that have yet to do so may attempt to diversify into related market pursuits, such as consumer electronics, to bolster margins. Others may attempt mergers with rivals to improve margins through economies of scale."

    Dell and Apple, for instance, have aggressively taken the first route by expanding into consumer electronics, such as LCD TVs (Dell) and portable music players (Apple). Gateway, meanwhile, staved off disappearance by merging with eMachines in January, 2004.

    The basic problem, said Fiering, is that PC sales will slow after next year.

    Gartner's projections for unit-growth increases from 2006 through 2008, for example, are about half that of the average increases expected from 2003 through 2005. During the '06-'08 run, the Stamford, Conn.-based research firm expects PC shipments to increase only 5.7 percent annually, a dramatic fall-off from '03-'05's average of 11.7 percent.

    It's this anticipated sales deceleration that will drive some vendors from the market.

    "With PC replacements still in full swing, 2005 should be a reasonably strong year for vendors," said Fiering. "However, the end of the replacement cycle is likely to strain even the largest PC vendors in 2006 and beyond."

    To add to the problem for U.S.-based vendors, a greater chunk of sales will end up in emerging markets, where PCs currently sport a smaller penetration percentage. Regions such as India, Russia, and, particularly, China will be increasingly important to sales growth, said Fiering.

    That leaves local vendors such as Lenovo in the catbird seat. Fiering said that Lenovo could easily leverage its strong standing in China and its low-cost operations into becoming a global player.

    "Local PC vendors in emerging markets should consider acquiring local rivals as a means to consolidate home-market position and develop the scale economies required to springboard into a global presence," Fiering recommended.

    On the customer side, she said that buyers should take advantage of the future slowing sales trend to pressure vendors on price. "However, customers also must consider the vendor's commitment to the PC market, as well as the vendor's 'staying power,'" she wrote.

  3. NetNinja

    NetNinja Always Faithful

    Oct 23, 2001
    HotLanta, GA
    So in laymens terms.

    There ain't no profit.

    The money is in service agreements the these companies know how to milk money out of companies by offering them nothing.

    They aren't offering you anything. It's snake oil crap.

    If they made thier products worth a Shizat to begin with you wouldn't need a service agreement.
    Hire at IT person worth a Shizat and you should be fine.

    Microsoft offered companies 2 year upgrade protection plans just incase MS released an updated version of any software application you would get the update for free. YEAH RIGHT!!!!
    Has anybpdy seen any updates for the past two years? I haven't.
    But I saw a whole crap load of security patch updates.

    The suckers who paid into that scam got just what they paid for.

    It'amazing to me how Dell continues to make a profit. Since 99% of computer components are maufcatured in Asia.

    I wonder why China/Singapore and Taiwan doesn't market directly.
  4. fastvfr

    fastvfr Ancient Tech

    Mar 28, 2001
    SW Oregon
    Unfortunately for those poor OEM's, far too many desktop users have gotten the word that their products stink, and that their 'support' is even worse, for them to survive.

    I'm guessing that there will be some standardization of laptop parts before too long, so they can be sold in kit form just as other PC parts are.

    Then, 2/3 of the OEM's will be gone. Awwww.

    Just more Compaqs, HPs, Gateways, VAIOs, EMachines...I might have to get a REAL JOB!! >shudders<

    J/K! But, seriously, those Pieces Of Crap are a big chunk of my revenue and represent a big part of any harshing of my mellow that occurs....I'll be much, much happier when all I work on are quality PC's I built in the first place.

    Best regards,

  5. hwyhobo


    Jun 3, 2003
    Silicon Valley
    Well, that's a twist I haven't thought of. That would be interesting, and I certainly would go for it.

    Yet, when you think about it, even in the PC space there are "brand" names despite the modularization.