IBM chief credits PC divestment as critical to success
updated 10:20 pm EST, Mon January 2, 2012
Executive points to HP as evidence
As IBM head Samuel Palmisano prepares to step down from his position and hand the reins to Virginia Rometty, the chief executive has reflected on the company's recent strategy. In an interview with the New York Times, Palmisano suggests he faced strong disagreement within the company over the decision to sell of IBM's PC division, however he credits the decision with helping the company stay innovative and maintain profits.
Opponents to the move argued that selling off the consumer PC group would reduce buying power for components used in enterprise equipment and have a negative effect on brand identity.
“I’ve heard every one of the arguments, every one of them,” Palmisano said. “But if you decide you’re going to move to a different space, where there’s innovation and therefore you can do unique things and get some premium for that, the PC business wasn’t going to be it.”
Selling the consumer PC business to Lenovo temporarily lowered the company's overall size among competitors, however Palmisano suggests the move helped enhance relations with the Chinese government and allowed the company to reinvest in the enterprise market. Since Lenovo bought the PC group, the company has acquired 25 software companies and boosted spending on research and development.
The executive points to HP's 2001 buyout of PC maker Compaq as an example of a contrasting strategy.
"You see the choice that was made, and how the economics worked out," Palmisano said.
