A few general comments by an IBM executive about the company’s 2004 decision to sell off the company’s PC business has – intentionally or not – highlighted the widely different states in which IBM and rival Hewlett-Packard find themselves today.
The decision to divest IBM of its PC business was a bold step that a few years later led to the company’s launch of its “Smarter Planet” initiative, argued Jon Iwata, senior vice president of marketing and communications, speaking at the IBM PartnerWorld Leadership Conference in New Orleans Tuesday.
“At the time we divested of the PC business we had a user base of 100 million,” Iwata said, noting that the decision eliminated all IBM sales to individuals and transformed the vendor exclusively into a business-to-business company. “It was not obvious at the time, perhaps you would agree, that this was the right move to make.”
In 2008 IBM unveiled its Smarter Planet initiative, which promotes the sale of IBM technology for embedded applications and instrumentation in everything from traffic control systems to “intelligent” power grids.
Iwata said Smarter Planet, while coming four years later, resulted from the decision to sell off its PC business to China-based Lenovo. “It wasn’t sufficient to say we were in a post-PC era,” he said. “People wanted to know what era we were moving into. We knew what we were getting out of. What were we getting into?”
At no point did Iwata mention HP, and it’s not clear whether he intended any such comparisons. But they were there, nevertheless.
Hewlett-Packard has spent much of the last year wrestling with its strategic direction – including announcing at one point that it would spin off its Personal Systems Group and then reversing that decision less than three months later.
Iwata said the decision to exit PCs and get into Smarter Planet has paid off for IBM with improved profitability and brand awareness. “It turned out to be the right call,” he said, and praised then-CEO, now chairman Sam Palmisano by saying: “He got us out of the old, he got us into the new.”
Iwata’s declaration of victory sounds a bit premature. Some still scratch their heads over just what Smarter Planet is and how much of a market it really is for IBM and its partners. (Although the fact that Warren Buffet acquired 5.5 percent of IBM’s stock last year, praising IBM’s management and strategic direction in the process, has to count for something.)
Point is, IBM has developed a vision of the future – both for itself and for information technology – and has committed to a strategy to get there. That’s something that HP can’t say right now.