December 8, 2004 10:16 AM PST

IBM to customers: Expect business as usual

IBM may be selling its PC business, but it's working hard to keep its PC customers.

Still, competitors Dell, Hewlett-Packard and others are likely to come knocking in an attempt to pick off nervous customers, and that could lead to intense jockeying for large deals. Dell, whose chairman Michael Dell observed on Tuesday that PC market mergers have been largely unsuccessful of late, could wield price as a weapon in an attempt to win customers from IBM and Lenovo. HP could do the same.

"IBM did everything they possibly could do to make this deal transparent to their customers."
--Leslie Fiering, Gartner analyst

Yet Lenovo, which also understands how to run a low-margin business profitably, is likely to respond in kind.

"Lenovo management could lead to ThinkPads selling for more competitive prices," said Leslie Fiering, an analyst with Gartner. "It's a pretty attractive value proposition (for IBM customers), if they can make it work."

IBM, which on Tuesday announced plans to sell its PC business to Lenovo Group, says existing customers should expect little in the way of change. IBM structured the agreement in such a way that while Lenovo will be in charge of manufacturing the PCs, IBM will continue selling, financing and servicing them. Lenovo will even be able to sell PCs under the IBM brand for five years.

"IBM has built its reputation on supporting its customers, and that will not change," the company said in a statement on its Web site. "IBM ThinkPad and IBM ThinkCentre brand product lines will continue. They will still be serviced by IBM's world-class service and support organization, as well as technology roll-out and help-desk services. Warranty services that business partners perform on behalf of IBM PCs will continue--business as usual."

So far, at least a few customers report that IBM's strategy is working and they'll stay with the company.

"My gut reaction is I don't have any problem with the fact that (IBM PCs) might be manufactured somewhere else," said Shawn Nunley, director of technology development for NetScaler in San Jose, Calif. "We tend to base our decisions on quality control, features and functionality. So if it's the same product, where it's coming from probably won't make a huge difference."

Still, at least a few problems or disruptions are inevitable

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