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Friday, December 03, 2004

I.B.M. Said to Put Its PC Business on the Market

NYTimes writes IBM may be selling its PC division.While I.B.M. long ago ceded the lead in the personal computer market to Dell and Hewlett-Packard so it could focus instead on the more lucrative corporate server and computer services business, a sale would nonetheless bring the end of an era in an industry that it helped invent. The sale, likely to be in the $1 billion to $2 billion range, is expected to include the entire range of desktop, laptop and notebook computers made by I.B.M.The retreat from the business may be the ultimate acknowledgement that the personal computer has become a staple of everyday life, a commodity product, yielding very slim profits. The companies that make the most money from PC's these days are Microsoft and Intel - whose software and chips are the standard for most of the personal computers sold, regardless of the maker.

Leslie Fiering, a research vice president at Gartner, has predicted consolidation in the PC industry over the next few years."Exiting the market may be the only logical choice for global vendors bleeding profits and struggling for share," she wrote in a recent research report. And she noted that Hewlett-Packard, a broad-based technology company where PC's are only part of a much larger business, might face pressures similar to I.B.M.'s. "The PC divisions of H. P. and I.B.M." Ms. Fiering wrote, "are vulnerable to being spun off if their drag on margins and profitability are deemed too great by their parent companies." In the meantime, she said, Asian vendors like Lenovo "appear well positioned to leverage their strong local-market standing and low-cost operating models into a global presence."Asia has increasingly become a major hub for technology manufacturing. More and more chip making is done in the contract factories, like Taiwan Semiconductor, and at new foundries in China.
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