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SCMP Reporter

THERE are few who will argue that it has not been a stellar year for the IBM PC Company. It has seen its world market share slip, particularly in the United States.

   But IBM officials say the autonomous unit has never been in better shape, characterising this year as a period of reconstruction.

  IBM PC Company general manager of marketing and customer fulfilment Bill McCracken said it had been a year in which operations were consolidated, reducing the number of brands under which its PCs were marketed from nine to four, improving the build-to-order capabilities of its manufacturing operation, and centralising its development and headquarters activities in a single location.

  Though there had been some slippage in market share, Mr McCracken said, the company believed it had never been in a stronger position in the PC market, citing the launch of OS/2 Warp as its strategic operating platform, the launch of its Aptiva PCs, the first that seriously address the home and consumer markets, and a strengthening of its portable and server lines.

  IBM used Comdex as a platform to 're-introduce' itself to the computing industry.

   The 'new' IBM is different. Strategically, the company seems to have come full circle.

  A couple of years ago, as its financial woes worsened, IBM began to give greater autonomy to its business units, apparently aimed at becoming a kind of federation of different wholly-owned companies addressing different areas of the market.

  At Comdex the company was presenting a single, unified approach. All IBM business units were in a single booth.

   IBM Chairman Lou Gerstner, in a videotaped message to a breakfast meeting, spoke of a company aiming to leverage its cross-industry expertise, the foundation of its newly launched corporate slogan 'There is a difference'.

  The PC company's Mr McCracken said strategically there had been no change. It continued to enjoy the absolute autonomy, but at the same time it sought to leverage the expertise in other parts of the corporation.

  'We have to capitalise on what we are able to do in association with the rest of the corporation, that other competitors of ours have to do through separate alliances,' Mr McCracken said.

  'So what you see is us establishing close alliances with other parts of the IBM Corporation, to take advantage of the same kinds of things that our competitors have to go outside of their own organisations.'   The company is expecting 1995 to become a big sales year - despite an early hiccup in underestimating demand for it Aptiva home computers. That was a mistake in which the company squandered tens of millions in lost sales.

  'We have this year spent a great deal of time . . . reorganising and restructuring to grab the market place in more leadership, in the way we do business, from manufacturing to fulfilment to brand management to advertising and so on,' Mr McCracken said.

  'We have set the foundation for continued growth and leadership in the market, but from a long term perspective, rather than running at it in the short term, as we were a little bit at the end of 1993.'   'It was a year of building the platform that will move us to a leadership role from all measurement points of view - in units, in revenue, in profit - in a 1995 time frame.'   Certainly the IBM PC Company has not been without its successes in recent times.

  The Aptiva range, for all the media attention that has been generated by the company's underestimation of demand, was a spectacular success.

  In particular, the market welcomed heartily the software bundle that came with Aptiva, specifically software that allowed the machine to act as an answering machine and fax terminal (even switching itself on to receive messages, and off again), as well as software that will let a remote IBM technician takeover the machine via modem and troubleshoot problems.

  The PC Company was awarded the prestigious Best In Show award for its ThinkPad 755CD, a breakthrough portable that integrates a full-size CD-ROM player into a portable package that weighs less than seven pounds.

  The simplification of the IBM PC brands should reap rewards next year.

  Mr McCracken expected the move to go a long way in helping regain lost ground in the consumer market (during Comdex, one major research company announced that Packard Bell, a company little known in this region, had overtaken IBM as the third largest supplier of PCs into US consumer retail channels).

   The branding revamp included not just consumer-friendly software bundles, but an entirely re-constructed support infrastructure that was perhaps the best in the industry.

  There are difficulties, however - one being the mixed messages that the market was receiving with regard to its marketing of the PowerPC processor.

   The challenge will be introducing PowerPC-based personal computers without undermining its Intel-based PC strategy.

   The fear, uncertainty and doubt created by the mixed messages will be something IBM's competitors could capitalise on.

  In Asia, there were some manufacturing issues the company would address early next year to get around some of the market complexities that result from different tariff structures.

  While the IBM PC plant in Wangaratta, Australia, would continue to be the focal point of manufacturing in the region, Mr McCracken said the company would start to move some assembly operations closer to each market.

  'We will have what we call assembly/distribution centres around the region that will be distribution points,' Mr McCracken said.

  The company's joint-venture manufacturing facility in Shenzhen, owned with Great Wall Corporation, may also play an expanded role in manufacturing for the region, as the terms of the joint-venture had a certain export quota requirement.



IBM unit ready for sales assault