Strategic CIO // Executive Insights & Innovation
Commentary
6/15/2009
06:22 PM
Bob Evans
Bob Evans
Commentary
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IBM CEO's Description Of Big Blue Used Against It In Court

IBM CEO Sam Palmisano recently told institutional investors, in a very pointed fashion, that IBM is "not like the other companies in the IT industry" because it's transformed itself. And so when IBM sued one of its VPs to prevent him from joining Dell, the VP defended his legal right to make the move by using Palmisano's own words as proof that Dell should not be regarded as a competitive threat to IBM.

IBM CEO Sam Palmisano recently told institutional investors, in a very pointed fashion, that IBM is "not like the other companies in the IT industry" because it's transformed itself. And so when IBM sued one of its VPs to prevent him from joining Dell, the VP defended his legal right to make the move by using Palmisano's own words as proof that Dell should not be regarded as a competitive threat to IBM.Global CIO covered Palmisano's comments extensively because he doesn't make a lot of public comments, and an audio recording on IBM's website of Palmisano's presentation at a recent "Investors Briefing" offered some deep insights into how IBM's highly successful CEO views the overall industry, IBM's ongoing evolution, and its prospects going forward.

In that context, Palmisano made the following comment as reported on Global CIO:

"Now again, I'm just repeating comments other people have made, and I said it once before: 'You guys are defying gravity - you're fighting physics - how can you sit there and say, 'At least $9 or $10 this year - how can you even give a projection in this environment? Ya-ya-ya, ya-ya-ya.'

"Now look: we got it all. Why? Since nobody's asking us why -- 'No one expects you to [make projections], so why would you do it?' Because you need to keep things in perspective: We are not like the other companies in the IT industry. We're not. We've completely transformed the IBM company. We're not."

And now some of those words have shown up in court papers filed by former IBM vice president David Johnson, who is seeking to jump ship to Dell, which recruited him to be senior VP of strategy. As reported exclusively a few weeks ago by my excellent colleague Paul McDougall, IBM is claiming that Johnson's move would unfairly harm IBM by virtue of his first-hand knowledge of internal IBM strategy and trade secrets.

In documents arguing against IBM's claim, Johnson's attorneys claim that no such competitive damage could occur for a variety of reasons, among them Palmisano's own claim about the unique position IBM holds in the industry. This is from court papers filed by Johnson's attorneys:

"For example, Dell and IBM necessarily have distinct corporate strategies because the companies' internal factors are quite different. IBM markets and sells high-performance business systems, such as information technology infrastructure, operating systems software and services. It contrast, Dell sells more basic products, such as PCs, at a lower cost directly to businesses, government bodies and individual consumers. Indeed, IBM's CEO, Sam Palmisano, recently told a group of investment professionals that IBM is 'not like the other companies in the IT industry.' "

It will be very interesting to see how this shakes out, and whether Palmisano's completely legitimate contention about IBM's status relative to its competitors becomes a factor in a legal finding that goes againt IBM. In addition, as McDougall reported earlier today, the court documents surrounding IBM's attempt to keep Johnson from joining Dell have disclosed that IBM is considering spinning off some unnamed business units.

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