IBM Launches Overhaul by Decentralizing 2 Units : * Technology: The changes involve the $1-billion data storage division based in San Jose and a printer group.


International Business Machines on Thursday announced the initial steps it is taking to implement its new decentralization plan, including restructuring a printer group into a separate subsidiary and giving operating independence to its $11-billion San Jose-based data storage unit.

The world’s largest computer maker said last week that it would undertake a major organizational overhaul, splitting the company into independent business units that can respond more quickly to rapidly changing markets.

IBM Chairman John Akers said Thursday’s actions were just the beginning of a long-term process, and it remains unclear just how quickly he will push the company’s core computer operations toward financial independence and accountability.

The new printer company, called Pennant Systems, will be the first unit to be made into a fully separate subsidiary under the new plan. The $2-billion operation, which builds high-end printers and related software, will be temporarily headquartered in Norwalk, Conn., and will headed by IBM Vice President James T. Vanderslice.


Perhaps the most far-reaching change announced Thursday was the creation of a new business unit for storage products, including computer disk drives, tape drives and optical storage systems. The data storage business is one of IBM’s largest, with 18,000 employees worldwide, and had previously been a part of the mainframe computer division.

IBM Vice President Ray S. AbuZayyad, a respected veteran of the operation that is widely recognized as the world leader in storage technology, was named head of the new Storage Products line of business. He immediately declared his intention to dramatically increase the sale of IBM disk drives and tape drives to other computer companies--something IBM has pursued with little success to date.

“We now have the charter to call upon any computer manufacturer and offer state-of-the-art products, and we are free to make our own decisions on pricing, investments and asset management,” said AbuZayyad, who was clearly excited about the opportunity to run his own show.

He said IBM would compete across a broad range of products, but would try to position itself as the high-quality supplier and avoid the price wars that have drained most personal computer disk drive vendors of their profits over the past year.


Other changes announced by IBM Thursday included:

* The creation of Employment Solutions Corp. to provide hiring and recruiting services to IBM in the United States.

* A restructuring of the Personal Systems business, which is responsible for personal computers and workstations. Personal Systems marketing executives were named for each of IBM’s five geographic regions and given broad responsibility for sales performance. A new organization was created to focus on long-term development of PC products.

* New management and measures systems for assessing the performance of individual IBM operations.


* New autonomy for the various IBM marketing and service companies, which now have much broader latitude to offer non-IBM products to customers.