IBM has announced that it will stop selling
its consumer PCs in the US through stores from early next
year and focus on sales over the Internet. This move comes
in the wake of falling computer prices and sliding margins.
Meanwhile the company will
look for a formula to sell its PCs through retail outlets,
and, as a company spokesperson put it, "Once we come
up with that formula, we will be back."
IBM has a stated business
philosophy today of transforming business processes with
Internet-based technology, and the company seems to made
a beginning with itself. (see related story: IBM''s
e-business plans in India)
IBM has a tough challenge
in the market in differentiating its products and in its
effort at direct sales over the Web. It has to contend
with low-priced consumer models in the retail stores,
and, on the Web it has to reckon with rival PC maker Dell''s
aggressive selling. However, its Aptiva models are doing
well through retail outlets worldwide where these factors
do not weigh much.
IBM''s PC business made a
loss of about $1 billion in 1998 and about $239 million
in the first half of 1999.