Devil's Advocate: What, no IBM PC?

Not the safest move...

Can we imagine life without the IBM PC? Rumour has it that IBM is negotiating the sale of its personal computer business. Of course, that would by no means herald the end of the PC but it would be remarkable to see the creator of the now ubiquitous device withdraw from the market.

This is only the latest in a series of similar rumours and IBM is refusing to comment on the speculation. The plausibility of the story gives cause for concern, though. We should be worried that a company with all IBM's resources cannot achieve significant profits in a market of its own creation, and perhaps wonder about the future for the PC.

Ever since IBM achieved dominance in the 1960s with its mainframe computers, it has been a significant presence in every area of the computer market. For a short while after microcomputers started being made, it seemed a new sector was coming into being without IBM. But the introduction of the IBM personal computer quickly led to dominance by the new machine.

Innovation does not always pay. And IBM, perhaps because of its concentration on large-scale computing, made a series of unwise decisions over the PC. Good features of the original design such as the expansion bus helped its success, but leaving control of the operating system with another company must be one of the worst decisions ever made in the computer sector.

Later, when IBM attempted to reassert control after market incursions by Compaq and others, its attempt to introduce a more sophisticated bus backfired badly. Compaq, backed by other PC makers, outmanoeuvred Big Blue by the neat device of describing the old bus as "Industry Standard Architecture".

Perhaps the biggest problem for IBM has been the fact that the PC has found itself straddling business and retail markets. IBM's achievements in consumer products have always been limited, contrasting with Compaq and especially HP, with its huge printer business. And Dell has always sold to both sectors, finding a business model that gave it a steadily increased share in both.

The worrying factor is that, in a market where software is already dominated by one company, just about every PC maker but Dell has considered giving up. Desktops have become so tough a market that many makers relied on portables of one kind or another to provide a source of profits. Now increased competition has squeezed even that formerly premium market.

Servers remain a distinctive market, where IBM has recently come out with innovative implementations of the blade server principle. Yet one wonders whether even that market may ultimately be squeezed in the same way as PCs. With the operating system making far more profits than the hardware for most PC platforms, the much misused description of 'commodity' does seem to apply to the machines.

While there can be no doubting the success of IBM's policy of moving into services, it will still be a hard decision for IBM executives to pull out of a whole sector of computer manufacture. Although it has largely withdrawn from the retail sector, the company still supplies a very broad range of hardware to the corporate and public sectors. Those that choose to do so can still have an IBM badge on all their computers.

The IBM brand remains strong, especially in the kind of large organisation that is IBM's primary target. While there is no doubt that profits are hard to find in the PC sector, and losses easy to incur, reducing the number of objects that carry the familiar IBM logo is liable to have unpredictable effects on the brand.

From the buyer's point of view, IBM's focus on services has led to it becoming a valuable competitor in a variety of hardware and software markets, resisting some of the consolidation that so easily occurs. If IBM pulls out of the PC sector, we may all suffer from a reduction in its ability to keep the IT game moving in new and innovative ways.