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TECHNOLOGY : IBM Sets Home Computer Strategy : Marketing: Company names James Firestone to head its new consumer products division.

August 08, 1995|From Associated Press

NEW YORK — Consumers who shunned IBM's computers for their homes even while depending on them at work could soon find Big Blue a lot more user-friendly.

Acknowledging one of its weakest areas, International Business Machines Corp. said Monday that it will refocus its efforts to take advantage of rising demand for home computers and related products such as on-line services.

IBM named James Firestone, who worked with IBM Chairman Louis V. Gerstner Jr. when he ran American Express, to head the consumer business. Firestone, 40, was most recently head of the consumer services division at Ameritech Corp., the Chicago-based regional telephone company.

The new division will control marketing of IBM's Aptiva home computer line, along with portable hand-held computers and on-line information services that computer users reach through telephone lines. Prodigy, a competitor of CompuServe and America Online, is a joint venture of IBM and Sears, Roebuck & Co.

The division will also market multimedia software, an area where IBM lacks any major products such as games or encyclopedias that combine data, text, video and audio.

Though still the largest computer company in the world, IBM has stumbled repeatedly in the consumer market, ceding business to Microsoft Corp. and computer hardware makers that use technological standards introduced by IBM in the early 1980s.

"It's fair to say it's one of our weakest areas of performance with customers," said G. Richard Thoman, a senior vice president and former American Express executive who joined IBM last year and who will be Firestone's boss.

The new division signals IBM's desire to put consumers higher up on its priority list and thereby tap a market that is growing much faster than the business market, he said.

"The worldwide consumer market for information technology is exploding, with the expectation that it will exceed $100 billion before the end of the decade," Thoman said.

Consumers won't see any "magic new products" two months from now, but they will notice the IBM name more, he said.

"They'll see a lot better display at retail, better layout, demonstrations on all our machines that work and very effective merchandising," he said.

Although the consumer market is growing fast, it is highly competitive and yields much slimmer profits than traditional business-oriented products such as mainframe computers.

IBM was criticized last year when demand for its Aptiva line vastly outstripped supply during the crucial holiday shopping season. The company later acknowledged it was losing money on the Aptivas because of high production costs.

Thoman said those problems have been corrected. Although he wouldn't offer numbers on Aptiva's profitability, he said IBM and most other makers of home PCs remain unsatisfied with their profit margins.

Firestone said one of his biggest successes at Ameritech was in turning around lackluster sales of the company's caller ID service, which identifies the phone number of callers to residents on a digital readout before they pick up the receiver.

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