"Palmisano's getting out of businesses that aren't growth opportunities and concentrating on what IBM does best," said Mark Stahlman, an analyst at Carris & Co. "PCs are not where the growth is."
To trim costs, IBM has steadily retreated from the actual manufacture of its PCs. In January 2002, the company sold its desktop PC manu-facturing operations in the US and Europe to Sanmina-SCI. IBM now confines its role in PCs to design and product development out of its offices in Raleigh, North Carolina, with all of its IBM-branded desktop or notebook computers made by contract manufacturers around the world.
Leslie Fiering, a research vice president at Gartner, has predicted consolidation in the PC industry over the next few years.
"Exiting the market may be the only logical choice for global vendors bleeding profits and struggling for share," she wrote in a recent research report. And she noted that Hewlett-Packard, a broad-based technology company for which PCs are only a portion of a much larger business, might face pressures similar to IBM's.
"The PC divisions of HP and IBM are vulnerable to being spun off if their drag on margins and profitability are deemed too great by their parent companies," she wrote.
Meanwhile, she noted, Asian vendors like Lenovo "appear well positioned to leverage their strong local-market standing and low-cost operating models into a global presence."
If IBM's personal computer business ends up being sold to Lenovo, it would continue the migration of high-technology manufacturing to China and Taiwan. In the semiconductor industry, Intel and IBM still have big factories in the US, and AMD has a leading-edge plant in Germany.
But more and more chip-making is done in the contract factories, like Taiwan Semiconductor Manufacturing Co., and new foundries sprouting up in China.
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