Was IBM nuts?

[lyonadmiral]

To sell the Personal Computer Division to Lenovo? I'm looking for both your thoughts; historical and anecdotal perspectives.

My own thought is that they were.

 

[mbbrutman]

A good source of analysis would be the news articles of the time, where they discussed the financials of the deal and what the motivation was. It was widely covered, and wasn't that long ago.

As to whether we think they were nuts, that just boils down to personal opinion - nothing more.

 

[Jorg]

I've heard people got fired for buying Lenovo stuff.

Well, we do not know the insides. But Lenovo will never get the brand related margin that IBM could generate.

 

[mark66j]

I just think the margins got too small for IBM's taste. For one thing, Lenovo (maybe not under the same name) already made the ThinkPads so IBM had to get some margin on top of Lenovo's costs. I think IBM does not want to be in a commodity business.

Cisco went in the other direction around the same time by buying Linksys, since they saw home networking growing much faster than IT infrastructure at the time. But they kept the division separate so that Cisco's higher costs to do anything didn't get in the mix.

 

[dorkbert]

IBM personal system division were unprofitable for years, unable to compete with variety of clone makers. Thus it made perfect sense for them to chuck it, and chucked it they did. Since the boxes were already being manufactured in China, it was a no brainer to sell it to the Chinese.

 

[per]

IBM is still making servers and mainframes, which has been their main field of interest since the minis. The PC was originally only a test-project to see if there was a place for them in the market of private comercial computers, which there apparently were untill Compaq & co. stole the show.

 

[Dave Farquhar]

I agree with mark66j. IBM lost money on its PC division for years. For a long time, they justified it by saying it drove sales of its profitable services division. They considered a number of remedies, including buying Gateway, back when Gateway was still a name that some people envied. Ultimately it came down to doing what their shareholders wanted, and shareholders don't like money-losing ventures even when the rest of the company is profitable.

I would have liked to have seen IBM turn its PC business around, but it would have been difficult. There are people who refuse to even look at IBM, just because they're IBM. I saw it when I was selling computers at retail in the mid 1990s. I had people who wouldn't buy an IBM even when IBM made the least-expensive computer in the store not made by Packard Bell. IBM and Packard Bell were the two most tainted names in the store, though for different reasons. And it didn't matter that the IBMs we were selling at that point were ISA/VLB and had a Phoenix BIOS just like everyone else's boxes. They were somehow "proprietary" in many consumers' minds.

I've seen it in my professional career too. All of the CIO types I've ever encountered had their mind made up about IBM a long time ago.

While I would have liked to have seen them turn things around and stay in the market, I understand. They tried everything sane, and nothing they tried worked. The things they didn't try, like buying Gateway, in hindsight probably would have just made things worse. It wasn't long after those talks broke down that Gateway started falling apart itself.

I'm sure it was hard for them to walk away from a market that they helped pioneer. But it was getting harder and harder to justify staying in.

 

[GADFRAN]

I will add my two cents from my STS [science, technology & society] decades of research.

Also read the many references and books on IBM - they are noted in some my other posts replying to someone in Europe interested in IBM history.

Just my thoughts from the above -

 

[GADFRAN]

rEST OF MY TWO CENTS - GOT CUT OFF SEVERAL TIMES !!!

rEST OF MY TWO CENTS - GOT CUT OFF SEVERAL TIMES !!!

Sorry - system just cut me off before I could finish -

Originally, IBM just got into it and then found it just too much against corp culture,
so they transferred the guy who "just got it done" under stressful situation and moved on to other things.

They were really not committed to PC's, but rather wanted the “ same old same
old “ familiar stuff - mainframes - worked in past will work in future – very comfortable - WRONG - times change so you have to change

Alan Kay quotes to predict future –

Prevent it - regressive

Invent it - progressive

To be successful you need to have a "champion" with the power and support to continue for at least a decade, if not more, even if things do not look so good at first

They tried but it was comical if you read the history - PC's by committee not those who really know about PC's

But many companies today continue to do the same thing - do things that have been proven wrong in the past - why should they be able to change it and be successful???

