IBM going build to order.
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Friday June 5, 12:01 am Eastern Time
IBM sets new PC hardware sales initiatives
By Richard Melville
NEW YORK, June 5 (Reuters) - International Business Machines Corp. said it would launch on Friday new marketing efforts
aimed at capturing a larger share of the personal computer market.
The two-pronged initiative will center on the booming market for network servers built around Intel Corp (INTC - news)
processors, which IBM sells under the brand name Netfinity.
The segment is one Chairman Louis Gerstner has targeted for special attention during his annual meeting with Wall Street
analysts in May and one where Compaq Computer Corp (CPQ - news) is currently the market share leader.
Under the two-phase program, corporate customers will contact IBM directly to order hardware and obtain services. IBM will
ask its sales partners to configure and assemble the computers.
IBM expects that the program, when completed, should close the price and feature gap currently enjoyed by direct marketers
such as Dell Computer Corp. (DELL - news) and Gateway Inc. (GTW - news), William McCracken, general manager of sales
and services for IBM's Personal Systems Group said in an interview.
IBM will achieve that goal by shrinking inventories of finished systems, he said. In turn, IBM should be able to trim system
prices because delaying system assembly means the company can take advantage of falling component costs, he added.
The first part of the program, called Netfinity Direct, will be launched over coming months and allow IBM corporate customers
who want it direct contact with IBM when buying hardware or arranging configuration or other service for systems, rather than
through a business partner or reseller.
The move means IBM will be selling Netfinity more like it does its other server computers and less like its personal computers,
a shift the company expects will appeal to certain corporate customers.
While the change in some ways mirrors the methods of direct marketers like Dell and Gateway, the program aims beyond that,
McCracken said.
IBM, which has one of the largest computer services businesses in the world, is hoping to draw on that advantage in its
competition with direct marketers.
''This is not to be confused with Dell or Gateway or those kinds of folks,'' McCracken said. ''This is not just hardware. We're
also giving customers the opportunity to decide how they want software, product service and support to come to them.''
Rather than build a large services organization itself, Dell has forged partnerships with companies like Wang Laboratories Inc.
(WANG - news) and Unisys Corp. (UIS - news).
IBM is not retreating from its relationship with resellers, which are a key element in its sales strategy, McCracken said.
Instead, the second prong of the program will focus on completing a shift in how IBM handles sales and manages inventory
sold through partners.
IBM plans to expand its practice of having its sales partners configure and assemble computers to order under the new
program, in part by implementing processor and component-level assembly on IBM systems.
IBM said four distributors -- Ingram Micro Inc. (IM - news), MicroAge Inc. (MICA - news) unit Pinacor, Tech Data Corp.
(TECD - news) and Inacom Corp. < shrinking inventories of finished systems.
In turn, because delaying system assembly means the company cam take advantage of falling component costs, IBM should be
able to trim its system prices, he said.
More Quotes
and News:
Compaq Computer Corp (NYSE:CPQ - news)
Dell Computer Corp (Nasdaq:DELL - news)
Gateway 2000 Inc (NYSE:GTW - news)
Ingram Micro Inc (NYSE:IM - news)
Intel Corp (Nasdaq:INTC - news)
International Business Machines Corp (NYSE:IBM - news)
Microage Inc (Nasdaq:MICA - news)
Tech Data Corp (Nasdaq:TECD - news)
Unisys Corp (NYSE:UIS - news)
Wang Laboratories Inc (Nasdaq:WANG - news)
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