A Tech Icon Grows Dimmer
International Business Machines is getting out of the machine business, at least out of the business of selling the personal computers that this American corporate icon made so ubiquitous. IBM’s announcement Friday is the latest example of how computer hardware has come to play a shrinking role in a technology hierarchy dominated by networking and software.
IBM will continue to make servers for computer networks and supercomputers, but it will focus mainly on its tech-consulting business. It turns out that selling companies advice on how to use their high-tech toys is more profitable than selling them the actual toys.
That’s partly because IBM long ago outsourced the design of a computer’s brain to Microsoft, the software giant that now makes the operating system for more than 95% of the world’s PCs.
It was in 1980 that IBM approached a then-obscure 25-year-old programmer who was at the time selling software coding on punched tape to early PC hobbyists and asked whether he had an operating system that might run the computer they hoped to introduce the following year. The programmer, Bill Gates, didn’t have such a system, but he quickly bought one and then leased rather than sold it to IBM. The result of this act of marketing genius is that Microsoft got a cut of IBM’s future profits and ultimately came to control the design of nearly all personal computers.
Computer “boxes” are now a commodity, merely a raw material, and the company that Thomas J. Watson Sr. founded to follow the mantra “THINK” will not be reduced to peddling plastic. Dell and Hewlett-Packard, for their part, may be a little worried that a potential buyer of IBM’s PC business is a low-cost Chinese manufacturer.
Still, the sale of IBM’s PC division inevitably diminishes the company’s fading image as technological icon. Most consumers not in the market for a supercomputer will see the inventor as just another service provider. That may seem like a comedown, but as IBM has proved to Wall Street in recent years, it’s a steady job, and in the volatile high-technology industry, that’s no small accomplishment.
