History (1995): Jim Vanderslice Replaces Ed Zschau as GM of IBM Storage Systems Division

James T. Vanderslice, 54, who was GM of IBM’s printing systems division, will replace Ed Zschau, 55, who will resign following a transition period ending October 31, 1995 as GM of IBM’s storage systems division (San Jose, CA).

We met with Ed Zschau at length in Spain last May, and at no time during the conversation did he make it apparent that he was on the verge of resigning. He was, however, as he said today: “The change was not made abruptly, but was the result of a thoughtful process which began a couple of months ago.”

Zschau left thin-film company Censtor to become GM at AdStar, later transformed into IBM SSD. He then set about reconstructing this enormous division to make it a supplier of storage devices and subsystems not only for Big Blue, but also for other computer manufacturers by relying on the division’s excellent technological base and moving production to areas of the world where the workforce is less expensive.

According to Zschau, for 1CQ95, his division contributed to IBM’s profits. But for the following quarter, SSD was not mentioned by CEO Lou V. Gerstner Jr. in his official report on the company’s results.

Two weeks after IBM’s quarterly financial results were known, Zschau’s resignation was announced. And it doesn’t seem that he has been recruited by another company.

“This seemed like a good time to put more balance in my life and devote my time over the next few years to (other) interests and new opportunities in emerging industries,” he commented.

Even though these restructuration efforts were carried out, IBM still hasn’t found itself on a first name basis with Seagate and Quantum, the leaders in the storage business.

Big Blue concentrated on high-end disk drives in 2.5- and 3.5-inch form factors, and was successful, but it never became a force to be reckoned within desktop drives, where the the volume is much higher.

Zschau didn’t stick around long enough to benefit from the new HDD factories in South East Asia and in Hungary, that followed the closing of those in Havant, UK, and Fujisawa, Japan and the cutbacks in jobs in San Jose, CA. The sales force for SSD, both OEMs and distributors, was never as aggressive as the competition’s. Particularly in Europe, where they didn’t rely directly on San Jose, but local subsidiaries unable to hire the best salesmen, that instead had to move people up from within the already overstaffed subsidiaries.

In short, Zschau was able to change things in his division, but the competition kept pace or better, which makes the difference in this perpetually moving market. Perhaps at the heart of the reason for Zschau’s resignation is that he didn’t know how to block EMC’s success on a key and particularly lucrative market for IBM, mainframes. Big Blue’s RAID-5 Ramac was somewhat successful, but the upgrade version, the Ramac 2 did not follow what had originally been announced.

Moreover, IBM was unable to prevent Storage Technology from flooding the world of mainframes with its automatic libraries. The 10GB MagStar tape cartridge 3590 is definitely a superb product, but one that lacks the software to be used to its full extent by mainframes.

Thus, Zschau is leaving his successor to take care of the restructuration of SSD that he began.

Vanderslice has been with IBM since 1966 and held a variety of general management and technology development positions, including president of the communications products division and serving as executive for business and development in IBM’s AsiaPac operations. He was named GM of IBM’s printing systems company in 1991 and turned it into a highly profitable $1 billion business. He will report to Patrick A. Toole, SVP and group executive.

Following this nomination Thomas A. Vanderslice, a brother of James T. Vanderslice, has resigned from the board of directors at Storage Technology to avoid business conflicts.

This article is an abstract of news published on the former paper version of Computer Data Storage Newsletter on issue 91, published on August 1995.

Note: Vanderslice left in IBM in 1999 to join Dell as president and COO until 2002.