President of IBM’s PC Unit Resigns : Major Shake-Up Reflects Woes at Division, Analysts Say
Offering yet more evidence of its personal computer woes, International Business Machines on Monday announced a major shake-up of its PC division, including the resignation of the division president.
William C. Lowe, who had helped persuade IBM to jump into into the personal computer business in 1981, will join Xerox Corp. as executive vice president, responsible for planning development and manufacturing of most of the company’s office equipment product lines.
Lowe, 47, had headed the PC effort since March, 1985, when he succeeded the late Philip D. Estridge. James A. Cannavino, formerly an IBM vice president, was named to replace Lowe.
In addition, IBM created a new division to handle its sophisticated workstations, products that had once been combined with the less powerful personal computers. The new division will be headed by IBM Vice President Nicholas M. Donofrio.
“The changes announced today significantly strengthen IBM’s ability to compete across all areas of the personal systems business,” said Richard Gerstner, vice president and general manager of IBM’s Personal Systems Group.
Analysts widely interpreted the moves as a clear indication that IBM is disappointed by the way its newest line of personal computers, the Personal System/2, has been received by both customers and the electronics industry. The line, introduced in early 1987, was specifically designed with hard-to-copy technology to protect IBM from the scores of clone makers that had nibbled away at the company’s share of the PC market.
However, analysts said the new machines--while protecting IBM from competitors--offered few improvements for customers over its earlier models.
“There was no demonstrable benefit for the customer and they balked,” said Bruce Lupatkin, an analyst with Hambrecht & Quist, a San Francisco brokerage. “It’s ironic but IBM, supposedly the great marketing company, doesn’t listen to its customers.”
According to Dataquest, a Silicon Valley market research firm, IBM’s share of personal computer sales in the United States has fallen from 20.1% in 1984, when a total of 7.8 million machines were sold, to an estimated 17.4% this year, when total U.S. sales are expected to hit 10.2 million.
Although there was no public indication that Lowe was forced out, analysts said they believed that he had fallen out of favor and was being blamed for the division’s misfires. Many speculated that Lowe had grown disenchanted with his job and was looking for a new challenge.
“It’s Xerox’s gain and IBM’s loss,” said William Lyons, who left IBM’s personal computer operation two months ago to become a vice president at Ashton-Tate of Torrance. “Sometimes the timing is right and you go.”
An engineer by training, Lowe joined IBM in early 1960s and quickly rose through the ranks. In 1978, he was named director of the laboratory at IBM’s facility in Boca Raton, Fla., a position he used to lobby senior IBM management to launch a crash attack on the personal computer market.
In 1980, he assembled the initial team of 12 engineers, dubbed the “dirty dozen,” who built the “Acorn,” the prototype of the personal computer that IBM introduced in August, 1981, a machine that went on to become one of the company’s most successful products.
