December 3, 2004 12:35 PM PST

Big Blue news a sign of PC market's graying temples

news analysis Charles Darwin is alive and well and looming over the PC industry.

Friday's news that IBM is mulling a plan to shed its PC division shows that yet another battle for survival of the fittest is under way. Despite reinventing the personal computer in 1981 and spawning the multibillion-dollar global industry that grew up around the machines, IBM is now said to be planning an exit from the market by way of selling its PC unit to China's Lenovo Group.

"Effectively, the world has been explored, and there's not a lot of new markets out there."
--Roger Kay, analyst, IDC

Such a deal would be only the latest example of a move toward consolidation in the PC market--a long string of acquisitions, mergers, tie-ups and quiet retreats that have littered the market's path to maturity over the last 23 years and have included milestones such as Hewlett-Packard's May 2002 blockbuster acquisition of Compaq Computer.

As it ages, the PC market will move into a position not unlike that of the auto industry, which plays host to a handful of giants that see relatively slow growth and often steal market share from one another, said Roger Kay, an analyst with IDC.

"Effectively, the world has been explored, and there's not a lot of new markets out there," Kay said. The "market could stabilize in the numbers we're talking about now--150 million to 200 million units per year."

A host of brand-name manufacturers have already gone by the wayside: Packard Bell, owned by NEC, exited the U.S. retail market; Micron Electronics' assets were sold to Gores Technology Group, which went on to form MPC Computers; AST Research withered away, its assets eventually sold to founder Beny Alagem, who sought to sell PCs under the AST Computers name. AT&T, Zenith and Texas Instruments all dropped or sold their PC divisions.

Disaster struck the PC market at the turn of the millennium. After having grown steadily since 1985, the market slowed in late 2000 and shipments fell by just more than 4 percent in 2001. The drop touched off a major round of consolidation, including HP's Compaq purchase, which swallowed up not only Compaq but also Digital Equipment Corp., acquired by Compaq in 1998.

Even relative giants suffered, including Gateway, which retreated from the global scene and refocused its efforts on the United States, where it tried several different strategies before acquiring eMachines in

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IBM laptops
The dummys should have kept their laptops. No one can come close to the quality. I know the word quality is not used much anymore, but IBM sure used it in their laptops.
Posted by wahooyahoo (13 comments )
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