IBM PartnerWorld: Gerstner Sketches Plans For Future - 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.


IBM PartnerWorld: Gerstner Sketches Plans For Future

IBM chairman and CEO Lou Gerstner talked about E-business, Linux, middleware, and outsourcing. He talked about resellers, systems integrators, and independent software vendors, and how IBM is handing them more authority. But in his keynote address at the vendor's PartnerWorld 2001 conference in Atlanta on Monday, Gerstner didn't talk about what may be the hottest topic in IT: the cooling economy and its impact on customers' spending.

On Friday, Salomon Smith Barney cut its 12-month price target for IBM shares to $135 from $140; they closed that day at $104. Salomon also cut its IBM revenue target for 2001 by $1 billion, citing tepid demand for IT. But Gerstner avoided those topics in his speech, instead painting the downturn in tech stocks as a shakeout of weak business plans.

"We've passed through the roller-coaster ride of E-business phase one," he said. "There were a lot of false starts." Gerstner was on hand to assure the audience of resellers and integrators that their channel isn't one of them. One-third of IBM's $88.4 billion in sales last year came though the channel, compared with less than 12% in 1993, when Gerstner took over as CEO. And the vendor is trying to hand partners more authority to lead product sales and service contracts, especially in the midmarket.

IBM plans no cap on the amount of channel sales it finances through its credit arm this year, Gerstner said. It's stepping back from more consulting and systems integration engagements to let resellers lead. The vendor will continue its exit from the application software development market, instead augmenting the 50 independent software vendor contracts it signed last year, which accounted for $700 million in sales. And IBM plans to invest $4 billion this year to build its data-hosting capacity, which the channel can resell.

Outsourcing is key to IBM's software strategy of developing middleware that sits on its servers and mediates between customers' apps and operating systems. With hosted software, more data processing, security, and systems management occur on the server and in the network layer of an application. "E-business workloads are not going to be processed on the desktop," Gerstner said. In a veiled dig at rivals Microsoft and Sun Microsystems, he said customers should be able to run software without worrying about compatibility with "any vendor's application suite or operating system."

There's one operating system IBM likes a lot, though, and that's Linux. The vendor is tailoring the system to run on all its servers, and Gerstner said IBM has 1,500 Linux developers on staff. "We think Linux matters," he said. Presumably, the economy does, too.

We welcome your comments on this topic on our social media channels, or [contact us directly] with questions about the site.
Comment  | 
Print  | 
More Insights
The State of Cloud Computing - Fall 2020
The State of Cloud Computing - Fall 2020
Download this report to compare how cloud usage and spending patterns have changed in 2020, and how respondents think they'll evolve over the next two years.
10 Ways to Transition Traditional IT Talent to Cloud Talent
Lisa Morgan, Freelance Writer,  11/23/2020
Top 10 Data and Analytics Trends for 2021
Jessica Davis, Senior Editor, Enterprise Apps,  11/13/2020
Can Low Code Measure Up to Tomorrow's Programming Demands?
Joao-Pierre S. Ruth, Senior Writer,  11/16/2020
Register for InformationWeek Newsletters
Current Issue
Why Chatbots Are So Popular Right Now
In this IT Trend Report, you will learn more about why chatbots are gaining traction within businesses, particularly while a pandemic is impacting the world.
White Papers
Twitter Feed
Sponsored Live Streaming Video
Everything You've Been Told About Mobility Is Wrong
Attend this video symposium with Sean Wisdom, Global Director of Mobility Solutions, and learn about how you can harness powerful new products to mobilize your business potential.
Sponsored Video
Flash Poll