In-Depth

Up Front With: The Customer's Voice Does Matter

• By Sam Albert
• 02/01/2001

IBM’s Personal Systems Group: The Customer’s Voice Does Matter

Despite what pundits may have claimed in the not-so-distant past, IBM’s PSG group is healthy, and appears to remain on a path to growth. As that oft-quoted saying goes, "Rumors of PSG’s demise have been greatly exaggerated."

I attended an IBM Personal Systems Group Analyst Symposium – the division’s second such event – last November. I witnessed a healthy display of optimism at the annual affair, marked by presentations from top PSG honchos, like General Manager Bob Moffat, and Ralph Martino, Vice President of Strategy and Marketing.

Now I don’t mean to portend that all "doom and gloom" analyst projections of recent years have vanished. But, I’m not ready to ring any death chimes, either. Instead, I tend to agree with Moffat, who, while reporting on a profitable 3Q for PSG, added that there’s more work to be done. "A number of people said we’re on the right track – and we are. But, to me, one quarter does not make a turnaround."

So, what is the real story behind IBM’s PSG division, the maker of such well-known mobile, desktop and server products as the IBM PC, Aptiva, Net Vista, ThinkPad and new eServer line (not to mention PC upgrades and monitors)? Sixty PC industry analysts gathered in Palisades, N.Y., to find out. What they learned, in part, is that IBM has every intention to ride the crest of its Q3 well into 2001.

Big Blue plans to do so in a few ways, all focused on extending PSG’s reach into the marketplace. Specifically: creating enhanced demand for each brand; transforming manufacturing operations to more efficiently meet users’ e-business needs; following a strong business model and refreshing PSG brands with new, wireless capabilities. (Remember IBM’s October release of the eServer xSeries?)

And, don’t forget the direct online purchasing capability for PSG products. Revenue coming in through ibm.com this year will hit a projected $1 billion.

PSG products now play across the entire e-business infrastructure. With that, "strategy execution," "customer driven" and "profit centered" are the themes most often addressed within PSG circles. They remain a guidepost for IBM, which unveiled more new and emerging technologies at the 2000 symposium – including the IBM IntelliStation Z Pro with 3-D graphics technology; MXT memory expansion technology; and the "Enterprise Wireless Office," which enables wireless personal area networking.

The IT analyst audience (including yours truly) – known, at times, to be a skeptical bunch – gave IBM’s showing positive feedback. And, one (without naming a colleague) analyst, who is a very tough critic, even said, "IBM does ‘get it.’" Can you ask for higher praise?

In the past, much of the IT industry’s marketing strategy has focused primarily on hardware features, per-unit pricing and projected market size. Those elements remain strong. But, IBM has added key (and necessary) factors such as high functionality, responsiveness and ease of use. Big Blue’s researchers have been putting their noses to the grindstone to find out, for example, just how customers are using the products, and how they fit in with lifestyles, office and home demands, as well as daily routines.

For one thing, researchers found a steady blurring of the lines between personal and business use of the ThinkPad. So, IBM built on that, identifying several distinct "categories of use" that include the Global Traveler, the Status Seeker and the Price Shopper, just to name a few. Enhanced ease-of-use features followed, right down to more simplified servicing and financing.

IBM’s advertising arm has gotten involved, too, running the following banner headline for the ThinkPad recently: "A powerful case for mixing business with pleasure." A similar ease-of-use exercise was carried out with the NetVista line of desktops, which were recently promoted through this ad: "Like speed dial for the Web."

Overall, I see the biggest change in PSG’s strategy as this: It channels its marketplace research findings directly back to its products, making the consumer voice its ultimate cornerstone. Yes, it sounds simple, but really this approach represents years of hard lessons learned, and an increasingly close ear to what IBM’s customers have to say.

This won’t be a "slam dunk." Commoditization has come to the equation. And,although the strategic messages I heard are "right on," the jury is still out on "execution," for IBM and its competitors. Moffat looks like a results-oriented executive, so I am placing my bet on IBM execution in 2001. Only time will prove my "hunch" and leaning.