The Flip And The Flop
Just when you start to get a handle on things in the PC market, things go all topsy-turvy on you. You work hard to stay on top of the trends, to try and figure out what the constants are, when all of a sudden, something shifts and all the things you thought you knew for certain get turned on their ear.
In this article, I am going to take a look at some of the changes that have caught my eye over the last few years and see if I can make some educated guesses as to what exactly happened to cause the upheaval. I find some of the dynamics pretty interesting when I actually give it a serious look. Hopefully there are some lessons to be learned from all of this. If not, history may end up repeating itself yet again.
Big Blue In The Beginning
IBM pretty much invented the modern PC, yet they have struggled to maintain a presence in the market over the last decade. They have pulled out of the consumer PC market entirely and have recently decided to outsource their last big push, the Net Vista series. How can it be that such a huge company with such a stockpile of talent could go from creating the personal computer to being an almost non-existent player? I’m laying this one strictly on management.
Take a long look back at IBM and you will see that while they certainly have the know-how to get things going, they have one of the most out-of-touch management structures in the history of computing. They have some of the poorest execution I’ve ever seen, and it baffles me that it has continued on for as long as it has. International Business Machines is still one of the most powerful and influential companies out there, but they have dropped the ball on so many occasions that it is flat out embarrassing.
They did well with typewriters and mainframes. So well in fact, that they became a very, very large company with some incredibly deep pockets. They have had some of the very best engineers in the industry, and those engineers have invented some of the most compelling technologies we’ve ever seen. But as IBM grew, so did the layers of stodgy managers. They became bloated and slow to react and seemed to be more worried about where they came from than where they were going. They started out being a single source, top to bottom solution for everything from the huge mainframes to the typewriters and the supplies they consumed. They even handled installation and management of the huge air conditioned rooms that housed some of these mammoth machines.
They also had a business model that many companies are beating down the doors to get: They rented/leased the equipment to the client. This gave them a constant flow of revenue, and once you added in their legendary service contracts, you had an ongoing stream of cash pouring into the coffers and a loyal and dependent customer base that was likely to keep on paying their monthly fees to keep things running smoothly. However, in the 80’s, IBM inexplicably made a shift away from this business model to one that was sales oriented.
Certainly this can be seen as a very short-sighted decision. Suddenly, the IBM people knew and loved was going off on a tangent. For some, the perception was that it was no longer about having your representatives in the field establishing long and trusting relationships with clients, but it was now about making the sale and moving on to the next customer. Instead of selling customers the legendary IBM “package” with the long-term revenue stream that came with it, it became about pushing product out the door at a competitive cost.