IBM's PC Biz Sale Will Be Ho-Hum for Resellers

By Wayne Rash  |  Print this article Print


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Opinion: While the traditional faith in IBM has declined over the years, there's no question that it has remained central to business mindshare. Now, resellers and white-box makers won't have to fight that battle.

The revelation that IBM may be selling off its PC operations isn't exactly a surprise. Market analysts have been pressing IBM to do this for years, but the company has resisted.

Now, with competition getting tougher and margins declining or disappearing, the time apparently has come. IBM won't be selling IBM PCs, assuming that current negotiations succeed.

But even if the sale does go through, it's not clear that much will change. IBM doesn't make its personal computers now. The company outsourced manufacturing of both desktop PCs and ThinkPad notebooks a couple of years ago. Much of its support operation has been outsourced. About the only things remaining in the company are engineering and design.

So, what will change? On the outside, probably not much. It's unlikely that any company will pay top dollar for the PC company and not get to retain the IBM PC name.

There's no reason the computer manufacturing and support operations will change. Of course, the details of what will happen to the personnel and infrastructure remain cloudy, no doubt because they have yet to be decided.

For resellers, this is a sort of a mixed situation. Companies that are currently reselling IBM PCs will have to face up to the situation that everyone will know that someone besides IBM is making the boxes.

But this may not matter, since many resellers are already providing their own support. And of course, the computers themselves are unlikely to change.

For box resellers that compete against IBM, the picture is perhaps a little brighter. Since the beginning of the PC revolution, IBM has always been the corporate standard.

Companies would buy IBM products not so much because the products were better or more innovative, but because they were from IBM, a company they felt comfortable with.

While this faith in IBM has declined over the years, there's no question that it has remained central to business mindshare. Now, resellers and white-box makers won't have to fight that battle. Machines may still have the IBM logo on them, but they won't really be from IBM.

Click here for an analysis on how IBM's PC retreat would shift the market balance to Asia.

In some sales, that one factor could be huge, but in others, it won't matter at all. For contracts that are already based on price and specifications, IBM has been at a disadvantage when it came to trimming margins, making it hard to compete in this part of the business. As long as a product met the price, performance and support requirements of the contract, the best price would win.

For other corporate sales, however, faith in IBM remained an issue. There were, and still are, a lot of IT managers and CIOs in positions to choose products who grew up with IBM.

Now that the company is on the verge of becoming just another Third World generic box maker, it's not the same thing. That brand loyalty built up over the years can vanish in an instant when buyers see that their company is no longer behind the brand.

Looking at this purely on the basis of selling hardware means that things are mostly a wash when it comes to the reseller community. Some will benefit slightly, some won't. Perhaps IBM PCs will become more competitive and perhaps they won't. We won't know the details for a while yet, assuming such a sale takes place, but it's unlikely to be a major event in the reseller world.

On the other hand (there's always an other hand, isn't there?) the part of IBM that's going to grow if this sale takes place is its services business. You can assume that the consulting and services parts of IBM will be better funded, more aggressive and more ubiquitous than they are now.

You also can assume that any disposition they may have had toward selling IBM-branded personal computers will vanish. So, if you're selling services along with hardware, you could well find yourself up against a powerful competitor. And that might not be a wash.

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Wayne Rash Wayne Rash is a Senior Analyst for eWEEK Labs and runs the magazine's Washington Bureau. Prior to joining eWEEK as a Senior Writer on wireless technology, he was a Senior Contributing Editor and previously a Senior Analyst in the InfoWorld Test Center. He was also a reviewer for Federal Computer Week and Information Security Magazine. Previously, he ran the reviews and events departments at CMP's InternetWeek.

He is a retired naval officer, a former principal at American Management Systems and a long-time columnist for Byte Magazine. He is a regular contributor to Plane & Pilot Magazine and The Washington Post.

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