Word: ibm
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Dates: during 1990-1999
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Still, analysts insist that IBM must get even leaner -- perhaps paring at least 50,000 more jobs within the next two years -- if it is to meet the challenge from smaller and nimbler competitors. Says Bruce Lupatkin, an industry analyst: "There's still a lot of fat left." CEO Akers agrees that layoffs are necessary for the company's long-term survival. "Although it's a difficult step to take," he says, "it's one that, given the realities, if we must do it, we must...
...reductions alone, however, will not be enough to restore IBM's competitive edge. Distracted by endless rounds of cutbacks, the company lost sight of the ball. IBM fumbled in market after market: it fell behind in computer-chip technology, and it engaged in a self-destructive battle with software powerhouse Microsoft over the direction of desktop-computer programs. Even worse, IBM began losing money and market share in two of its vital markets: mainframes and personal computers. Here IBM is faced with a double quandary: it remains the world leader in the market for mainframes, but the large systems...
...years, IBM stubbornly attempted to ignore the trend away from big mainframes. Instead of adapting, it tried to protect its base: the computing dinosaurs account for 42% of IBM's revenues and about 60% of its profits. Margins on large systems were as high as 70%, although recent price competition has reduced margins to about 50%. But with sales slowing and price pressure mounting, IBM has finally faced up to the trend. Last week Akers signaled IBM's intention to shift away from its mainframe business, which is down 10% this year. Most of the $1 billion reduction...
...IBM, however, is seeking to gain strength in a market where it is at its weakest. Personal computers accounted for 20% of IBM sales of $63 billion last year and are expected to make up 40% by the year 2000. But IBM's growth in PCs lags far behind that of the rest of the industry. IBM is the only one of the top 10 PC vendors whose market share has declined this year. In fact, IBM's PC business...
...contrast, Apple Computer -- which has surpassed IBM as the leading PC maker for the first time ever -- is having a spectacular year, largely on the success of its laptop PowerBook. Apple and Compaq are reaping the benefits of huge demand sparked by aggressive price cutting. Workstation manufacturers, such as Sun Microsystems and Hewlett-Packard, are also enjoying strong demand for their machines. IBM is still catching up in workstations. Although it developed superb technology years ago, the company sat on it out of fear that it would cannibalize IBM's bread-and-butter mainframe business...