IBM Corp took the first hesitant steps towards the promised radical restructuring of its operations yesterday, pulling its storage devices and printers out of the mainframe line of business and turning them into new business units. New management measurement systems were also outlined. Significantly, while the disks and tapes go into a new Storage Products line of business, printers fall under a new Pennant Systems Company, and the choice of name suggests that IBM is considering either floating off or selling the printer business, which builds some of its own printers but buys much of its product OEM from either Eastman Kodak Co or Hitachi Ltd. On printers, described as a $2,000m business in a $30,000m industry, IBM says it intends to make Pennant a wholly-owned subsidiary. Pennant will have temporary headquarters in Norwalk, Connecticut, development operations in Boulder and Tucson, and development and manufacturing in Endicott, New York. It will oversee the Jarfalla plant, which remains part of IBM Sweden. Pennant will be heded by James Vanderslice. The Storage Products line of business is also to get its own name when IBM can think of one, but no mention is made of it becoming a subsidiary. It will step up IBM’s OEM efforts – the company has already won Apple Computer Inc and Sun Microsystems Inc as OEM customers as well as supplying all IBM’s needs. IBM rates it an $11,000m business in a $53,000m industry. It will be headquartered in San Jose, California under Ray AbuZayyad, who joins IBM’s corporate management board. It takes in all magnetic and optical disks, tape drives and controllers, and related software. It takes in development and manufacturing in San Jose; Rochester, Minnesota; Havant, UK; and Fujisawa; development in Tucson and manufacturing in Mainz; Berlin; and Martinez, Argentina. A new US Employment Solutions Corp is being formed to handle hiring and recruiting for IBM and, in due course, other companies: it will take on some IBM people but also hire from outside. In other restructurings, the Personal Systems line of business gets an expanded mission to acquire as well as develop best-of-breed technologies and subsystems for PS/2s, 1s and RS/6000s. Marketing executives from around the world will join an executive board, headed by James Cannavino. There is also a new Entry Systems Technology unit to improve efficiency in developing future subsystems and technologies – and it is noteworthy that it is under a Japanese general manager, Nobuo Mii, who was vice-president and general manager of Asia Pacific Technical Operations. The Applications Business Systems line of business will have AS/400 brand managers in each market and some countries will implement a general business marketing organisation. IBM also formed an executive steering committee to help co-ordinate an effective working relationship among the large systems business, including the Enterprise Systems, Storage Products, Networking Products, Programming Systems and Technology Products lines of business under senior vice-president Terry Lautenbach, who cedes the Technology Products line of business to company president Jack Kuehler. The its new management and measurement systems are designed to bring autonomy to individual businesses to optimise their respective markets. Business plans and assessment systems applied to each business will vary since each market is different, IBM said, although certain principles will remain in effect for all businesses, including individual reporting of financial results from IBM’s major businesses, salaries tied more directly to each unit’s performance, and operational changes that will inject more market discipline into the relationships between IBM’s business units. Marketing and services companies will become service companies creating value for customers through knowledge and skills, and depending less on product cycles and hardware volumes for their prosperity, IBM said. They will in most cases be responsible for field inventory they buy from IBM.
