The Computer Slump Becomes A Sea Change

When growth in the computer industry suddenly slumped back in 1985, dropping from a 15% annual rate to 9% in a matter of months, few of the largest manufacturers seemed particularly bothered. It was only a temporary downturn, they maintained, and new technologies would soon create new opportunities--and generate new profits. And business did start picking up in 1988, but not at the old rate. So industry stalwarts such as IBM, Unisys, and Groupe Bull began trimming payrolls and closing unneeded facilities. It was a calm, measured response to what IBM Chairman John F. Akers came to refer to as the market's "new reality." With a bit of fine-tuning, IBM and others figured, they could get back to customary profit levels.

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