Now, I get it. With a headquarters in New York, they will be doing what
IBM feels it cannot do profitably (enough): outsourcing to China! The
twist here is that they will hire IBMers to learn how to manage a
world-wide company!

Who do you think did the smart thing? The guy who sold the ranch, the
cattle and teaches the new owners how to run it? Yes, unless he needs a
job in a farm!

Then, we will attempt to learn from the Chinese how to make computers
profitably! Think what happened when the Japanese started building cars.
Look what happened to Mercedes when Chrysler "told" them how to run a
company: Chinese are not doing the same mistake, they will learn from us
and then ... May be one day, we will come up with the computer
equivalent of the Saturn (which as every body knows is not exactly a
huge success ....) to attempt to compete with Chinese PCs...

Who is smart here? The Chinese. They will have a wonderful foothold in
the US, will "outsource" their production to Chinese workers and I bet
they will be smart enough to hire enough Americans with a Midwest accent
to answer phone lines, at least in the beginning, until we get used to
their accent!

Well, now, I am less concerned about the future of Thinkpads: there will
be some glitches but at the end of the day, they might become as good
and reliable as Japanese cars eventually became. This does not mean the
user has won, since a user needs a job to have money to buy a computer.
Globalization should not be a one way street!

I am ashamed IBM did this: whatever the window dressing, this is a very
short-sighted policy at best and if they think Lenovo will limit itself
to quietly learning a few ropes, who are they kidding?

John Doue

I'm concerned about this. When I contacted IBM on a service call for
my ThinkPad last month, I specifically asked if they outsource tech
support and other jobs. They *specifically* said they did not. They
claimed they were proud of their domestically-based call centers,
customer service, and tech support.

mutefan@yahoo.com wrote:

IBM is not outsourceing, they're selling the whole operation.

--
--John
Reply to jclarke at ae tee tee global dot net
(was jclarke at eye bee em dot net)

John Doue wrote:

There's nothing to learn. All you have to do is convince your workforce to
work for 5 cents an hour and you've got the "secret" of Chinese
productivity.

What, exactly, happened? If you will review the history you will find that
(a) the Japanese were able to build inexpensive cars because their labor
costs were low, (b) they were able to get a foothold in foreign markets
because they went ape over quality control, (c) their labor costs started
going up as their economy grew, (d) they ended up having to move their
production to lower-cost areas--many Japanese cars are now made in the US
with no greater efficiency than Ford or GM.

What, exactly, do you believe happened to Mercedes, and when did Chrysler
"tell" them _anything_?

Uh, Saturn was an experiment in management theory, not an attempt to compete
with anybody. If you will check the sales figures you will find that while
the Japanese have a good share of the US auto market, you will find that
worldwide GM is still on top with 185 billion dollars in sales, followed by
Daimler-Chrysler with 171 billion, Ford with 164 billion, and then Toyota
with 163 billion.

As for "competing with Chinese PCs", it has apparently escaped your notice
that nearly all PCs on the market today are made in China. Not the
Peoples' Republic of China, but China nonetheless.

Well, actually the same Chinese workers who are doing the work now will
continue to do it. Or are you laboring under the misconception that there
is a Thinkpad factory somewhere in the US?

Depends really on whether IBM spins off their support operation with the
rest.

I sincerely hope the Chinese can do better than _that_. In any case, I have
not noticed Thinkpads or any other kind of computer except the very
cheapest suffering any significant reliability problems of late. I
certainly have never had a computer give me as much grief as my old Toyota,
that has since been replaced with a trouble-free Chrysler product.

As long as there are countries with high labor costs and others with much
lower labor costs, this is going to happen. If the Japanese model is any
indicator, the Chinese will eventually be paying their workers as much as
Japanese and American workers get, although they may manage to make slave
labor continue to work in which case we may all be screwed.

In what way is it a "short sighted policy"? IBM has decided that there is
no longer any profit in PC hardware and they're getting out of that
business. As far as they're concerned the Chinese can _have_ the hardware
market.

--
--John
Reply to jclarke at ae tee tee global dot net
(was jclarke at eye bee em dot net)

J. Clarke wrote:
You are oversimpliying the issue. Productivity is only one aspect of the
problem.
Boils down to one thing: Japanese managed to gain a significant share of
the US market and to make money in the process. AFAIK, we are not
exactly overwhelming the Far East with american cars ... Who wins here?
I have a different view: Saturn was an attempt to compete with european
and japanese imports by offering a product somewhat similar. Few people
go this far in "experimenting management theories"! But given the
results, I understand it might be portrayed like this!.

