If you want to make John Akers mad, you just have to suggest that IBM management is in any way to blame for the company’s less than sparking financial performance over the past five years (CI No 1,322). And while he seems to be endlessly and optimistically waiting for something to turn up when all […]
If you want to make John Akers mad, you just have to suggest that IBM management is in any way to blame for the company’s less than sparking financial performance over the past five years (CI No 1,322). And while he seems to be endlessly and optimistically waiting for something to turn up when all the signs are that Europe, which has saved the company’s bacon up to now, is about to turn down at the same time as the US market goes into a more emphatic decline, only the hypercritical will blame IBM for the problems that held up the 3390 disk drives projects at the boundaries of the known technological world do go wrong and it ain’t necessarily anybody’s fault when they do. But the impression Akers gives is that there is nothing that IBM management can do to improve the company’s terms of trade.
The problem is easy enough to expound: IBM grew fat in the days of proprietary operating systems and vendorspecific hardware so fat that it became by far the most successful computer company in the world, largely owns the proprietary mainframe business, and has an ample slice of the proprietary small systems business. But that world is now in terminal decline, the number of proprietary operating environments that will be a serious force in 1995 can be counted on the fingers of one hand. IBM can’t afford to throw its own proprietary environments away because they represent far too large a part of its business as well as the most profitable. And there is a vast if very finite army of customers that want exactly what IBM has always offered: because IBM’s success has been built not only on the sheer market muscle it acquired when it gained the critical mass that enabled it almost effortlessly to dominate the industry and see off its less skilful competitors. It offered and offers superb service and its products are generally of a significantly higher quality and reliability than those made by most of its competitors. That costs. But it’s a price that the majority of IBM’s longstanding customers are prepared to pay. But those customers are no longer large enough in number to provide IBM with both its bread and butter and its jam, and the fundamental changes that are seeping up from the desktop to threaten even IBM’s hitherto rock-solid mainframe business. The fastest-growing sectors of the market simply won’t wait for every last IBM manager to sign off a new workstation or a new personal computer before the thing can be launched: we have seen over and over again that all that leads to is competitors being two steps ahead in terms of price-performance by the time IBM is satisfied that the thing really does meet its exacting manufacturing and reliability standards – and the vast majority of personal computer and workstation users don’t want products designed to be as good after 25 years as they were when they were first plugged in – certainly not if they have to pay for that extra quality. Yet IBM can’t just throw all its hard-won repulation for quality and service overboard overnight: what can the company do?
The answer is quite simply to put mass-market personal computers and Unix workstations – everything that is non-proprietary into a wholly-owned subsidiary under entrepreneurial managers brought in from outside and paid solely by results: do properly what IBM so nearly did when it formed Entry Systems Division to enter the personal computer market until it got cold feet and brought it back under the leaden hand of the Armonkeys. But the most crucial and revolutionary step has to be to drop the IBM name for the new subsidiary. Go for the next three letters in the alphabet and call it JCN – fit words to the letters later in the time-hallowed IBM practice of rewriting history when it comes to nomenclature. JCN would have the best of both worlds: it would have access to all IBM’s plants and components around the world, yet would make no overt claims to offer IBM quality, reliability or service: indeed the last would have to be as cheap and as cheerful as possible. Yet everyone would know that it was IBM under anot
her name, so that it would retain most of the benefits of the IBM name, and in the case of personal computers, its Micro Channel models would be more or less the same as PS/2s, although not built to such rigorous standards and of course it would be free to offer as many AT- or EISA-bus models as it chose if that was what it found the market wanted why throw that business away just because the semi-detached IBM wants to establish a new standard? IBM PS/2s would cost significantly more than JCN’s machines, but would be supplied with better service than IBM presently offers on personal computers, and instead of being schizophrenic about OS/2 versus MS-DOS, Unix versus OS/400 and ultimately MVS, everyone would know exactly where IBM stood, and true blue IBMers would be free to disparage the upstart sibling in a manner that would have made even a Data Processing Department man blench were those terms to be used about the old General Systems Division.
JCN would have the freedom to mix it in the gutter with the likes of DEC, Sun Microsystems and Hewlett-Packard, offering whatever it felt it needed in the way of communications to IBM mainframes and mid-range systems – and, crucially, the freedom to rejuvenate its product line every three months if it needed to in order to stay ahead of the competition. It’s an even bet that in a few years, JCN would be bigger than True Blue IBM, and margins should not be substantially worse because volume would be so much greater than it is now. Some might argue that IBM should then spin JCN off to its shareholders as a completely independent company, but as its ambition remains to own the computer industry one way or another, such a move would likely not appeal. And to give the True Blue IBMers a start in piling invective on the the head of the unborn upstart, among other things, JCN stands for Junk – Cheap and Nasty.