Check Compaq - they did it right and sales and success soared - my stats in the draft of my Kaypro book on my website - WWW.KAYPROSTS.ORG - under folder "Special"

No contest – they were the leader, no one even close – so Kaypro dropped out as did many others including IBM

Of course, a key factor was legally doing the IBM bios so the Compaq could run all that IBM compatible software – but that is another long story.

But then success only lasts so long and even Compaq declined rapidly.

Obviously in such a short reply all bases cannot be covered adequately.

Also there are always many different interpretations – witnesses to an accident – it was the yellow car hitting the blue one – no it was the truck that started it – the red car hit the truck and ……..

So I always say do your own research and develop your own documented conclusions. Then share them with all of us so we can all learn more.

Read the fiasco on Xerox, Commodore, Apple [the old original one – not today – but isn’t it things other than pure computers really making Apple so successful today ???]

Yes, when it turns into a “commodity” anyone can make it – then it is price cutting and marketing that can rule.

Good discussion !!!

Keep those comments coming.

If we do not know the past we repeat the past in the future, as the saying goes.

Frank

 

[modem7]

In the early days (eighties), there was a very good reason for buying IBM personal computers. That reason was compatibility. One knew that any software one bought was going to run. For the very same reason, if one was in the market for a dot matrix printer, Epson was the ideal brand. For a plotter, HP was the ideal brand. If one deviated from those brands, one saw compatibility issues.

What started to happen over the years was that the 'compatibility' issue slowly decreased and large organisations, such as the one I worked for, could no longer justify buying the big names (with their big price tags). IBM contributed to that problem in some ways. For example, I remember a magazine doing an 'IBM PC compatibility' test, and the IBM PS/2 model 30 came in last in the results.

By the time of the PS/2 ValuePoint, the only time we bought those was when they were cheaper than their non-IBM competition.

The writing was on the wall a long time ago.

 

[barythrin]

Right, with the price and [personal opinion]crap clones..(I'll at least say lets refer to newer machines 90s+) the price depending on if you're making a quality product costs too much more than a cheap and bulk make system. What's the last IBM personal computer you bought and when? Even late 90's they were expensive comparatively regardless of the quality or lack of (I also saw plenty of borked up thinkpads) although previous to that it was NEC, TI, and Zeniths in reverse date order that our state agency had gone through. Anyway it's tough and if you saw the top desktop/notebook computer sellers and the prices they were trying Dell, Gateway, and probably Compaq or HP were usually in the lead on sales (mostly from price).

I agree I found it to be ashame and a huge disappointment from a historical standpoint. I mean what does that say when one of the first personal computer manufacturers gives up? Sucks, but yeah monetarily I don't think too many folks could afford to buy an IBM just from the name tag alone.

I mean honest question though, what was the last IBM desktop or laptop you bought and when? I've never purchased a new IBM system and my only ones are vintage from collecting. We started out with clones in our family from a price perspective.

 

[IBMMuseum]

...I mean honest question though, what was the last IBM desktop or laptop you bought and when?...

Do you really want to ask me?... :D

Granted it is secondhand (to have an IBM name on it instead of Lenovo), but two weeks ago, a Prescott P4 3GHz (now upgraded with a 320Gb SATA HDD, and preparing to max RAM, bought today) desktop...

It even appeals to me on a "vintage" level, because the model encoding is "8086-W4R" (ultimately a ThinkCentre S50). I can say I operate an IBM 8086 on a daily basis now. Well, it's been some years for my PS/2 Model 25 and 30's to be used that often after all.

l33t-speak, it is my W4R system, becoming my primary unit, although physically small. The right size to hold up a big flatscreen, but still with PS/2 ports to run my black Trackpoint II keyboard. But, as said, I'm probably biased in regards to the topic anyway.

