Intel, similarly chosen, became the dominant chipmaker. Almost by accident, IBM forced every other maker of small computers to either join it or be relegated to a tiny niche. In the process, some of its main competitors found themselves unable to adapt, and they eventually died. Digital Equipment Company, then the dominant maker of minicomputers, moved into the PC arena too late. First it tried to set its own standard, then eventually moved to PCs too late, and was taken over by Compaq as a result. Data General, Wang and others likewise found the PC juggernaut to be their undoing. But before anyone realized it, IBM lost control of its own industry. Worse, when the company realized this and attempted to regain control by setting new standards, it didnt work.IBM never really recovered the leadership role it held before those events. While the company remained a serious competitor, as well as being the third-largest PC maker, margins droppedand with the drop came pressure to drop that part of the business.
"It should surprise no one," said Simon Yates, senior analyst at Forrester Research in Cambridge, Mass. Yates said IBM was finding it tough to compete in the PC market because it was difficult to keep prices down.
"Theyve always been the technology innovator in the PC industry," Yates said, adding that because the company was the innovator, it had to keep its prices up to pay for it.
Unfortunately, keeping prices up meant that IBM was never able to compete effectively in the PC marketplace, and that kept margins low.
With IBMs growing focus on services and higher-end hardware such as servers, the choice was obvious. But being obvious doesnt make it any less painful, especially to IBM customers, many of whom are upset by the idea of a pending sale.
Boston-based marketing consultant Cheryl Delgreco pointed out that for many companies, buying IBM as she did for her company was a matter of trust. You always knew the company would be there for you, she said. "What happens if something goes wrong?" Delgreco asked. "Am I supposed to call somebody in China?"
That probably wont be necessary, of course. Even if IBM sells its business to Hong Kong-based Lenovo, its certain that the infrastructure will remain, if only to service existing customers and meet existing contracts.
But its also likely that Lenovo will get to keep some of the IBM PC identity as part of the sale. So, the IBM PC name may continue, at least for a while, even if IBM isnt making them. And, of course, IBM hasnt been making those PCs for a while anyway. Manufacturing was outsourced two years ago.
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"Two huge missteps, the microchannel-based PS/2 hardware and the half-hearted OS/2 operating system, swiftly eroded enterprise confidence in IBMs PC division," Zeichick said.