Word: ibm
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Dates: during 1990-1999
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...instead of being a high-tech hardware store, IBM is now selling help. Gerstner is betting that for the next 10 years, the technology market will be stuffed with firms aching to get rewired but without a clue about where to begin. IBM plans to sell these folks "solutions," the institutional equivalent of your nephew Phil, the relative you call when you're debating which PC to buy or wondering how to rescue the last half of that tax return you were preparing. Gerstner's Big Blue will offer solutions to help point you safely to the future...
...looks like a highly profitable choice. IBM's service sector, with sales of $12.7 billion, is pegged to grow at around 25% a year--that's good news, since the company can sell real brainpower rather than its quickly obsolete silicon counterpart. The group is growing so fast, says Thoman, that it's facing a challenge that's novel even for IBM: locating 15,000 talented new bodies to throw into the business next year...
...last corporate nosedive. He parachuted Thoman into the firm's struggling PC division with a mandate to clean up the mess. Thoman killed some of the group's nearly 500 models of machines and breathed life into those he kept while pounding costs through the floor. In January, IBM spent twice as much and took twice as long to make a PC as industry leader Compaq. Now it claims it has No. 1 beat...
Gerstner, in contrast, still believes in big iron. He is making a huge wager that the flood of interest in the Internet and internal networks (intranets) will produce a surge in demand for the sort of giant computers only IBM can make and maintain. The prediction evokes some scary memories at company headquarters in Armonk, New York; it's exactly the same bet the company made in the early '80s, when it wagered billions that the mainframe market was due for growth. The decision almost killed the company. Gerstner at least has stripped away the division's techno-worshipping culture...
Software is a trickier problem. Although IBM annually sells $12.6 billion worth of code, twice as much as Microsoft, it isn't seen as much of a software innovator, something that's considered essential in the age of the Internet. Gerstner tried to repair that view with his $2.9 billion purchase of Lotus last year, but skepticism remains. "They're not really innovating on the Internet," says Jon Oltsik, an analyst at Forrester Research. "They're being outmaneuvered by Netscape and Microsoft...