IBM's PC Division Sale Offers Its Rivals An Opportunity To Gain Market Share
We all know that IBM, Dell and others used the turmoil surrounding HP's Compaq acquisition to inject as much fear, uncertainty and doubt (FUD) into the market as possible in an attempt to get solution providers and end users to rethink whether they should represent or use HP products.
Whether or not IBM and Lenovo want to admit it, this deal will result in the slinging of as much FUD as the HP-Compaq deal. In some ways, it has the potential to generate even more.
One area in which the development has the potential to offer some real market-share gains by HP and Dell is within government sales. Once the deal transacts, the IBM PC and ThinkPad will be foreign-owned. I'm no expert on all the favored nation trade status regulations and how they might impact this, but last week I did ask Michael Sade, director of acquisition management and procurement for the U.S. Department of Congress, about the sale. He said this could prompt some changes in the purchases of IBM PCs by government agencies.
In commercial markets, of course, the spin is going to center around the future of the ThinkPad and IBM PC in terms of quality and research and development. To date, the IBM-branded products have been able to command a higher price based on these criteria, but I doubt that will be the case going forward.
There will also be plenty of turmoil inside the IBM Personal Computer Division (PCD) after the transaction takes place. While there may not be as much pain as there was associated with the HP-Compaq deal—given that the latter required the mashing together of two very large organizations—it will not be painless. Many individuals who were in IBM PCD may more readily consider leaving the company, since it will no longer technically be part of IBM. Anytime there is a major acquisition, employee turnover is much higher than prior to the change.
HP and Dell will try to take advantage of this, and executives at both companies have been saying these types of things offer opportunity for competitors. Dell CFO Jim Schneider, speaking at the Raymond James IT Supply Chain Conference last week in New York, said history shows that anytime there is a merger of this magnitude it results in lost market share.
Solution providers with deals on the table are already fielding questions and deciding whether they should switch customers to another brand. The turmoil will be most pronounced in the U.S. market, and that's where there is the most potential for HP and Dell to gain ground.
Solution providers are the key to whether or not this shift will take place. If HP wants to quickly win share from IBM in this segment, it should immediately move to engage its channel partners to help it do just that. It's the solution provider community that will be answering the bulk of the questions from users, and a little push in one direction or the other by solution providers can easily mean the difference between an account switching to HP or staying with IBM.
Over the next year, turmoil inside IBM PCD is bound to distract executives and force them to focus more heavily on internal issues than they would like. A distracted team offers opportunity for competitors.
If HP, which recently said it is committed to pushing more midrange customers to the channel, steps up its engagement with PC-centric solution providers, it just might find it easier than it usually is to make gains against IBM.
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