December 8, 2004 10:16 AM PST

IBM to customers: Expect business as usual

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as IBM transfers the PC business to Lenovo. The bellwether for IBM, which will maintain an 18.9 percent stake in Lenovo, will be how it responds to problems, analysts said. IBM and Lenovo may also have to give a little on PC pricing in order to help keep customers happy.

"If it has an impact on us at all, I anticipate it to be a positive impact," said an IT executive and major IBM customer at a large manufacturer who asked not to be named.

Fiering of Gartner stressed that IBM went out of its way to make the deal attractive to its PC buyers.

"IBM did everything they possibly could do to make this deal transparent to their customers," she said. "We have to give them a lot of credit for structuring the deal that way. So long as IBM continues its current level of responsiveness in weeding out any problems, (it) is likely to keep many of its large customers."

Gartner is recommending that IBM customers use whatever risks they see in the IBM-Lenovo deal to their advantage when they sit down at the bargaining table.

"We're advising our clients to negotiate hard with IBM right now...to improve their terms and conditions, whether it's price or service level agreements--whatever is important to that customer."

Analysts said that even though there will be competition for some large deals and some customers may make the switch, an all-out price war seems unlikely.

"I can't believe Dell is going to shoot itself in its own profitability," Fiering said.

Another key to success for IBM and Lenovo will be retaining key employees, including IBM's 800 PC sales reps, who are an important contact with customers. Losing them would hurt Lenovo, one source close to IBM said.

The mood among many IBM PCers, meanwhile, has been marked by fear. "Everyone in North Carolina is freaked out," the source said.

CNET News.com reporter Michael Kanellos contributed to this report.

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