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January 17, 1994


By CBR Staff Writer

Louis Gerstner is energetically reversing many of the big changes set in train during the last year of his predecessor John Akers’ tenure of the chairmanship at IBM Corp, and over the weekend, three new developments emerged. The company has thought better of the idea of giving financial breakdowns of the performance of the various newly-decentralised business units, the PS/2 and ValuePoint personal computer lines are to be merged, and the let 100 flowers bloom strategy on operating systems is to be reversed. According to the Wall Street Journal, the annual report for 1993 will contain a lot less financial data on the various business units than had been promised, and the paper says such a decision would underscore the extent to which IBM has abandoned efforts to increase autonomy of its various businesses – as well as riling analysts hungry for numbers to help them forecast the company’s future. But there is expected to be more detail on the performance of IBM Credit Corp and other finance activities. On the personal computer front, IBM announced that it is putting PS/2 and ValuePoint under one US marketing unit to be called the Commercial Desktop brand, although the separate product lines will not disappear completely. In the recent past, the separate PS/2 and ValuePoint sales teams are said to have turned up at the same account and bid against each other – and ValuePoint is characterised by PC Week as a $1,000m business that is unprofitable. The PS/1 remains the separate home computer brand. PC Week also gleans from an interview with Louis Gerstner that he has ordered reviews of IBM’s entire product line portfolio, including its operating systems, to eliminate or modify redundant development efforts. With profit margins dropping, IBM can’t afford to keep developing multiple products that fill similar needs, Gerstner told the paper, noting that the company has two mid-range computer lines, multiple personal computer lines: We’re going to have to kill things earlier. Areas under review include all of our operating systems, the evolution of OS/2 to what we call our Workplace OS operating system – there are lots of people who would argue that operating systems are not going to be as valuable in a world of object-based software, he told the paper. A high-level task force, led by senior vice-president of strategy and development James cannavino and senior-vice president and group executive Ellen Hancock, is overseeing the operating system review, said an IBM insider, who also confirmed Taligent does not carry a high priority.

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