IBM to Sell Asian PC ‘Clones’ in Europe : Computers: The U.S. giant will join the low-cost market by selling imitations of its own machines.

IBM has long fought makers of low-cost “clones” of its personal computers because they hurt its business, but now the leading computer manufacturer is joining the crowd.

By this summer, International Business Machines Corp. will start selling clones in Europe made by an Asian manufacturer, industry sources said Tuesday.

The new PCs will not carry the IBM label. Instead, they will use the name of a new subsidiary IBM will announce in May or June to sell the machines, the sources said, speaking on condition of anonymity. That name has not been established.

IBM has not decided whether to sell clones in the United States, but the sources said IBM’s domestic sales group will monitor the European venture closely.

In effect, IBM is splitting the PC market into three segments: its top-end PS-2 line, sold primarily to corporations; the cheaper PS-1 line, aimed at home and small-business users, and the clones.

By going outside for the new PCs, IBM is acknowledging what industry analysts have said for some time: only the lowest-cost manufacturers can compete in the the low end of the PC market, which has been the scene of drastic price-cutting in the past year or so.

“It’s certainly not typical IBM behavior, but then typical behavior in the PC business has been thrown to the wind,” said analyst Bruce Stephen of International Data Corp., a high-tech research firm.

Stephen said many companies that sell low-cost clones are really just sales and warehousing concerns that have their machines made for them in Asia.

“It’s a whole new ball game in that end of the market and they (IBM) are just acknowledging the way that business is organized.”

IBM announced a major reorganization late last year designed to give its lines of business more independence and to cut costs. Though the European clone venture was in the works before the revamping, it was given a push by the move, the sources said.

IBM suffered its first-ever loss in 1991, though most of the red ink was due to the costs of a job-cutting program and to account for retiree benefits.

In a statement, Bill McCracken, general manager of IBM’s European PC operations, acknowledged that the company was considering selling clones.

“We have been actively studying the marketing of lowest-cost, IBM-compatible PCs across Europe. These activities have included studies of supply and delivery options we haven’t pursued in the past,” McCracken said.

“As a result of our findings, we have decided to establish an independent subsidiary to focus on this particular segment of the market,” he said.

IBM spokesman Mac Jeffery said the company, based in Armonk, N.Y., had no comment on the reports that it would sell Asian clones under a non-IBM label.

News of the venture was first reported this week in PC Week, a trade journal.

The move has some precedent. Since last summer, an IBM joint venture in Singapore has been selling clone PCs made there.

The company, called International Application Solutions Pte Ltd., is 49% owned by IBM, 51% by Hong Leong Corp. Ltd., a Singapore-based trading company. The PCs are sold in Southeast Asia under the IAS label.

Speaking of the Singaporean venture, Jeffery said IBM decided that it needed to sell clones to compete in the low end of the PC market.