IBM to drop direct PC sales in four European countries

IBM to drop direct PC sales in four European countries

IBM is phasing out direct phone sales of PCs in France, Germany, Sweden and the U.K., although customers will still be able to order machines online.

The company had been focusing on telephone sales to small and medium-sized enterprises (SMEs), but has found that those customers prefer to deal with local vendors, said Ian Colley, a spokesman for IBM.

"It's really just a reflection of how our customers want to do business," he said. "Small and medium businesses buy technology in the form of a solution that addresses their problem. In a local marketplace that most often takes place in conjunction with a business partner."

The move comes as part of IBM's general shift away from PC retailing, said analyst Brian Gammage of Gartner.

"IBM traditionally has probably the least efficient supply chain of all the major PC vendors, so especially in the environment of the past year where Dell (Computer Corp.) has used its network to maintain pressure, IBM has suffered," he said.

Unlike manufacturers whose sole business is PCs, however, IBM can afford to focus on the sectors of the market that it finds more lucrative, he said. "They've really been cherry-picking the business they want to do."

IBM has also been moving to outsource PC production, announcing Wednesday a three-year, US$5 billion deal to transfer most of its NetVista desktop PC manufacturing operations to Sanmina-SCI.

"We do expect to see their overall volumes of PCs go down, but ... I would expect their profitability to improve, because they're backing out of high-cost sales and manufacturing which they don't do well," said Gammage.

According to Gartner, IBM's PC sales in Europe, the Middle East and Africa stood at 462,000 in the third quarter of 2001, the last period for which figures are available. Sales were down some 30 per cent from the same period of 2000, while the market as a whole shrank only 5.3 per cent.

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