Global CIO: Why Are Microsoft, Oracle, And HP Bashing IBM?

Mark Hurd, Larry Ellison, and Steve Ballmer have all recently taken some fairly empty shots at IBM. But if Big Blue is such a loser, why do those three CEOs keep talking about it?
He gets some attention (I plead guilty) and he pushes out the word that Oracle is getting into the hardware business if he gets approval to buy Sun from the fuddy-duddies in the European Union's Bureaucracy Central, who are shooting to double their annual productivity by making two (2) decisions in the same year.

But I don't think customers today give a rat's rear-end about whether the hardware from Larry Ellison and Oracle "beats" IBM's hardware. I think they assign to that claim the same value they give to e-mail spam messages promising to secure their databases for just pennies a day. I don't think they perceive any real value in this chest-thumping devoid of the business context that CIOs are demanding every day with increasing urgency. I don't think they see in that boast—especially because Oracle hasn't yet sold a single server, or PC, or storage unit—anything other than, "Well, that Larry Ellison's quite a character, isn't he?"

Ellison could have made a lot of fans by saying, "I promise that Oracle/Sun hardware will interoperate with everything you've currently got. I promise that Oracle/Sun hardware will be supported with a level of excellence and commitment so far beyond what you've ever seen that each support package we sell will come with a money-back guarantee. And I promise that we'll help you optimize on our hardware every single piece of enterprise software you have—whether it comes from us or from SAP or from Microsoft or anybody else."

Well, maybe next time that'll be Larry's big promise.

And then there's HP CEO Mark Hurd, who—understandably—declined to mention IBM by name when asked in a public forum if his strategy for HP was patterned after IBM's. But then Hurd, by saying two things, missed a huge opportunity to have a broad discussion about how HP's business model and products and approach are superior to IBM's. Instead of saying any of that, here are the two things on which he focused:

1) "Sounds like they're trying to chase us." In one sense this is 100% true: IBM is chasing HP in terms of overall revenue: HP is in the range of $118 billion, and IBM's somewhere around $95 billion. But by every other financial metric, IBM is outperforming HP—the numbers aren't close. Then there's services: Hurd says HP is building out its services business and will include vertical segments, but IBM already has that. Hurd says HP wants to expand its software business to include business analytics, but IBM's already there with a 5-year head start and current-day revenue in the billions. So maybe I missed it, but I wish Mark Hurd would have been more precise in following up that line—after all, it drew quite a laugh from the audience at the Gartner Symposium, and I'm sure they would've been eager to hear what HP the leader is teaching IBM the follower.

2) The second thing Hurd said about IBM was that HP is superior to IBM now and will remain so in the future because HP has an all-inclusive hardware portfolio as part of its unmatched infrastructure offerings (this was the subject of yesterday's Global CIO column, and is referenced at the bottom of today's column in the "Recommended Reading" section). Hurd's point is that successful broad-line players today can't be choosy about which parts of the hardware business to engage in: " …you can't be in any one of them as a hobby—you will not compete in these segments of the market as a point-product player over the long run."

That's certainly a defensible position for Hurd to take, and he's staking HP's future as "the infrastructure company" on its ability to have the broadest array of infrastructure hardware and software, plus services that his software automates, plus unmatched scale to gain lowest-cost advantage, plus innovation in delivering superior solutions to customers. I think his audience was eager to hear that, excited by some of it, but also disappointed that Hurd didn't say more about what makes HP at its core different from IBM beyond a few gaps in its hardware business.

So in the interest of completeness, we here at Global CIO are happy to fill in that blank and let CIOs the world over compare Mark Hurd's vision for HP (link is a few paragraphs at the bottom of this column) against Sam Palmisano's vision for IBM. Here's an excerpt of Palmisano's strategic vision for his company from an earlier Global CIO column in which he talks about IBM's stability, its exit from commodity markets, and its belief that it will be increasingly rewarded by customers for the outcomes it delivers instead of the parts it assembles:

"So we're not saying it's easier for us than for anybody else -- we're just saying we don't have the dependency that other people have—that's all. We're not seeing a different world: It is what it is. We just don't have the dependency on it that others have. Therefore we haven't slashed the pay of our people, we haven't cut all their compensation, we haven't furloughed, we haven't we haven't we haven't."

But what IBM has done is force his sprawling, highly diversified company that operates in 170 countries to get out of the mindset that pervaded the entire organization for more than 100 years and remake itself in the image of where business is heading, not where it's been. And that also meant overhauling the capabilities and products IBM offers, top to bottom.

"You know the moves we've made there: we divested in the commodities businesses that don't cover their cost of capital, regardless of how well you execute them, and we invested in other areas, both organically and through acquisitions -- as you know, 100 acquisitions, $20 billion, etc. etc. etc. "The other thing that was gonna drive all this in addition to the technology shifts was client behavior: They were gonna get more towards outcome and less toward 'I'll be the assembler of other people's parts.' More towards outcome, and 'I'm no longer an assembler.' "Why? Economic pressure. When you're under budget pressure, you cannot afford to do other people's work for them, i.e., the industry. Awright? And buying at good prices in little pieces and then assembling them doesn't generate value for your enterprise. As soon as you're under budget pressure, behavior shifts. Guess what? We're here. We see that occurring today as more and more people want outcome, solutions, front-office transformational things versus just 'I'll assemble piece-parts better than somebody else,' " Palmisano explained.

Well, folks, if you want choices, you've got them, which is a great thing. And as I mentioned yesterday, don't believe for a second any nonsense about how all these companies are becoming exactly the same—it's quite the opposite. As for IBM, at some point it's got to show some growth in its core businesses, and stop settling for narrowed declines—otherwise, the carping from its competitors' CEOs will take on a lot more validity.

But IBM is narrowing that gap, and that's why I think the digs at IBM from the CEOs of Microsoft and Oracle and HP say a lot more about the perceptions those CEOs have of their own companies and of the broader IT marketplace than they say about IBM.

Recommended Reading:

Global CIO: Ballmer Blasts IBM For All The Wrong Reasons

Oracle CEO Ellison Vows To Whip IBM In Hardware

Oracle's Ellison Calls Out IBM: Why You Gotta Love The Guy

Oracle Not Telling The Truth About Websphere, IBM Says

Global CIO: Hewlett-Packard CEO Hurd's Strategy: The Infrastructure Company

Global CIO: Sam Palmisano's Grand Strategy For IBM

Global CIO: An Open Letter To Oracle CEO Larry Ellison

GlobalCIO Bob Evans is senior VP and director of InformationWeek's Global CIO unit.

To find out more about Bob Evans, please visit his page.

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