PC is dead, says IBM's Gerstner

By Linda Leung in Silicon Valley

March 26, 1999

The PC's supremacy is dead and network technology is the way forward, with devices such as vending machines connected to the Internet, declared IBM chairman Lou Gerstner, in his letter to shareholders published today.

He writes: "The PC's reign as the driver of customer buying decisions and the primary platform for application development is over [...]. It has been supplanted by the network."

Gerstner believes that as computing components are embedded in devices such as cars, roads, machine tools and vending machines, these could be networked to enable their suppliers to keep track of where and how they are being used. He terms this as 'pervasive computing'.

Big Blue's boss also introduces the term 'deep computing' which makes use of all the information garnered by pervasive computing. Named after IBM's chess playing supercomputer, Deep Blue, deep computing sounds very much like the now outdated term data mining.

He continues: "In deep computing we're already applying what we learned from Deep Blue to real world initiatives that were previously inconceivable, like modelling pharmacological agents, simulating weather patterns for more accurate forecasting, and mining data dtabases in retail or insurance for patterns and insights."

Despite being upbeat about IT's long term future, Gerstner warns that over the next two years a "sweeping shakeup" will rock the entire business world.

"In just about all businesses - including information technology, but also banking and retailing and healthcare, and in the noncommercial world too - we will see new leaders emerge, and we will see some old, longtime leaders sink. Competitors will spring up out of nowhere - competitors called 'something.com.'"

Closer to home, Gerstner admits that IBM faced difficulties over the past year, including economic distress in Asia and Latin America, plus soft memory chip prices and a PC price war. "Some were our own making - wresting with important product transitions in our server line, for example," he continues.

The challenges will continue this year, he warns. These will be in areas such as Year 2000, Euro conversion, as well as the continued economic uncertainty in Asia and Latin America.

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