Some say Big Blue can't afford to continue losing money trying to marketdesktop computers. Others counter that PCs are a necessary evil that IBMmust suffer in order to land global corporate contracts.
I have a more interesting question: If IBM did get out of the PC business,how long would it be before its employees knew? Six months? Seven months?Who knows--maybe even longer!
Although it's the oldest high-tech company, IBM remains the mostfascinating, partly because of its sprawling size. In 2000, the companypulled in $88.4 billion in revenue and $8.1 billion in net income. IBMcontrols $896 million worth of real estate and $22.4 billion in plant, laboratory and office equipmentin Eritrea, Djibouti and Guyana, among other countries (although still nooffices in Chad or Laos).
Also, 316,303 employees worked full time at IBM while another 47,386 toiledin affiliated companies on behalf of 664,791 stockholders. Retiree clubs still meet in company cafeterias. Four researchers have won Nobel prizes--something companies like 1-800-Dentist will never claim.
Strategic shifts, therefore, can't be examined, or even implemented, in thesame manner at IBM as they might be at other large companies. It's just toodamn big.
In many companies, for instance, internal divisions work closely together.IBM has both a personal computer division and a semiconductor division butthe IBM PC rarely uses microprocessors from the semiconductor group. It'snot that the PC division distrusts the semiconductor division. But in itspursuit of objectivity and impartiality, the PC group ends up avoidingin-house products.
One handy way to think about the company is to think of it as Europe. WillIBM ever go bankrupt? No. Continents don't go out of business. At worst, theeconomy suffers. Exit the PC market? Too great a cultural shift. The equivalent would be getting Germans to renounce David Hasselhoff or Speedo bathing suits.Change comes in small doses, in the form of new divisions (Moldova) orexecutive retirements (Enver Hoxha).
Chief executive Lou Gerstner sits on top of the pyramid, but it's hard toeven envision him in complete control. In fact, it's hard to envision himperiod. Unlike Sun's Scott McNealy or Microsoft's Bill Gates, Gerstnerrarely makes public appearances and hardly accords interviews. If rumorssurfaced that the IBM board had placed him in a cryogenic freezer last yearand substituted Ernest Borgnine in his place, it would be tough to findclues to refute it.
But the reign of Lou is a far cry from the Imperial era. From 1911, when theComputing-Tabulating-Recording Co. formed, to 1993 when John Akers retiredas CEO, IBM's story was one of conquest, hierarchy and stability.
Hold that door, please
William Giles, now a public relations official at Intel, recalls a day whenAkers visited the Research Triangle Park, N.C., facility in the early 90s.Corporate headquarters told North Carolina not to make a fuss. Buildings were entirelyrepainted. Security was beefed up. "It was one of these 'The Eagle hasLanded' sort of things," he said.
Giles' job in the event? He held an elevator in the lobby so that when Akersarrived he wouldn't have to wait. To complicate matters, Giles had to actcasual, as if he were just hopping off.
"It continued the perception that these guys (CEOs) have that life is fareasier than it really is," Giles said, laughing. Giles held the door for tenminutes. Luckily, he could see Akers' entourage coming in a reflection offthe ceiling so he managed to strike a nonchalant pose in time.
The trappings of power left when Gerstner came in and the promise oflifetime employment disappeared with layoffs. Employees first began toquestion directives given to them by their managers, relayed an engineer.Executives at corporate headquarters in Armonk, N.Y., got moved from officesto cubicles.
Nonetheless, old habits fade slowly. If a VP and a director have a meeting,the meeting takes place on the VP's turf, never the other way around, saidone former employee. Casual day replaced the suit in the last decade, butsome guys had trouble adjusting. They initially wore regular shirts, butwith pants from the suit. Now, everyone has gravitated to a blue shirt and khakis.
"You double- and triple-check everything," said one source. How budgets forequipment and talent get allocated still remains a mystery, said another. Onthe positive side, when it comes to layoffs, the company spares no expense.
So what does the future hold? That's right. More of the same.
As the corporate timelineshows, the company has plugged forward through world wars, technologytransformations and the emergence of the digital economy. Compared with allthat, the recent upheavals in the marketplace are a veritable drop in thebucket for IBM.