Quote:
Originally Posted by Barcey
I heard Lou Gerstner (former CEO of IBM) speak years ago. He was talking about how IBM had lost the WINTEL server market share to Compaq not because they didn't have the technology advantage, but because they refused to deploy it in the low end server market. They were afraid that if they did they would lose the high margin sales of their UNIX and mainframe servers. They had developed RAID technology and hot plug drives but they let Compaq bring it to the low end servers first. I believe that Mr Gerstner said, "We learned that if you don't eat your own children someone else will."
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The question is what IBM actually lost.
Intel compatible PCs are are commodities, with commodity pricing. Margins are razor thin, volume is critical, and the lowest cost producer wins.
IBM has never been the lowest cost producer in any of their lines of business.
IBM was also broadly based, having mainframes, mid-range machines (the System 34/36/38 and AS-400 series), Unix servers running AIX on PowerPC based systems, and a healthy business in software and services which had been a determined push to reduce the reliance on hardware for revenue.
They may have surrendered the Wintel server business to Compaq, but where is Compaq now? They no longer exist, after being acquired by HP. They were in trouble before that, as they were having problems trying to lower costs to be competitive with people like Dell.
You can make a good case IBM did the right long-term thing by getting out of that business.
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Dennis