home *** CD-ROM | disk | FTP | other *** search
- Xref: sparky comp.os.os2.misc:39867 comp.os.os2.advocacy:10575
- Newsgroups: comp.os.os2.misc,comp.os.os2.advocacy
- Path: sparky!uunet!zaphod.mps.ohio-state.edu!swrinde!cs.utexas.edu!torn!newshost.uwo.ca!news
- From: pkedrosk@student.business.uwo.ca (Paul S. Kedrosky)
- Subject: Re: Future of OS/2 and IBM???????????? (LONG)
- Organization: University of Western Ontario
- Date: Fri, 18 Dec 1992 14:14:03 GMT
- Message-ID: <5PeZVB1w165w@student.business.uwo.ca>
- References: <1992Dec18.035926.1900@sequent.com>
- Sender: news@julian.uwo.ca (USENET News System)
- Nntp-Posting-Host: student.business.uwo.ca
- Lines: 116
-
- furballs@sequent.com (Paul Penrod) writes:
- > In article <1992Dec16.152535.12204@jupiter.sun.csd.unb.ca> hwhalen@jupiter.su
- > >In article <1992Dec16.072137.28867@sequent.com> furballs@sequent.com (Paul P
- > >>In article <1992Dec15.210437.934@gn.ecn.purdue.edu> ashwath@gn.ecn.purdue.e
- > >
- > >[Stuff about IBM laying off 25,000 people deleted]
- > >>
- > >>I think it would be prudent to ask the question as to where the
- > >>cuts are coming from. Remember, IBM has started decentralizing it's
- > >>busineses and while the PC products Division may be going great
- > >>guns, their mainframe division may be suffering terribly, so you
- > >>might find the cuts coming from a source that has little to no
- > >>impact on the product (OS/2) that you are currently using. Also,
- > >>IBM is among the most conservative of the blue chip stock companies
- > >>and has long earned it's reputation as a stable commodity in the
- > >
- > >Ahem .... stable? I believe that around 1987 IBM stock was trading at
- > >approximately $178 per share. Yesterday it was trading at $56 per
- > >share. God help us if this is stability. :)
- > >
- >
- > Yes, stable. You obviously don't play the stock market with
- > professional investors or you would realize that stock price is not
- > relavent, unless you are going short term. DIVIDENDS are the
- > stability. And, IBM earned it's BLUE CHIP status by producing
- > DIVIDENDS that are, up till now, consistently better than the
- > average.
-
- This is possibly one of the strangest definitions of stock stability I
- have heard. There are two components to returns on a stock: dividend
- yield and price appreciation. If the share price fluctuates madly then
- so does the dividend yield, which is why IBM all of a sudden became a
- good investment again when its price fell below $85 or so and its
- dividend yield became high in relative terms. Price appreciation is the
- other part of the investment equation and saying it is only the concern
- of the short term investor is naive, goofy, and just plain wrong. IBM
- earned its blue chip status, or perhaps I should say, kept it, because
- of the naivete of many institutional investors who simply never
- understood (in the same that IBM has only slowly understood) the
- fundamental changes in its lines of business. That is not the same as
- calling IBM blue chip.
-
- > >>volatile stock market. This implies that they have planned for this
- > >>and are trimming the fat from the company to be come more
- > >>competative.
- > >>
- > >>While the numbers are gargantuan as compared to someone like
- > >>Borland or Microsoft, it represents a much smaller percentage of
- > >>IBM as a whole than Microsoft. I would not worry about OS/2 support
- > >>suffering. Right now, it's becoming a cash cow for them and they
- > > ^^^^^^^^
- > >
- > >Cash cow? I don't think so. The most optimistic numbers I've heard are
- > >2 million units sold. Lots went out at what ....$49. Others have gone
- > >to retail outlets and since the retail outlets have to make a profit
- > >the full price of these units did not go to IBM. Subtract costs for
- > >disks, manuals, suppport!!!!, bug fixes!!!!, shipping, order taking,
- > >advertising, beta testing, etc. and there is no way that this product
- > >*at this time* is a cash cow. If IBM got an average of $50 per unit
- > >sold then they received at most $100,000,000 from OS/2 sales. This is
- > >not much in a company that has over $50,000,000,000 in sales. It is at
- > >most .2% of their sales.
- > >
- > Think again. IBM makes a large portion of it's money on hardware
- > and service. They could give away the OS for all intents and
- > purposes, so long as they get the service contracts and sell
- > hardware. That's why their called International Business MACHINES.
-
- This is a very misleading statement; IBM, far from making all or most
- of its money on hardware and services, makes most of its money in one
- place: mainframes. That's mainframe hardware, mainframe software, and
- mainframe services (like maintenance). They are suffering everywhere
- else, at least partly because of a horribly bloated infrastructure and
- an outdated business model. IBM's old model of relying on hardware and
- maintenance services to make up their bottom line is simply unworkable
- in the 1990's. Look at the PC industry, that business will not accept
- marked price premiums from IBM hence their introduction of ValuePoint PCs in
- response to the low price mail order houses like Gateway and Dell.
-
- At any rate, none of this makes OS/2 a cash cow in any sense of the
- world. OS/2 is strategic, plain and simple. IBM spent around $2
- billion on developing the thing and see it as their path back to
- control of the desktop. If they make back their investment in the
- product, ever, I for one will be very surprised.
-
- > >>have announced plans to integrate it into their other system
- > >>platform. As long as people continue to buy OS/2, IBM will continue
- > >>to promote it's growth and useability.
- > >
- > >Maybe, in fact, probably .... but more as a matter of strategy and ego
- > >rather than the dubious fact that it's a cash cow.
- > >
- >
- > Old marketing strategy they never teach in college:
- >
- > "I'll give you the razor, so long as I can sell you the blades..."
- >
- > One last thing. According to the sattelite news service, IBM is
- > having problems producing enough OS/2 packages to sell and bundle
- > with their PS/2 hardware, which is selling a record clip. Yes, I
- > would call that a cash cow.
-
- This is what I would call a floating defintion of "cash cow". That IBM
- is selling many PS/2s does not imply that the things are cash cows if
- IBM's margins are not significant. I'm not suggesting their margins
- are not at least respectable, IBM has made it clear many interviews
- with business and industry publications that competition has broken
- the margin back at IBM and they are feeling the pain of selling in a
- commodity low margin PC world. Not exactly a cash cow. A volume cow, maybe.
-
- Paul
- __________________________________________________________________________
- Paul S. Kedrosky __/ "In a certain village in La Mancha,
- pkedrosk@business.uwo.ca __/ which I do not wish to name, there
- University of Western Ontario __/ lived not long ago a gentleman..."
- (519) 679-2111 x5174 __/
-