It wasn’t the first maker of PCs, but IBM is widely considered the company that brought personal computing to the business world. Until the first IBM PC was launched in the summer of 1981, microcomputers — as we mostly called them then — were toys. You heard occasional stories about someone doing
something interesting with a Commodore 64, an Apple II or a Radio Shack machine, but in the world of serious computing those projects were treated a bit like tales about singing dogs or clothes made from duct tape — they were interesting precisely because they were unexpected.
The IBM PC changed all that, though not instantly. The fact that Big Blue was selling a PC made corporate IT departments (called data processing departments back then) think these things might be more than toys. And IBM’s selection of an unknown operating system from relatively obscure Microsoft, instead of the nearest thing to a standard at the time, CP/M, changed the landscape.
So IBM’s decision to sell its personal computer business to Lenovo is a milestone.
It shouldn’t come as a surprise, though. First, IBM has a history of selling businesses that no longer fit its plan. It spun off its typewriter and printer business to form Lexmark International Inc. in 1991 — and the IBM Selectric typewriter was just as much of an office icon in its time as the IBM PC. IBM hasn’t been interested in commodity manufacturing for many years, preferring to turn itself into a services business. Things that don’t fit have to go, and the PC business no longer fits.
The fact that IBM chose to sell the business to a Chinese firm is more interesting. It shows how completely the PC sector has been transformed from a leading-edge technology sector to a commodity business.
In fact, although Lenovo is moving its official headquarters Stateside, you could see this deal as offshore outsourcing taken to its logical conclusion. PCs being manufactured in the Far East is old news. Now IBM has concluded that the whole business belongs offshore. For those who contend that offshore outsourcing shouldn’t worry North American workers because there will always be higher-skilled jobs here, this may be a bit disturbing.
(The fact that Lenovo’s second-largest shareholder is the Chinese government, whose dreadful human rights record includes using prisoners as slave labour, might also cause some concern.)
Not that what is happening to the PC business is anything new. Look at the rust belt. Detroit’s Big Three automakers used to dominate the car business. Somewhere around the 1970s to 1980s, Japanese manufacturers — followed a bit later by Koreans — started eating their lunch. If GM had decided around that time to sell its compact car business to, say, Toyota, it would have been rather like what IBM is doing now.
Much has been written about China as an emerging economic power lately. You might say China is the new Japan (while Japan, with soaring costs and economic problems, is the new United States).
China is also the emerging market everyone is talking about, and that’s part of IBM’s motivation too. Take the Lenovo deal along with IBM’s announcement shortly afterward that it was setting up a joint venture with Great Wall Computer Corp., another Chinese firm, to make servers, and it seems clear Big Blue is intent on building its position in China.
