IBM to sell PCs via the Web

IBM plans to sell PCs over the Web in a move designed to put it on a par with Dell Computer.

Dell stole a beat on its larger rival and now sells more than $4 million worth of products and services over the Internet each day. Apple Computer, Compaq and Hewlett-Packard also sell over the Web.

"You'll see us get aggressive in that respect," said David Thomas, the newly appointed senior vice president and group executive of IBM's Personal Systems Group.

Thomas, a seasoned IBM executive who received his newest assignment last month, was reluctant to disclose many details. But he did acknowledge that IBM intended to offer a way for customers to configure and order computers via IBM's Web site in the "near future."

The decision to sell computers over the Web is a belated recognition of the shift in consumer buying patterns. E-commerce is a favorite theme sounded by IBM Chairman Lou Gerstner, but his company has resisted taking this step for fear it might alienate IBM's resellers. However, under the proposed plan, resellers will ship the products to customers in a move designed to undercut any possible opposition from IBM's distribution channel.

For Thomas, the decision to sell PCs via IBM's Web site is part of a larger initiative to improve the performance of the company, which now ranks No. 2 in worldwide market share behind Compaq and ahead of Dell and NEC.

"We've got to focus more on the customer and less on our competitors," Thomas said.

Just how that will play out remains unclear. However, during the course of an interview, Thomas returned to the theme of cooperation with other branches of IBM--singling out its fast-growing Global Services consulting business, which, he said, should allow the company to clinch contracts that come up for grabs.

"We've got to leverage all the pieces that IBM has to bring to the table. We've got incredible capability," Thomas said.

However, he acknowledged that IBM has failed to trumpet all the cards it's holding.

"How do you communicate to the customer that you are the least expensive supplier for their computing needs, all the way to the enterprise? We need to be price competitive and then prove to the customer that we can provide value later on," Thomas said.

Analysts say the kinds of customers who buy computers over the Web tend to be experienced users shopping for price and performance. It's still unclear, however, whether the popularity of Web-based PC sales will translate into major gains in business for computer makers.

"They're letting all their flowers bloom," said Sam Albert, the president of Sam Albert Associates, in Scarsdale, N.Y., adding that Thomas was once considered a possible heir to Gerstner. "IBM has been asleep at the switch for some time. But now they're getting pretty aggressive."

Albert said IBM's decision to let its channel partners take the lead in handling fulfillment of Web orders was a promising sign.

"I think that IBM is going to be able to balance all these things on all fronts," he said. "What you have to understand is that Dave Thomas has had innumerable job responsibilities at IBM, and the guy is definitely not a new kid on the block."

However, Seymour Merrin, a consultant in Menlo Park, Calif., said a successful move into Web-based selling required skills and a concomitant corporate culture that still elude IBM.

"They have an infrastructure designed for the corporate world. They have the worst support lines. Their Web site is a disaster," Merrin said. "This is not a brand issue. Brand matters only as a reinforcer in this market."

"It depends on how well they can meet the basic criteria--which is whether they can supply machines with competitive performance at competitive prices," Merrin continued. "If they can, and they make it nice and convenient for the customer, they have a high probability of being successful. If not, they won't be successful."