Any opinions on this?
"IBM: The PC is dead
By Brooke Crothers
Staff Writer, CNET News.com
March 25, 1999, 6:30 a.m. PT
update Chief executive Lou Gerstner labeled e-business an important component of IBM's future
while repeating a mantra often heard among CEOs: "The PC era is over." But some observers
think this is sour grapes.
In the company's recently posted annual report for 1998, Gerstner had a new, very strong reason to exclaim
the demise of the PC. Last year Big Blue's personal systems division, which makes desktops and servers,
suffered a $992 million loss largely due to price competition.
The loss grew a whopping 516 percent from 1997's shortfall, according to an IBM financial statement.
This year's report, which came with a letter from Gerstner, outlined the company's future, and it will
increasingly deemphasize the PC.
IBM will attempt to capture a big part of e-business, according to Gerstner, which "represents an enormous
opportunity… By 2002…the e-business segment [overall] will
grow to $600 billion, and it will grow twice as fast as the industry
overall."
Gerstner also mentioned some of Big Blue's related difficulties.
These include "soft memory chip prices and a PC price war," he
said.
"Some were of our own making, wrestling with important product
transitions in our server line, for example," Gerstner said. He also
cited the usual geographical problem spots: Asia and Latin
America.
But there's no getting over a subsection entitled "The PC era is over," a statement that carries a lot of weight
coming from the company that helped invent the business PC. Although such CEOs as Hewlett-Packard's Lew
Platt have also been stating this sentiment, along with major PC antagonists such as Sun Microsystems' Scott
McNealy and Oracle's Larry Ellison, the viewpoint takes on extra meaning coming from Gerstner.
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"This is not to say that PCs are going to die off, any more than mainframes vanished when the IBM PC debuted
in 1981…But the PC's reign as the driver of customer buying decisions and the primary platform for application
development is over. In all those respects, it has been supplanted by the network," he said.
But some observers think this statement is too self serving. "How much of this is sour grapes because IBM
can't make money moving [PC] boxes unlike Dell that does make a decent margin in the business?" wondered
Danny Lam, a principal with Fisher-Holstein, a consulting firm.
"I am not convinced that the PC as the primary engine for [software] application development is over. Domestic
growth is exhausted, but international growth is far from over," he said.
Lam thinks the Web is overrated too. "The Web is greatly exaggerated in terms of its capabilities. For all
practical purposes, the most commonly available pipe worldwide barely manages to eke out 28.8 kilobits per
second and it is not big enough to drive large apps that replace the PC," he added.
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