Quote:
Originally Posted by DMcCunney
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
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IBM has never left the Wintel server business and has regained market share by changing their strategy. They lost significant business because they tried to protect their old business segmentation rather then trying to make the best product they could in every segment. At the time of the speech Compaq was number one, Dell was a growing second and IBM was a has been. I'm not sure why you think they would have been better off giving up the billions of dollars of revenue they've made in this segment.
The cannabilization concept is only important on the original decision to release the new product. Normally it doesn't matter because if you don't release it somebody else will. You are never guaranteed to keep the old business, you have to compete under the new terms.