Emotion aside, it was the right decision for IBM to leave the PC market. I'd rather see what relates to being a "ValuePoint" level with someone else's name on it anyway. I can remember them for the big and not-so-big iron, good sturdy systems of the day.

 

[Chuck(G)]

I think my wife still uses a NetVista P4 desktop. Tight fit, but nice engineering for a mATX system.

But when the industry lapses into a "race to the bottom" and Foxconn is building almost everything in the PC world (even iMacs), why bother competing for ever-decreasing profit margins?

Really, the game was over when the likes of Dell, eMachines, etc. started pushing out systems by the millions.

 

[lyonadmiral]

What's the last IBM personal computer you bought and when?

I just bought two ThinkPad T42's (right at the edge of the IBM-Lenovo transition, used) as Christmas gifts since I think even an older laptop with a nice big screen is better than a brand new netbook.

 

[Unknown_K]

I like the PS/2 MCA line, but only corperations could afford those when new. You could tell they were never intended for home use because of the lack of sound cards. If IBM had kept the ISA and went EISA with the other big makers they would have ditched PC manufacturing much sooner I think.

 

[IBMMuseum]

...If IBM had kept the ISA and went EISA with the other big makers they would have ditched PC manufacturing much sooner I think.

But remember that EISA was a reaction to microchannel. Even so, there are several IBM EISA systems (in the Server 300, 500 and 700-series). With VLB on the ValuePoints, and PC/104 on some industrial systems, they had every possible PC bus covered somewhere (and a proprietary version of their own - on the Gearbox 800).

 

[krebizfan]

I like the PS/2 MCA line, but only corperations could afford those when new. You could tell they were never intended for home use because of the lack of sound cards. If IBM had kept the ISA and went EISA with the other big makers they would have ditched PC manufacturing much sooner I think.

Compaq sold at even higher prices for equivalent specs to IBM's PS/2 line from about 1988 through 1993. The cost of an hour of downtime exceeded the savings of buying a cheap business computer. However, IBM stopped bothering to fully test their systems so SIMM slots wouldn't work or network cards that would only work with certain revisions of motherboards. In short, buying from one of the better clone manufacturers yielded a more reliable system than what IBM offered. It takes around 5 years to change perceptions so by the time IBM transformed their product line into quality clones it was too late to recover the market.

I prefer the MCA card layout with the provided handles. EISA and all other doublestacked cards seem likely to be shorted out once the stops wear after a few insertions and removals. IBM probably would have benefitted if some models beyond the specialized industrials ones had mixed MCA and ISA card slots. Those would have removed the major stoppage in purchasing MCA systems and speeded up the adoption of the PS/2.

 

[Chuck(G)]

I prefer the MCA card layout with the provided handles. EISA and all other doublestacked cards seem likely to be shorted out once the stops wear after a few insertions and removals. IBM probably would have benefitted if some models beyond the specialized industrials ones had mixed MCA and ISA card slots. Those would have removed the major stoppage in purchasing MCA systems and speeded up the adoption of the PS/2.

The best in my experience are the side-loading-with-contacts-on-the-far-end style of cards, for example, Eurocard. But they just don't happen in the consumer world--only on industrial equipment, it seems.

 

[lyonadmiral]

Made in the USA...

Made in the USA...

I will say one thing that I find well, is that the older IBM's, I especially proud of the fact that they have stamped on the bottom or the back, Made in the USA by International Business Machines Corporation. Whether or not it is 100% true is another story.

 

[IBMMuseum]

I will say one thing that I find well, is that the older IBM's, I especially proud of the fact that they have stamped on the bottom or the back, Made in the USA by International Business Machines Corporation. Whether or not it is 100% true is another story.

Depends on which particular unit in most cases. IBM had various operations scattered around, including outside the United States (many PS/2 planars being made in Greenock, United Kingdom). Of course with the country of origin for Lenovo now, the U.S. State Department will not accept that brand name for use in their offices.