How Goliath Was Humbled


By Paul Carroll

Crown x 375pp x $24

In Big Blues, Paul Carroll attempts to describe how and why IBM, arguably the most successful corporation in the world just a few years ago, has fallen as hard and as low as it has. He tells a story of arrogance, greed, and incredible incompetence, at both corporate and personal levels. And he names more names and offers more direct quotations than any book to date about IBM.

The book is sure to displease a good number of IBM executives, including perhaps Louis V. Gerstner Jr., the company's new chairman and chief executive. After all, he still depends heavily on some of the people Carroll portrays as "culturally gridlocked," thick-headed, and just plain lost in a fast-changing marketplace. He might wonder: If this was the caliber of its leaders, how did IBM ever get as far as it did? Then again, he might not: Carroll admittedly relies heavily on outsiders--in particular, officials of Microsoft Corp.--for this depressing picture.

Carroll spins his tale around the rise of IBM's famous personal computer. As everyone in the business world knows, the IBM PC was an instant, huge success from its 1981 launch. PCs sent IBM's already fat profits through the roof for several years and spawned a vast subindustry--now the biggest segment of the computer business. Equally familiar is the story, central to this book, of how Microsoft, led by one William H. Gates III, capitalized on IBM's missteps to shape the industry to its advantage and grab enormous market power. Carroll's challenge has been to find a more compelling and perhaps more scenic route through this well-trod territory.

In many ways, he succeeds. Carroll describes the past 15 tumultuous years of computer-industry history quite thoroughly. He serves up enough technical detail to keep the informed reader interested, yet he doesn't lard on excessive jargon that might turn off the uninitiated. He keeps the pages turning with a stream of lively anecdotes, many of which will be new even to those who have followed IBM's woes for years.

Drawing on talks with scores of current and former IBMers and those who have done business with them, Carroll describes a cadre of top IBM executives who, convinced of the infallibility of Big Blue's finely tuned management systems, fall out of touch with the market as the action shifts from high-profit mainframes to commodity-like desktop microcomputers. Carroll seems to relish describing their every stumble--in pricing, product design, layoff policies, you name it. IBM, he writes, became "like a music-publishing company run by deaf people."

Juiciest of all are Carroll's descriptions of the messy encounters between his two protagonists: Gates and IBM's PC chief, James A. Cannavino. Carroll portrays the former as a near-genius, the IBMer as a somewhat pathetic wannabe. In Carroll's telling, Gates seems to understand the PC and software businesses in his very bones. Cannavino, 100% a product of IBM's mainframe establishment, never seems to comprehend the extent to which Big Blues's clout is fading.

As Gates outfoxes him, the IBM executive becomes more and more flustered. During negotiations over the OS/2 operating system, which IBM engaged Microsoft to co-develop, Carroll reports that Cannavino shouted at his nemesis: "You may think I'm an idiot, but I'm not, and I'm not going to let you make me look like an idiot again."

How does Carroll know Cannavino actually said that? Or that former Chairman and CEO John F. Akers and others really felt the feelings attributed to them on page after page? We cannot be sure, for Carroll frequently doesn't make clear who his sources are. And that's a problem: The tone of this book overwhelmingly favors the winners--Microsoft and the other companies that got rich on PCs. Gates, especially, seems to walk on water, while IBM's doings come in for mounting sarcasm.

Perhaps that's just a function of the circumstances that shaped this book's production. In his forward, Carroll tells readers that IBM declined to cooperate and thanks Microsoft officials for having "spent days" giving him their view of events. They're clearly not disinterested parties, though. Also, judging by the book's rather shapeless structure--the chapters don't even have clear topics--Big Blues has the feel of something rushed into print to tap current interest in IBM and Gerstner's predicament.

With more time, Carroll might have fleshed out some important themes. He rather grandly presents his tale as "a sort of Greek tragedy," implying he'll uncover some universal truths in the decline of a computer company. And he says, promisingly, that "IBM's troubles...raise questions about whether big companies can work anymore." Unfortunately, the book has ended up reading like a very long newspaper article, crammed with every tidbit this Wall Street Journal reporter could find and missing no opportunity for overdrawn irony or melodrama. Indeed, Carroll's final chapter begins with the gruesome and quite gratuitous description of an IBM employee's attempted suicide--prompted, she tells Carroll, by the increasingly corrosive atmosphere at the company she'd felt such loyalty for.

Carroll also falls short in making sense of IBM's travails. He never actually considers what lessons they hold for other companies, or for the nation as a whole. And by focusing so heavily on IBM's $10 billion PC business, he makes it seem as if its problems alone explain the company's current mess. In fact, IBM's biggest problems are in its $30 billion mainframe business.

Still, Big Blues will definitely be entertaining for many readers, in and out of the computer industry. Don't take it too seriously--you can't. And stay tuned. The story of IBM ain't half over.

Before it's here, it's on the Bloomberg Terminal.