SOMERS, N.Y. - Santa slipped a piece of coal into the stockings of a number of IBM employees this season.
IBM this week confirmed that sagging profits caused somewhere between 3% to 6% of the company's massive server group workforce to get pink slips. An IBM spokesperson says the company had notified the server group employees back on Nov. 4 that IBM needed to reduce expenses and layoffs would be coming. The company now knows where those cuts will be, the spokesperson says.
IBM also made some organizational changes. For starters, it has renamed the server group the IBM Enterprise Systems Group. This group will be getting a new addition - the Storage Subsystems Division, which will include products such as the IBM Enterprise Storage System (code-named "Shark"), tape subsystems, storage software and SAN hardware.
Also being folded into the new unit is the company's troubled Networking Hardware Division (NHD), which will be concentrating exclusively on the sales and maintenance of legacy network products such as SNA and token ring devices.
This is actually the second time in two years NHD has been attached to IBM's server group. Back when IBM was attempting to reinvent NHD as a viable Ethernet-IP vendor, it put the division under the server group's organizational and marketing umbrella. The company hoped that it would be able to sell IP, ATM and Ethernet gear as a bundled offering with the servers. Not long after, without great success, it was sliced off again and placed into the Technology Group - where it could work with the microelectronics division to develop networking chip technology - such as the much touted Rainier communications chip.
Sources say it makes sense to tie the pared-down NHD, which sells data-center class SNA Communications Controllers, to the IBM S/390 mainframe unit at the server group. NHD will also keep close ties to the Personal System Group, which sells the companies token ring adapters for desktops.
Linda Sanford, former head of IBM Global Industries, will run the Storage Subsystems Division. She will be reporting to Sam Palmisano, vice president and executive of the Enterprise Systems Group. "This change more closely aligns us with the way customers make their purchasing decisions," an IBM internal memo announcing the changes states. "Instead of buying piece-parts and islands of technology, customers look at enterprise hardware with a total system view."
In other news this past week, James Vanderslice, the head of the IBM Technology Group, which includes printers, microelectronics, and formerly NHD and the storage unit, will be leaving to take a job with Dell. Vanderslice was responsible for expanding IBM's multibillion OEM business over the past year with customers like Dell and Cisco. Head of IBM research Nick Donofrio will take over the Technology Group.
For more information: www.ibm.com
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