:::renaissance chambara:::

Posts on quality, life, culture, the media, news & tech with a twist & a slice of Limey. I moved my blog to http://renaissancehambara.jp in December 2006, go there for the latest content.

Thursday, January 20, 2005

 
Hollow Point

This posting pulls together some thoughts prodded into life by a news story and Linspire's Michaels Minute email newsletter, both highlight the self imposed challenges faced by companies with too much commercial power used in an unwise way.

First of all Wal-Mart has been slated for a number of years about the disturbing side effects of the retailing superpower.

Accusations against Wal-Mart include:

There is a good article that outline these arguments in more depth: Fast Company - The Wal-Mart You Don't Know (page 68, December 2003). There is a viewpoint out there that goes along the lines of Wal-Marts dogged pursuit of growth at any cost had caused and untold amount of economic destruction and ruined the social fabric of communities across the US. Wal-Mart has had enough of this pinko communist rubbish and decided to launch a PR blitzkrieg to counteract negative perceptions that consumers and skakeholders may have about the retailing behemoth. A key component in this charm offensive is the dreadfully dull Walmart Facts website. Somehow I don't think that this website and copy will make it into the web designer's or PR agency's portfolio.

As a measure of the effectiveness of the campaign, it has picked up a slating from industry analysts who think that it will make little difference to consumer attitudes or Wall Street's valuation of the company.

Michael Robertson in his Michael's Minute email newsletter had two interesting Microsoft-related comments. The first one was the Microsoft had moved from being a growth company to being a value company and despite trying to diversify the company had failed to get sufficent returns from entering new markets such as PDAs, mobile phones, TV, games consoles and music. Part of this could be because players in these markets are reluctant to have their margins hollowed out in the devastating commoditised markets that have wrecked the once thriving PC business. Robertson further considers that this devastation of the industry will encourage IBM PC partner Lenovo to lean more towards Linux.

China-based Lenovo just received US government clearance to purchase IBM's PC business. IBM executives have assured the IT world that the quality and service will remain, and I hope it does because I'm a big Thinkpad fan and own several of the X series laptops. But something must change or Lenovo will have paid $1.75 billion for the right to lose money on every IBM PC they sell. Over the last 3.5 years, IBM has sold about 30 million computers and lost $965 million dollars - or approximately $33 per computer. To reverse their fortune, Lenovo needs to find a way to have $50 better economics on every PC so will they not only break even, but they will generate some profits. IBM already uses Chinese labor in their plant in Shenzen to manufacture their PCs - so there won't be much savings there. Lenovo may be able to buy hard disks, memory or other parts slightly cheaper than IBM because of greater economies of scales, but at best this will be less than $10 per machine. The only place where significant savings can be generated to turn their PC business around is the operating system and office suite. Instead of paying Microsoft $100-$300 per machine for Microsoft Windows XP and Microsoft Office, they will ship Linux with an office suite and pay just $5-$10 on some of their product line. This will give them distinction from the well-entrenched Dell and HP computers they must compete with.



Create Social Bookmark Links


Links to this post:

Create a Link



<< Home

Archives

03/2004   04/2004   05/2004   06/2004   07/2004   08/2004   09/2004   10/2004   11/2004   12/2004   01/2005   02/2005   03/2005   04/2005   05/2005   06/2005   07/2005   08/2005   09/2005   10/2005   11/2005   12/2005   01/2006   02/2006   03/2006   04/2006   05/2006   06/2006   07/2006   08/2006   09/2006   10/2006   11/2006   12/2006  


Welcome, thanks for visiting and a bit about this blog (:::renaissance chambara::: all in lower case just like UNIX)
Got something to bitch about? Trying to legal the author or want to send scary fan mail? Click here for more details
Want to leave a comment? Feel free, but please take account of the guidelines
The blogroll (there's some missing that Bloglines can't read, if you're not in sort your feeds out)
Subscribe via RSS to :::: renaissance chambara ::::
The grooves that drive :::: renaissance chambara :::: (see what's on our iTunes)
This work is licensed under a Creative Commons Attribution-Noncommercial-Share Alike 2.5 License.

Blogger rox nuffsaid.