IBM Can't Shrink Its Way To Greatness - InformationWeek

InformationWeek is part of the Informa Tech Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them.Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.

Cloud // Software as a Service
09:43 AM
Doug Henschen
Doug Henschen
Connect Directly

IBM Can't Shrink Its Way To Greatness

IBM saw revenue declines in every major business unit in 2014. Can the company do more than please investors with fatter margins?

Comment  | 
Print  | 
Oldest First  |  Newest First  |  Threaded View
Charlie Babcock
Charlie Babcock,
User Rank: Author
1/21/2015 | 1:05:31 PM
IBM's growth in cloud revenues will offset some losses
Good assessment, Doug. IBM's obit has been written many times but unlike Word Perfect, Lotus Development and Sun Microsystems, it's always still around when the obit writers hang up their pens and go to their own just rewards. It has had to go through several rounds of re-inventing itself and is doing so once again. One renewal drive: Look for accelerated SoftLayer cloud revenue growth to gradually offset losses elsewhere.
D. Henschen
D. Henschen,
User Rank: Author
1/21/2015 | 3:46:23 PM
This is no obit, but it is a prod.
IBM issued plenty of $Billion-plus commitments in 2014 -- Softlayer, Watson, next-gen chips, etc. -- but they were open-ended on time (meaning not all in 2014). I was surprised, yesterday, when IBM cited $6 billion in R&D in 2014 and only $4 billion in acquisitions and other investments. To put it in persctive, SAP, a much smaller company than IBM, acquired FieldGlass for an estimated $1 billion and Concur for a whopping $8.3 billion all in 2014.

I think IBM needs to take more aggressive action. One impulse would be to buy a fast-growing company like Workday, but that would piss off SAP and it growth would probably die. Are Netezza, Cognos, and SPSS better off under IBM than they were as independents? I'd say their pace of innovation and market aggressiveness have waned since acquisition. The politics, layers, and factions inside IBM sometimes stifle innovation.

It's hard to solve the IBM puzzle, but a bit of culture change, more partnerships, less emphasis on consulting-driving offerings, and more emphasis on finished solutions would help.

Thomas Claburn
Thomas Claburn,
User Rank: Author
1/21/2015 | 6:24:22 PM
Re: IBM's growth in cloud revenues will offset some losses
I hope IBM finds its way out of the woods.
IT Spending Forecast: Unfortunately, It's Going to Hurt
Jessica Davis, Senior Editor, Enterprise Apps,  5/15/2020
Helping Developers and Enterprises Answer the Skills Dilemma
Joao-Pierre S. Ruth, Senior Writer,  5/19/2020
Top 10 Programming Languages in Demand Right Now
Cynthia Harvey, Freelance Journalist, InformationWeek,  4/28/2020
White Papers
Register for InformationWeek Newsletters
Current Issue
Key to Cloud Success: The Right Management
This IT Trend highlights some of the steps IT teams can take to keep their cloud environments running in a safe, efficient manner.
Flash Poll