IBM's shake-up must be a wake-up call

The returning government should see IBM's shake-up as a sign that urgent action is necessary if our tech industry is to thrive

So, IBM clearly sees little future in making hardware for mature markets (read Western Europe), leaving us with its services arm while it goes off to build PCs for emerging markets east of the Danube.

Who can blame it? The only people making any real money from PCs are makers of games boxes and Dell. For everyone else the narrow margins make it a dangerous play. Even Dell has had to create a business model that more resembles a financial institution than a PC maker: money comes in at one end, sits in the bank for 45 days collecting interest until it is shipped out, minus that slim margin, to suppliers. Sometimes it almost seems incidental that, travelling in the opposite direction, come components that are assembled — four minutes for a PC, 20 for a notebook and only a little longer for a full-blown four-way server — before being shipped to customers.

IBM could never match those kind of efficiencies, and so it is instead turning to services, having already shipped its PC business out to China's Lenovo. This should be a wake-up call to the returning government, and indeed to the whole Parliament — if the UK is to become a leading knowledge economy that can replace the lost manufacturing jobs with new services jobs, urgent action must be taken now by the government.

And they don't have to look far to see how it's done. The Isle of Man is desperate to get a slice of the high-tech economy, but you won't find them building factories; rather, it is datacentres and legislation that are the priority. And not legislation that threatens IT managers with prison if they cannot prove they have a decryption key, or legislation that gives everyone from government car park attendants to the Egg Marketing Board the right to demand data that was retained under terrorism legislation.

Intellect today highlighted the big issues that need addressing: a network of organisations to help exploit technology; more support for IT skills; an accessible and affordable information infrastructure; and, most important of all, policies that reward innovation and entrepreneurship.

We'd add legislation; without a proper legislative environment that will attract and retain high-tech services jobs, we face a very real danger that in five years' time the services jobs will all be going the way of those manufacturing jobs.