IBM: Think Big, Harder, Slower

February 28, 2015

i read “IBM Says Cloud, Mobile, and Data Businesses Will Reach $40 Billion by 2018.” The write up reports that IBM has some “strategic imperative.” I assumed that sustainable revenue growth and healthy profits were important. Well, maybe.

Computing and IT services giant IBM will spend $4 billion on its cloud services, data analytics and mobile businesses in a bid to turn it into what CEO Ginni Rometty said will be a $40-billion-a-year-in-revenue business by 2018. On a conference call ahead of its annual investors presentation in New York, Rometty said the three businesses, which she referred to as IBM’s “strategic imperatives,” have grown in overall importance as it has divested itself of its older traditional business units. Five years ago the divisions amounted to 13 percent of IBM’s sales, Rometty said. By the start of 2015 they accounted for 27 percent.

Not long ago, Watson was going to be a $10 billion business. IBM should be proud of these projections.

The hitch in the cloud, analytics, and mobile git along is that there are a few other outfits with the same idea. A couple of these companies seem to have some traction in the cloud and mobile markets.

With regard to analytics, IBM has some useful technologies. The problem is that the company does not know how to deliver solutions that generate sustainable revenue. As a result, a number of smaller firms are jockeying for lucrative US government contracts and deals with smaller firms eager to take advantage of more advantageous prices for comparable services.

The write up points out:

Rometty said IBM will also do more partnerships with other companies similar to deals announced last year with Apple to jointly sell and develop mobile software, and a deal announced earlier this month with SoftBank to bring the Watson cognitive computing system to Japan. The result, she said, will be “IBM reinvented again.”

Sounds great. Like HP, IBM is doing MBAish activities. Stakeholders will be looking for answers about job security, stock and dividends, and sustainable growth. So far I see marketing, stock buybacks, and fast dancing.

I don’t want to dance with Watson, the system that generates recipes requiring tamarind. Judging from the comments on the Alliance@IBM Web site, there are some internal issues that IBM must manage as well.

Stephen E Arnold, February 28, 2015


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