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11/26/2003
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IBM: Notebook Innovation And Quality Come At A Price

Though it launched the first PC in 1981, IBM long ago lost its leadership in PC sales. Given that IBM derives only about a third of its revenue from hardware, PCs clearly aren't the company's top priority.

Still, IBM prides itself on technological leadership, even with its PC market share of just 5.9% in the third quarter, according to market researcher IDC. IBM apparently has plenty of satisfied PC customers: In the recent InformationWeek Research survey, Analyzing The PC Vendors, IBM ranks second after Dell in overall customer satisfaction for desktops and ties Dell for first place in customer satisfaction for notebooks.

Customer Jerry Griffin, region manager for Shawnee Mission Medical Center, likes the design innovation in the IBM Think Centre S50 desktop. It's "one of the best products I've bought since I've been in this business," he says. "The price is very good, but what really distinguishes it is it's easy to maintain. As a hospital, we've been buying small form factors from different vendors for a long time, and you usually make some compromises. With the S50, you get everything you need. It's really well designed."

chartYet notebooks are IBM's innovation strength. Bob Galush, VP of product marketing at IBM, cites the design of the ThinkPad notebook, where a number of significant technologies have debuted, including the industry's first color screen, first ultraportable form factor, and first notebook security chip. In InformationWeek's study, IBM notebooks take first place in customer service, reputation, and reliability and quality; tie for first with Toshiba in innovation and ergonomics; and tie for first with Dell in collaboration.

IBM also works to differentiate its PCs with software--not surprising, given that it's the No. 2 software vendor in the world behind Microsoft. The company's ThinkVantage Technologies, which comprise a number of self-management features, represent a good example of this, Galush says.

But perhaps IBM's most distinctive effort is its services capability. "It's really an opportunity for us to leverage those skills and provide capability to a small-business customer that really doesn't have access to that type of talent," Galush says. Such efforts haven't gone unnoticed. "IBM particularly is very deft--and HP has been getting so--at tying desktops into an overall enterprise relationship," Forrester Research analyst Richard Fichera says.

Ron Silliman, an analyst at IT advisory firm Gartner, says both IBM and Hewlett-Packard have a progressive approach to service. "Both of them are moving into the IT utility space with a great deal of vigor, which covers the desktop but goes all the way up to running the mainframe in the data center," he says. The challenge, Silliman says, is that vendors must focus on companies that are looking at computing strategically rather than just at the cheapest box. "It's a very different approach to the marketplace," he says.

Indeed, IBM isn't considered a low-cost leader. IBM and HP tie for third place among desktop vendors in price/performance, and IBM is in dead-last place among notebook vendors.

Even so, the bottom line is never far from customers' minds, as T.J. Kazalski, VP of MIS for of industrial manufacturer Oakland Associates, indicates. "IBM provided the products that we need at prices we can afford," he writes in an E-mail. "They have good tech support and parts availability when required."

That, plus an innate tech savvy, is why IBM retains the thought leadership--if not PC market leadership--it does today.

Illustration by Scott Laumann

Continue to: Hewlett-Packard: Counting On Managed Services

Return to main story: Analyzing The PC Vendors

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