October 21, 1999 Web posted at: 9:10 a.m. EDT (1310 GMT) by Ed Scannell

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(IDG) -- Having tried every traditional method to profitably sell its line of home PCs, IBM officials have announced that the company will yank its entire line of Aptiva home desktop PCs from retail stores in the United States and sell the machines almost exclusively over the Internet.

IBM officials, who said the company will continue to sell its more profitable ThinkPad line of laptops through retailers, said the decision is not a precursor to selling its various lines of high-end desktop systems to corporate users online.

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The announcement comes only two weeks after IBM announced it would cut as much as 10 percent of its 10,000 workers dedicated to its PC business, a unit that lost almost $1 billion in 1998.

"When we restructured the Personal Systems Group two weeks ago we said one of the things we were going to do is increase our focus on selling direct. This is an offshoot decision. We are trying to get this business profitable," said Trink Guarino, an IBM spokesman.

IBM's decision to sell over the Internet was driven largely by cutthroat pricing of components and systems by its major competitors and suppliers, the overhead costs of selling through dealers, and the inability to sufficiently differentiate its products among dozens of others in storefronts.

"One of the things we are looking for is a way to differentiate our products in a retail channel. Until we find that winning formula, and maybe this [selling over the Internet] is it, it doesn't make sense because we are not profitable," Guarino said.

IBM will continue selling its Aptiva line through retailers overseas, where it fares much better. In fact, IBM officials said the home line sells best in Japan where Japanese retailers set aside space in their stores just for the IBM systems, and have a trained and dedicated sales force that is paid commissions.

"But in the U.S. you go to a store and the Aptiva sits on a shelf with 25 others and the sales force is not any more motivated to sell Aptivas than any other system. No way to differentiate your product in that kind of environment," Guarino said.

Trying to emulate its success in Japan, IBM this past June initiated a pilot program with Office Max, which did dedicate space in its stores for the IBM systems and has put together a dedicated sales force to sell them.

With the pilot program yielding good results so far, IBM plans to continue selling Aptivas through Office Max in the United States, even after Jan. 1, company officials said.

To back up the move IBM will launch a $20 million advertising campaign involving television and direct mail flyers sometime in next year's first quarter. The company will not launch a new Web site dedicated to selling the systems but instead will improve its existing ShopIBM Web site.

Ed Scannell is an editor at large at InfoWorld.