| > POWER, OS/2, and The Thinkpad has convinced me that IBM just doesn't make the most of what they create. They are all kind of different. I used to use Thinkpads and I hated IBM for selling it. But from their point of view it was the absolute right thing to do. High end consumer laptops are dominated by Apple (heck IBM is buying Apple and giving them to all their workers, something like 300K Mac Book Pro's). Everything else is racing to the bottom with thinner and thinner margins. Windows running laptops have to compete with Asus and friends and the money just wasn't there. Not sure about OS/2 much, don't remember the history. But with POWER, IBM has kind of started to turn around in the last few years. At some point in the past they have made an explicit choice to not play in the consumer market. Heck, there used to be IBM stores, you'd walk in and buy IBM products like you go to an Apple store now. But they decided they don't want to play in that market (or better or for worse). We'll still see how it ends up working out. So far it still stays in business after hundreds of years, maybe it just luck or there is something to its business approach. (Fun fact, it used to sell cheese slicers and time tracking devices as well at some point). |
Prior to Gerstner, IBM had a variety of esoteric products which were solely designed as loss leaders, never earned a profit, and relied on subsidies by other parts of the company to stay alive. Post 1993, really starting in 1994-1995 these got killed off or sold off, rapidly.
It wasn't enough to break even, one number I recall being thrown around was that we had to get to a 12% Expense-to-Revenue ratio, ignoring SG&A which was a corporate-wide number. Growth products, products in new markets were exempted entirely or given better targets, but old-line products were held to this magical 12% ratio (I was in the mainframe division at the time, which was grotesquely profitable and even today subsidizes much of the rest of IBM).