IBM plan to regain PC sales

THE troubled computing giant IBM last week radically restructured its personal computing branding strategy and announced a series of initiatives aimed at simplifying PC distribution in a bid to restore its flagging global PC marketshare.

Under the new measures, IBM has reduced the number of brand names under which its PCs are sold from nine to four, and will rationalise the number of components used in its PCs. 'Building-block' components will be shared across various brand models.

IBM said the initiatives were aimed at making the PC business less complex for the consumer, simplifying its PC design and manufacturing process by using more 'common' components and making its distribution system more flexible, allowing for more effective 'built-to-order' fulfilment.

Senior vice-president and group executive Richard Thoman said it was time 'to fundamentally change the way that IBM approaches the PC business'.

Mr Thoman said: 'The PC industry has done a brilliant job of innovation and technology. But, in the process, we lost touch with the majority of customers - who are all dazed and confused by the complexity of the technology, the array of choices and the level of support.' For IBM, which once had the biggest slice of the world PC market, the restructure represents the first salvo in its battle to claw its way back to the top.

While IBM's PC business - like the rest of the industry - has grown rapidly, in the past two years it has lost marketshare to competitors such as Compaq and Gateway.

Two years ago, IBM laid claim to more than 13 per cent of the world PC market as the number one supplier.

This year independent research group Dataquest put IBM's share at 7.9 per cent, and the number four supplier.

The company is supporting its fight with US$100 million in advertising to be spent worldwide before the end of the year.

And according to the IBM PC Company's Sydney-based Asia-Pacific South general manager Henry Chow, the company will continue its advertising blitz (which will include print and television spending) through next year at the same rate, if not more.

The rapidly growing Asian PC markets had been made priorities for IBM, Mr Chow said.

A disproportionately large proportion of the $100 million advertising pool was being allocated to the region.

The Asia Pacific South sales region makes up about five per cent of IBM PC Company revenue, although 'considerably more' than five per cent of the advertising budget would be spent there, he said.

It was hoped the advertising blitz in Asia would fuel growth across the region by more than 50 per cent, he said.

This included anticipated growth of some 400 per cent in China, and 80 per cent in Association of Southeast Asian Nations countries.

In future, users can expect to see only four IBM PC brands. Desktop systems aimed at the business and commercial markets will appear under the company's previous brand name, IBM PC.

Business server systems are to be branded simply PC Server, while the multimedia-ready systems aimed at the home/consumer markets will be marketed under the new brand name of Aptiva.

Mobile products will continue under the successful ThinkPad name.

The new brands consolidate nine previous brands, and are designed to clear some of the confusion created by less consumer-friendly brands, such as PS/2, PS/1 and ValuePoint.

Although IBM planned to market its PCs under fewer brand-names, Mr Chow said this did not mean customers would have less choice.

IBM would be offering more configurations, and its streamlined design and manufacturing processes would mean it could be more efficient in delivering 'built-to-order' systems anywhere in the world, he said.

The streamlined manufacturing and PC component consolidation was the result of two years effort under the PC company's 'Do It Once', campaign, Mr Chow said. There were now five motherboards, eight fewer than before;there were four 'mechanicals' - the term applied to frames and casing devices - 10 fewer than before the campaign.

The company had also consolidated the number of hard-drive devices from 52 to 10.

By reducing the number of components, the company aimed to cut costs and also improve its responsiveness as configurations become simpler.

Last week's announcement included the introduction of several models and technology, including a new family of commercial desktop systems called the IBM PC 300 and IBM PC 700 series.

The new models feature an IBM-designed pre-loaded software add-on called IBM PC EasyTools aimed at simplifying system management and maintenance.

In addition, the company announced two new models of its ThinkPad 755 and 360 series. The ThinkPad 755D is a mobile multimedia system.