To: Elwood P. Dowd who wrote (68869 ) 10/14/1999 5:59:00 PM From: John Koligman Read Replies (1) | Respond to of 97611
Hello Elwood - Here's an 'on topic' one for you! Regards, John IBM's 'ass backwards' Aptiva pullout Click on our sponsors! Updated 1:17 PM ET October 14, 1999 By Charles Cooper, ZDNet News IBM Corp. is facing criticism for its decision to stop selling its Aptiva desktop personal computers through retail chains in the United States in favor of selling the product over the Internet. The move, which has been communicated to retailers over the last couple of weeks, follows IBM's decision to streamline its Personal Systems Group by cutting up to 1,000 employees in a bid to improve the profitability of the division. With an eye on the success enjoyed by Dell Computer Corp. (NASDAQ:DELL) selling systems over the World Wide Web, IBM is believed to be keen on finding a less expensive, more efficient way to target consumers. Sources say IBM (NYSE:IBM) is preparing to put more emphasis on sales via the Internet when the changes go into effect this January. However, a spokeswoman said IBM may revisit its decision and reinstate retail sales of Aptiva at a still undetermined date in the future. 'A temporary decision' "It's a temporary decision," Trink Guarino. "We may go back to retailers when we figure out how to differentiate Aptivas on store shelves." Selected retail outfits will still be able to sell the Aptiva overseas and the move will not affect sales of IBM's ThinkPad through domestic retailers. But in pulling its desktops out of the domestic retail market, IBM's move puts about 10 percent of the market up for grabs. The most likely contenders to fill the gap include Compaq Computer Corp. (NYSE:CPQ), Hewlett-Packard Co. (NYSE:HWP) and eMachines Inc. 'Totally ass backwards' The move caught some analysts and industry executives by surprise. "I don't think it's more efficient or more profitable," said Stephen Baker, the director of analysis at PC Data Inc. in Reston, Va. "What they're doing is totally ass backwards. Retail sales of notebooks are not particularly strong and never have been. Retailers have a tough time explaining them to customers." He added that IBM would face difficulty reproducing the success of its arch-rival. "Everyone wants to be Dell," he said. "But you know what: Dell is Dell and Dell is unique. You can't jump out of one business into another and expect to be successful. "I thought IBM hit on a decent strategy in the last few months where they stopped trying to play in the real aggressive market and concentrate on mid-range price, do more volume and play off their name," he continued. "It seems this says more about IBM than the ability to sell through retail." 'Doomed to failure' "I think it's doomed for failure," said Matt Sargent at Infobeads, a Ziff-Davis company. "The Aptiva served the consumer that bought on name. It's never been a traditional strong player. What IBM is saying is they're giving up on Aptiva. Clearly, they can't play in the low-price market and can't hang with it." An executive with one retail chain was nonplussed at the change and expressed annoyance at IBM's decision to pull the Aptiva out of retail. "This is a nice way of rewarding loyalty," said the source, asking to remain unidentified. "They say they may go back in once they figure out how to best meet the needs of the consumer. Well, why don't they ask us? We're the ones who deal everyday with the consumer, not IBM."