IBM's Failing Bid to Control the PC Industry

Strategic Insights -

IBM, the world's largest computer company, is struggling to gain control of the PC industry by replacing Microsoft as the dominant supplier of operating systems and ousting Intel as the main source of microprocessors. Its products, OS/2 and PowerPC, have failed to gain traction, and the company's recent inability to deliver PowerPC-based PCs and a version of OS/2 to run on them has cast doubt on its strategy. IBM's failure to invest in Microsoft when it was small has been particularly galling, as it has since become a dominant player in the industry.

Key Takeaways:

  • IBM's attempt to take back control of the PC industry in 1987 with the launch of the PS/2 range and the OS/2 operating system was a disaster, with customers declining to buy the slower and less compatible systems.
  • IBM's Power Personal Systems, based on PowerPC processors and PCI buses, were due to be launched this month but were postponed due to a lack of software, with Portable OS/2, a microkernel-based version of OS/2, not expected to be ready until the middle of next year.
  • The PowerPC architecture has been used in low-end RS/6000 workstations since February 1990 and in Apple PowerMacs since March 1990, but it has yet to gain widespread adoption.
  • Microsoft's vision is for every type of computer to run Windows NT, which is why NT was designed to be portable and is supplied for Intel, Mips, and DEC Alpha processors, with PowerPC and other versions to follow.
  • IBM's competing vision is for its PowerPC-based systems to run every type of software, including OS/2, SSP, OS/400, AIX, MacOS, Microsoft Windows NT, and others.
  • Hermann Lamberti, boss of IBM's Personal Software Marketing division in Europe, stated that IBM will "break Microsoft" in its bid to dominate the PC industry.

Statistics:

  • IBM's minority shareholding in Intel was sold at a hefty profit.
  • Microsoft had 40 employees when IBM signed it up to supply DOS.
  • IBM had 405,000 employees, a turnover of $50bn, and profits of $6.5bn in 1985.
  • OS/2 1.0 was bug-ridden, slow, and had almost no software.
  • PowerPC processors have been used in Apple PowerMacs since March 1990.

Sources:

  • The Guardian (no specific date mentioned)