Oh, please ... has it escaped your notice that your knowledge might be
shared by others ?


snip

Please ... again !

So, the way you see it, nothing basically changes in this deal? This is
where we disagree. I see this as a major change in the industry; we are
getting out of an important sector and helping a dangerously effective
company acquire the skills it lacked to compete with ... the few US
players left in the field; even if this is not, today, the primary goal...
Because you really think IBM would keep supporting products it does not
design, manufacture or sells any longer?

Let us keep our fingers crossed.
Yes, but we do not need to help them screw us!
trying to prune the less productive branches and to keep only the most
successful ones might be smart on the surface for some companies but not
for others. IBM seems to have been searching for its soul the last 20
years. To me, a customer, not a shareholder, IBM parted with an activity
from which it may not have derived huge profits but which gave it
something which has no price, a good image. When corporate executives
will have switched to Dell or Compaq for their laptops and PC, don't you
think this will impact their attitude towards IBM services? Do you think
IBM competitors will stay idle and not take advantages of this
psychological impact?

Every company needs a flag ship, a flag product; the Thinkpad was one.
--
John Doue

John Doue wrote:

So what are the "other aspects" that have a greater impact on cost of sales
than a practically zero-cost labor forces?

GM, Ford, and Daimler-Chrysler of course. They're still 1, 2, and 3.

As for the Far East market, parts of it require special models designed
around local regulation, other parts have protectionist legislation in
place and the rest is small potatoes.

Why would anybody want to "compete with European and Japanese imports by
offering a product somewhat similar" and to which "European and Japanese
imports" are the Saturns "somewhat similar" and in what ways?

And do you really expect one small GM subsidiary to have sales approaching
those of the whole of GM?

If it is "shared by others" then why did you bring up "competing with
Chinese PCs"?

Of course things change. The profits stop going to IBM shareholders and
start going to Lenovo shareholders. The upper management is no longer
American, it is Chinese. They will cease to run the company for the
benefit of IBM's shareholders and start running for the benefit of whoever
they are responsible to. Of course many things change. But not the ones
that you seem excited about.

You have a mouse in your pocket?

What sector is that that you and your mouse are getting out of? Are you
saying that Dell and Compaq and Gateway and the other resellers of
Chinese-made laptops don't count? Why does only IBM count?

Which "US players" are "left in the field"? What company in the US
manufactures laptop computers in the US?

No, they might instead divert those personnel to the support of other
products that they do sell. As for designing and manufacturing, how many
Thinkpads were actually manufactured in an IBM-owned facility in recent
years?

Well, if they can figure out a way to get slave labor to produce high-tech
products then we are screwed regardless, and I don't think that anybody at
IBM knows how to do this, so I fail to see how anything that IBM does is
"helping them screw us". On the other hand, if it helps boost their
economy and thus raise their wage levels then it reduces their competitive
advantage in labor rates and so it does the opposite.
Can you say Hollerith machines? Can you say typewriters? IBM was founded
in 1888. In the more than a century that has passed since then they have
abandoned a number of product lines that were no longer profitable for
them. Should they have continued to lose their shirts on typewriters
because typewriters gave them "a good image"?

Take a look at the sell price. Compare that to IBM's current cash position.
That will tell you how much they value the PC line.

So what services can Dell and DECPaqard provide? They are not services
companies, they are hardware companies. They for the most part don't even
have staff onboard to write device drivers. They most assuredly have not
produced as many patents in the past ten years as IBM. They are certainly
not set up to deliver supercomputer services on demand. What exactly _are_
they set up to do other than sell me-too boxes? IBM grosses 9 billion a
year on PCs and 89 billion total--where do you think the other 80 billion
came from? That 80 billion is more than HP makes and almost twice what
Dell does. There is, by the way, no such company as "Compaq", that is a
Hewlett-Packard brand name. And HP, by the way, has completely abandoned
their core business, electronic instrumentation, in order to pursue
computers, so if that is harmful it should hurt them more than ditching PCs
hurts IBM.

Can you say zSeries? Can you say System/390? Can you say PowerPC?
Can you say eServer? Can you say "Blue Gene"? Can you say "Who gives a
shit about a me-too laptop?" In the IBM heirarchy of systems, PCs were
always econoboxes.

--
--John
Reply to jclarke at ae tee tee global dot net
(was jclarke at eye bee em dot net)

J. Clarke wrote:
snip
snip

John,

I respect your views even if I disagree with them.
--
John Doue