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Why Even The Japanese Are Worried About Ibm


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WHY EVEN THE JAPANESE ARE WORRIED ABOUT IBM

On Dec. 3, the biggest names in the U. S. computer industry, including the chief executive officers of Digital Equipment, Apple, Hewlett-Packard, and Compaq Computer, marched on Washington. Their group, the Computer Systems Policy Project, was there to lobby legislators and White House heavies, including Richard G. Darman, director of the Office of Management & Budget. The goal? To raise funds for a new nationwide computer network, a project they view as crucial to future U. S. technology competitiveness. But the group's most influential member was missing. IBM CEO John F. Akers stayed behind in Armonk, N. Y., to put the finishing touches on his reorganization plan.

The absence of IBM's chairman left the lobbying group at a disadvantage, yet highlighted just how crucial IBM remains to the health of the U. S. computer industry. Even with its problems, the $67 billion giant is still the dominant force in the business, and restoring its vigor, these executives say, will help them all. "What's really important is if we can get IBM back on the offensive -- as a shaper of things -- that could be a positive for the whole industry," says Apple Computer Chairman John Sculley, who also chairs the Policy Project.

Even in Japan, where problems at U. S. computer companies are normally seen as an opportunity, IBM's plans sparked a sense of unease. For one thing, giants such as Hitachi and Fujitsu are suffering their own profit declines. And Japanese customers are worried, too. "If IBM doesn't pull itself together, it could be devastating," says Shoji Sakamoto, deputy general manager in charge of computer systems at Sanwa Bank." Back in the U. S., IBM's efforts to downsize sound depressingly familiar to a host of troubled computer makers. "You could say, 'welcome to the club,' " says Reto Braun, president of Unisys Corp., the ailing mainframe and minicomputer giant that is the target of a potential takeover by a group of European investors. Like IBM, companies such as Unisys, Digital Equipment, Sun Microsystems, and Compaq are desperately trying to climb out from beneath stifling bureaucracies by revamping cost structures and altering the way decisions are made. "Russia proved you can't do it all centrally," says Digital Equipment President Kenneth H. Olsen.

But so far, none of IBM's competitors have succesfully reinvented themselves. And that leaves many of the industry's top executives skeptical about IBM's latest reorganization. One problem, critics point out, is that the company's plan to grant increased autonomy to certain units doesn't go far enough. "They're going in the right direction," William H. Gates III, chairman of software powerhouse Microsoft Corp., says of IBM's plans for recovery. "But unless they do it in a strong fashion, I don't see it happening."

Big Blue's previous reform efforts have also raised doubts about its ability to really change. "IBM has made a number of changes over the last few years, and the end result is that they haven't been able to demonstrate anything," says G. Glenn Henry, a senior vice-president of Dell Computer Corp. Frustrated by the IBM infrastructure, he quit a high-level IBM research post after 21 years to join the PC maker.

Still, if Akers is serious about remaking his company, the doubting Thomases could soon be surprised. Take software. By giving the software groups more independence, says John P. Imlay, chairman of Dun & Bradstreet Software Services Inc., IBM has a chance to "build another culture, a nonhardware culture." That, despite years of frustration, could finally give IBM a leading role in software technology. "They have deep pockets," says Steven A. Ballmer, Microsoft's senior vice-president of system software. "I take it very seriously."

But if the "new IBM" turns out to be not so new after all, U. S. computer executives may find themselves without a center. And future marches on Washington may be far more serious than simple pleas for research funding.Deidre A. Depke in New York, with Mark Lewyn in Washington, Kathy Rebello in San Francisco, and bureau reports


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