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IBM & Business Strategy



At 2:52 AM 3/26/96, Sandy Meltzer wrote:

>Also, I never understood why IBM isn't the true performance leader
>in laptops...they always seem to produce ThinkPads that benchmark in
>the middle or towards the rear-end of the pack.  And availability
>is becoming a real issue for me too.  Why should I spent $2000-$3000
>more for a ThinkPad that becomes available long after everyone else?
>I don't mind spending the extra money for a top-of-the-line ThinkPad,
>it just doesn't make sense to buy it knowing that the next generation
>is only weeks away and that its resale value is going to drop like a
>ton of bricks.  I experienced this last year with the 755CX.

        Ignoring the other issues (we all face them), a quick explanation
of the dilemma:

        Any quick course in Business Strategy and you'll see that virtually
every industry typically has a 1 to 3 *really* major players, with some
selection of 2nd tier players behind them and perhaps a huge number of
smaller ones.

        In computers (without slicing it down the individual sections like
"Mail order" or "notebooks", which you could do), clearly IBM is the major
player.

        The funny thing is this:  Usually that major player(s) are *NOT*
the undisputed leader in any given field.  Rather, they sort of "set the
tone" or overall mood/standard for the industry, while the rest set some
other standards and the many others compete in niche segments.  Other
companies may have a cheaper product, another may specialize in something
else, etc.

        But ask yourself:  Does IBM make the fastest computers in the
world?  No--that title belonged to Cray.  Does IBM make the least expensive
ones?  Definitely not.  Does IBM lead the market in software?  Not in PC's,
but they have a respectable showing (now that they bought Lotus).  Do they
provide the best systems integration?  Probably not, but they're certainly
no slouch.

        You're probably seeing the sense of it here, and clearly this is
the case in the computer industry.  The ThinkPads line is not the fastest
notebook available, nor is it the cheapest, nor is it the lightest.  But is
it overall one hell of a machine?  You better believe it--a far better
overall package than almost any of its competitors (okay, I'm biased--but
I've been burned by other machines and I'm very happy with the 'Pads I've
owned).

        Basically put, "leading the industry" doesn't mean you're the best
at everything--it means you're the best at putting everything together (at
least in this case).


-----
Randy Whittle           whittle@usc.edu         http://www-scf.usc.edu/~whittle
USC Graduate School of Business
 "Did you really think you could call up the Devil and ask him to behave?"
        -Fox Mulder on T.V.'s "X-Files" speaking to an occult practitioner