PCs as commodity?
The big, yet hardly surprising by this time, news of the day is IBM's sale of its PC business to China's Lenovo. IBM will take an equity stake in the Chinese PC manufacturer as part of the deal.
The big question in the automation space is does this transaction signal anything similar among the companies we cover. Certainly the success of AutomationDirect, which uses a model similar to Dell's, shows that there is an element of commodity business in programmable controllers. However, the "major" PLC manufacturers (GE Fanuc, Mitsubishi, Omron, Rockwell, Schneider and Siemens) have all responded by providing useful upgrades to their platforms. These upgrades generally follow the path of integrating more functions into the controller (hmm, seems like a familiar refrain from the early '90s PC business). The major functions are integrated motion and logic control and improved data handling.
Rockwell, Siemens and GE Fanuc, however, are also quickly developing software and services capabilities, as well as expanding their target markets from discrete manufacturing (also known as factory automation) into process manufacturing. The major DCS vendors seem to be content within the process automation market, but they (ABB, Emerson, Foxboro and Honeywell) are also moving toward software and service solutions as growth platforms.
As always, manufacturing seems to be on a 10 year lag cycle vs commercial technology. Which of these companies, if any, will follow IBM's successes?
Meanwhile, does this leave a substantial market for companies marketing smaller and relatively inexpensive control and I/O solutions such as Opto 22, Phoenix Contact, Wago and others? Where might this market go, and might it lead the way for automation vendors to expand markets out of factory automation?
On Cnet, news.com, check out three articles:
http://news.com.com/IBM+sells+PC+group+to+Lenovo/2100-1042_3-5482284.html?part=rss&tag=5482284&subj=news.1042.5
Michael Kanellos disses the joint venture part of the deal at http://news.com.com/Why+Lenovo-IBM+is+a+tough+sell/2010-1071_3-5482020.html?part=rss&tag=5482020&subj=news.1071.5
Then, Cnet's Charles Cooper looks at the IBM side of the puzzle praising CEO Palmisano as the early champion of Linux which gave the company the opportunity to push its (high-margin) proprietary middleware. Plus, with no PC business to make him worry about Microsoft, he's now free to pursue this strategy more strongly. Palmisano also has "secured the future of IBM with its big move into services." Check it out at http://news.com.com/Method+to+Palmisanos+madness/2010-1071_3-5482531.html?part=rss&tag=5482531&subj=news.1071.5.
The New York Times take on the matter is that this reflects some of the aspirations of both countries. Lenovo wants to be a global player, while IBM seeks an entre into China. This deal works to the benefit of both.
Sale of I.B.M. PC Unit Is a Bridge Between Companies and Cultures. The sale of I.B.M.'s PC business to Lenovo reflects the ambitions of not only the two companies but also their two nations. By By STEVE LOHR. [NYT > Home Page]
Finally, Infoworld weighs in noting the potential dangers to IBM's reputation in the corporate world if the new company devalues the products that will bear IBM's name for the next five years. Check out http://www.infoworld.com/article/04/12/08/HNIBMadjusts_1.html?source=rss&url=http://www.infoworld.com/article/04/12/08/HNIBMadjusts_1.html.
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