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Monday, Apr. 23, 2007 at 4:30 am

Should IBM Acquire Amazon?

By Jeffrey Eisenberg
April 23rd, 2007

I just read an interesting post on SeekingAlpha.com about why RedMonk’s James Governor believes IBM should acquire Amazon. The thinking is that “IBM is too risk averse, large-enterprise focused, and lacks a strong presence at the core of the Internet.” It’s just speculation and he doesn’t think it will happen, anyway. Even ignoring the cultural differences, I might be dense, but I don’t understand why anyone would offer this as a good idea or even one worth considering. IBM has never been good at managing consumer businesses. Can anybody explain to me why this might be a good idea?

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Comments (2)

  1. did you read my piece, or just dan’s?
    1. Amazon is also a B2B supplier- ks of small retailers use the platform
    2. Amazon also offers ecommerce services to large retailers, which is a BPO opportunity.
    4. IBM has no solid on ramp for SaaS at present
    4. Amazon has the hottest web APIs in the business right now, through its Amazon web services platform.
    5. the megatrend- consumer and enterprise are converging. IBM doesnt really have a choice.
    My colleague Stephen wrote another good explanation of the issues in his post yesterday: Is Google Ring-Fencing IBM?
    http://redmonk.com/sogrady/2007/04/23/ibm_google/

  2. James,

    I can’t speak for Jeffrey, but he and I have discussed this issue and I know for sure that he’s read your piece; he just disagrees with its conclusion.

    Although this deal looks great on paper (for the reasons you’ve outlined), Jeff’s point isn’t just about IBM, it’s about DNA. In other words, IBM has proven time and again that they’re not comfortable in the consumer market–and that’s fine. They remain innovators in enterprise-level B2B technology. But, ultimately, the PC is the perfect example of why IBM shouldn’t get into customer service (or buy companies that are).

    Sure, ThinkPads are great computers–at least they were around 2000 when I used one–but IBM’s model was generally to sell them directly to businesses. Every foray into the consumer market for IBM has been met with limited success over time. It seems Jeff’s just very skeptical of there ever being a scenario where IBM wouldn’t end up changing a lot of the customer-centric DNA that makes Amazon “Amazon.”

    In fact, in that piece you link to, your colleague makes the same point about how IBM missed the boat on PC’s and the OS!

    The real difference seems to be a philosophical one; that you guys believe IBM is actually missing these opportunities, whereas we believe IBM’s corporate culture for the past 100 years doesn’t allow for such radical departures from their (huge) niche.

    And, if IBM were to branch out into the consumer world as you recommend they do, would a deal this big really be the right place to start? I suppose it might work, but they’d be risking the future of both companies to do it–and for what?

    -Blog Editor

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Jeffrey Eisenberg, founder of FutureNow, is a professional marketing speaker and the co-author of New York Times and Wall Street Journal bestselling books Call to Action and Waiting For Your Cat to Bark. You can friend him on Facebook.

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