IBM Makes PC Unit More Independent : Technology: But the firm stops short of spinning off the troubled operation.
In a long-anticipated effort to give its troubled personal computer operation greater autonomy, International Business Machines Corp. said Thursday that it had established the IBM Personal Computer Co. as a separate business unit.
Robert A. Corrigan, an IBM vice president who will head the new company, said the restructuring will enable the computer giant to respond more quickly to fast-changing conditions in the PC business.
“This takes out a lot of the bureaucracy,” Corrigan said. “Now we can get all decisions made in the local units and be much faster to the market.”
But IBM stopped short of making the $7-billion PC business a fully independent subsidiary directly accountable to IBM shareholders--a step some analysts have recommended.
Instead, the new unit will remain a part of the IBM Entry Systems division, which is headed by James A. Cannavino. In addition to the PC company, Cannavino retains overall responsibility for PC software, workstations and the broad alliance with Apple Computer.
In response to a disastrous drop in sales and profit that began in 1990, IBM has been trying to remake itself into a decentralized confederation of companies. The company has sold its typewriter division, converted its printer division into a wholly owned subsidiary and spun off its San Jose-based disk drive division into an independent business unit comparable to the new PC company.
Analysts have welcomed the new strategy but questioned whether it can really solve IBM’s broader problems, which stem from a historic shift away from large, proprietary computer systems toward generic, low-margin PCs. Although it established the PC standard in the early 1980s, IBM’s slow decision-making and high costs have enabled nimble, lower-cost PC suppliers such as AST Research, Compuadd, Dell and Gateway to steal customers.
With the new PC company, IBM aims to reverse its declining market share by dividing the business into four distinct product segments and introducing a slew of new products during the next several months.
