IBM to merge consumer, corporate PC units
By Michael Kanellos
Staff Writer, CNET News.com
October 7, 1999, 5:55 p.m. PT
In an effort to streamline operations, IBM will merge its consumer PC group into its larger organization for corporate PCs and notebooks, sources close to the company said.
The consolidation underscores Big Blue's ongoing efforts to enhance the profitability of its PC division, which has been hit hard in the past two years by descending PC prices. In its last fiscal year, the company lost close to a billion dollars because of personal computers sales. As with other major PC makers, IBM is actually selling more PCs than ever before, but netting much lower returns because of price cuts.
The consumer group is responsible for the Aptiva home PC line. Under the reorganization, the group will become part of IBM's Personal Systems Group and be known by the personal name "individual segment," sources said.
It is uncertain whether layoffs will occur, but some sources termed them inevitable. IBM could not be reached for comment.
Analysts and observers have debated the question whether IBM will eventually exit the PC market. While intriguing in the abstract, most have said that the prospect is unlikely, because PCs lead to the sales of other products and services.
"It is fundamental for us to be in the PC business to provide solutions to customers," said IBM's new general manager at the Personal Systems Group, Jim Pertzborn, in April.
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