Big Blue's New BabyCatherine Arnst
Big Blue is getting a new look--sort of. Ending one of the personal-computer industry's favorite topics of summer speculation, IBM on Sept. 3 planned to announce that it has reorganized its PC operation.
Although the move is aimed at improving the troubled division's ability to compete by making it more independent, the new incarnation won't have the autonomy that the computer industry was expecting. IBM does call the new organization and its 10,000 workers a "separate operating unit," not a division, and it has given it a new name--IBM Personal Computer Co. Nevertheless, its president, Robert J. Corrigan, 52, will report to James A. Cannavino, an IBM vice-president and a key player in the IBM corporate structure. And Big Blue says that it won't break out the new company's revenues--about $7 billion in 1991--or itsearnings.
But IBM-PC, as Big Blue has dubbed it, gains considerable freedom. For one thing, it gains distance from IBM's workstation business and its OS/2 operating program, which got its own separate unit in the shuffle. That leaves Corrigan free to concentrate on the company's PS/1,PS/2, portable, and yet-to-be-announced, inexpensive ValuePoint personal computers. And IBM-PC absorbs the 1,200 employees of IBM's National Distribution Div., the group responsible for selling PCs to dealers. That means IBM now has more latitude in how it sells the computers through third parties. Formerly, NDD was part of the massive North American marketing and service group.
STREAMLINED. The best thing about the new structure, however, may be that Corrigan will control the company's costs himself--no longer will personal-computer operations have to bear overhead expenses from other parts of IBM. Says Corrigan: "The thing that's criticalto us is that we have complete control over all the parts of our business."
Still, some operations will remain somewhat beyond Corrigan's control. Although he is ultimately responsible for the success or failure of PCs worldwide, for example, the people who run IBM's PC operations in Europe, Asia, and Latin America do not report to Corrigan. That means Paris-based William E. McCracken, who, as head of the Europe/Middle East/Africa (EMEA) PC business, has publicly disagreed with Cannavino on strategy, will continue to report to EMEA Chairman Renato Riverso. Also, IBM-PC will have no direct sales force of its own: The corporate salespeople will continue to sell PCs directly to big customers.
Corrigan says he is encouraging geographical autonomy so each region can make product and pricing decisions appropriate for its market. The new strategy's first test will come with a slew of new product announcements and big price cuts planned for later this month.
Whether or not IBM-PC can be as agile as competitors, however, is still a question. But without Big Blue's bottleneck, the company is bound to be more nimble--fully independent or not.