We had a couple of problems that IBM's competitors didn't have. For one thing, we couldn't make too powerful a PC that might cannibalize the minicomputer sales (AS/400). IBM made much more money on an AS/400 than a PS/2 model 95.
Our cost structure was too high. How high? We lost $1 for every $100 we sold.
Part of the reason the cost structure was high were the number of IBM'ers: I worked in an office of about 15 people supporting the NY/Long Island region. Four years later, it was down to 1 person.
Another reason was our physical costs were high. For example, we couldn't buy RAM from Intel; we had to buy RAM from IBM (which was fabbed in Kingston, NY, not to be confused with the Kingston RAM mfr).
Also, we were struggling to get the correct mix of sales channels. For example, we couldn't sell PCs directly through the IBM sales force (too expensive, IIRC it added 36% to the sales cost). Instead, the IBM sales force would partner with dealerships (which added 21% to the sales cost). The web didn't exist yet, not really, so we couldn't sell through there. We could have done direct-response (an 800 number, like Dell & Gateway were doing), but that took a while to spin up. And it was similar in cost to selling through dealerships. Also we didn't sell through distributors, which was the least-expensive channel (16% IIRC).
I remember looking at the price list. We had two levels of dealers: those who bought large volumes, which typically purchased equipment at 30% off list, and those who worked in smaller quantities, which would get ~20% off list.
As the PC Market became more competitive, we couldn't afford high list prices (we were too expensive), so one of the ways we brought down our list prices was to shrink the discount we gave to the dealers.
The dealer was not allowed to sell online or via computer magazines: there had to be in-person contact. That helped prevent the Atlanta dealers from poaching the NYC dealers' business.
It's easy to armchair-quarterback the decisions IBM made, but a lot of those decisions were nuanced. For example, you could say, "Why didn't IBM have an 800 number to buy PCs?". And the answer is that a lot of our biggest customers were corporations, not individual consumers, and they felt more comfortable purchasing through a dealer they trusted.