Harassed by legions of imitators, IBM considers making its own copy


April 20, 1992|By Jim McNair | Jim McNair,Knight-Ridder News Service

BOCA RATON, Fla. -- Harassed and humiliated for years by clones of its personal computers, IBM Corp. is pondering a clone of its own.

Until a year or two ago, IBM executives rarely uttered the word. But with the lower-priced imitations outselling IBM 3-to-1 in a $25 billion-a-year industry, IBM is conceding that it has done a poor job of winning over PC users whose main loyalty is to their wallets.

"There is a group of customers, 20 to 30 percent of the marketplace, that is very price-sensitive," IBM spokesman Michael Reiter said of clone buyers.

"One of our strategies to reach that group could be with a PC that doesn't have an IBM logo, IBM standards or our one-stop service," he said.

Last month, IBM disclosed plans to offer an Asian-made clone to its overseas customers. That prompted speculation that IBM would take a similar tack in the United States.

Speculation turned into a firm possibility when Sam Inman, president of IBM's National Distribution Division, told PCWeek magazine that IBM is considering the formation of a subsidiary to sell clones.

Selling a marked-down copy of its own PCs would represent a major change in strategy for the world's biggest computer maker. Analysts and PC dealers say IBM has little choice because upstart rivals such as AST Research Inc., Dell Computer Corp. and Packard Bell are selling comparable machines at much lower prices.

"They found that people aren't willing to pay a price premium for the brand name," said William Lempesis, publisher of the Lempesis Report in Pleasanton, Calif.

Charles Hull, president of Computer Pro, a PC dealer in Miami, said: "IBM is getting very little of the small-business market share. All of them are going to the Dells and clones because of the price differential."

IBM has other alternatives. One would be to accelerate discounts on its current PS/2 line of PCs. That practice, however, could put IBM in a constant state of catching up with rivals whose PCs start cheaper and are then discounted.

Lempesis Report said building clones might make more sense for IBM in the long run, in part, since IBM PCs already incorporate monitors and other key PC parts. He said clone makers have been successful because they contract out parts and, unlike IBM, don't have much manufacturing overhead.

James Adamek, vice president and general manager of Monterey Waldec, a PC systems integrator in Fort Lauderdale, Fla., said he doesn't like the idea of IBM lowering its standards, even on a clone. He said a clone line will force IBM to make tough decisions on its core PS/2 PCs.

"They're going to put out products that compete directly with PS/2s -- and at half the price," Mr. Adamek added. "Where's the PS/2 line going to end up?"

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