News
IBM PC Plight Could End In Dell Takeover
(04/01/99, 12:03 p.m. ET)
By Paul Briggs and Sean Samuels, Computer Reseller News
Rumors are growing that Dell or a rival could take over the troubled IBM PC business, after it made a loss of almost $1 billion (£620 million) in 1998.
The speculation increased when IBM CEO Lou Gerstner suggested the PC was dead as a volume business and analysts suggested IBM should dump PCs altogether.
IBM does not want to remove its logo from PCs, even though they may be made by someone else because it wants to protect its computing brand.
IBM's $16 billion (£10 billion) technology-sharing deal with Dell led to rumors that Dell will take over manufacturing IBM PCs. Analysts said they predicted IBM's services division could, in return, help fulfil Dell's ambitions to win enterprise business by servicing Dell boxes. Industry watchers have questioned how long Dell can maintain its fantastic growth if it sticks purely to its direct model.
Dell's U.K. and Ireland vice president, Brian McBride, told CRN the deal between IBM and Dell meant they sold very similar boxes. "If IBM comes to us with a proposition, we would listen," he said.
Bill Joss, group business development director at reseller Compel, said it would be "dangerous for its customers" if Dell stuck to a purely direct model for much longer.
Vas Patel, vice president of PC component manufacturer Elex Business Systems, said Dell could become a marketing arm for IBM while Dell could take advantage of IBM's foundry and "get its components directly into retail or the arms of the end user." Sources said IBM's PC business aims to double its sales during 1999. A stronger, lower cost, direct model would help, especially after too much inventory and a price war were partly responsible for its massive loss.
Inger Moes, research analyst at Context, said after the recent deals with Dell and EMC, IBM off-loading its PC division "would not be a surprise."
Kevin Drew, managing director of IBM reseller Triangle, said brands do not matter because the components supplier still profit.
Good Luck!!
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