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IBM merges desktop, laptop divisions

Big Blue creates its new Personal Computing Devices group that combines the design, development and logistics operations for desktops and laptops.

IBM on Monday consolidated its desktop and notebook units in what analysts characterize as a forward-looking move.

The change created a new Personal Computing Devices group that combines not only the NetVista desktop and ThinkPad portable product lines, but also their design, development and logistic operations.

"It's mainly to focus on our competitive position in devices," IBM spokeswoman Marta Decker said Monday. "We're combining resources, doing what's smart for the business and making sure we have a much more competitive footing when it comes to personal computing devices."

This is the second major reorganization within IBM's PC division in recent months. In February, Big Blue moved its Intel server operation out of its PC division, which was then renamed the Personal Computing and Printing division. With servers out of the picture, many analysts have been predicting that the Personal Computer and Printing division will post a first-quarter loss.

Gartner analyst Martin Reynolds said the newest change "makes all the sense in the world. The customers don't differentiate between desktop and notebook products, and handling the products in different ways just doesn't make sense."

IBM last year cut $1 billion in costs out of its PC division, but it needs to squeeze out even more for efficiency's sake. The new organization could save IBM a bundle in the long run, Technology Business Research analyst Bob Sutherland said.

"I think they're cutting costs because (desktops) and notebooks will be sharing development," he said.

Last year, IBM began closing the gap between desktops and portables by introducing an all-in-one computer built around an LCD (liquid crystal display). Sutherland said he expects more changes for desktops that draw on the resources of notebooks. "In a year, why couldn't the desktop motherboards really be ThinkPad motherboards?"

The new move also indicates IBM plans to focus much more on different types of devices that transcend typical PC designs, as it did with the ThinkPad TransNote. The mobile product combines a notebook, writing recognition software and a notepad with paper.

"This is an indication of the things to come with devices," Sutherland said. "What's going to make the difference going forward is flat screens, for example. IBM is on the leading edge of flat screens," otherwise known as LCDs.

With LCDs already playing a critical role in notebooks and with IBM pushing LCDs for desktops, the company could further blur the line between the two types of computers, he added.

Fran O'Sullivan, who had been in charge of the ThinkPad group, will become general manager of the new Personal Computing Devices group. John Judge is general manager over the Personal Computing and Printing division. Harry Nichols, who had been responsible for desktops, moves on to become vice president of cost management, large enterprises and direct enablement.

With a computer price war happening and major players likely to exit the PC market, such a consolidation makes tremendous sense, Reynolds said.

"By bringing the products under one roof, IBM has the opportunity to really leverage all their skills in the marketplace," he said. "So I think it's a great move for the company."