

IBM CEO Ginni Rometty Gets Past the Big Blues - pesenti
http://fortune.com/2014/09/18/ginni-rometty-ibm/

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vo1aQXJ3
Ginni is very unlikely to turn around the company. She is a livelong IBMer.
Just like Sam Palmisano before her. And both have been undoing the good work
that Lou Gerstner did and continued the bad work he did.

IBM is a financial engineering company... now, if it could become a sales
company again...

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mathattack
You hit on it. IBM has a legacy of great financial engineering and sales. This
isn't all that bad, if they admit that they're a value company rather than a
growth company, the best thing to do is provide sales and service while
returning money to shareholders.

From the article:

Ginni’s Rules 1\. Don’t protect the past. 2\. Never be defined by your
product. 3\. Always transform yourself.

#2 seems to lock them in as a Finance, Sales and Services company.

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yuhong
Yea, they should have done this from beginning instead of hiring Sam.

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tgflynn
It seems to me that a big risk in IBM's strategy is losing the technological
foundation on which most of its current revenues are based and/or not
communicating a strategy for that technological base to its customers.

The importance of "big data"/cognitive computing cannot be overstated but it
needs hardware on which to run. The neuromorphic computing research is
interesting but for the time being the real advances in the field are being
made with more conventional hardware and I'm not convinced we yet have a good
enough understanding of this field to create an effective new hardware
architecture for it.

As for cloud computing it certainly has advantages for many types of customers
but I think many of the large businesses that represent the lion's share of
IBM's customer base will be wanting to maintain their own computing
infrastructure for the foreseeable future. They simply will not be willing to
trust 3rd parties with their sensitive data, especially in light of the lack
of legal protections in the US for data that is in the hands of 3rd parties.

So where does this leave IBM's current (or prospective) customers ? x86 is
gone. If IBM's strategy is to push POWER as the way forward, that would be
great, but are they really doing that or are they going to let POWER wither ?
Will customers need to put Lenovo hardware in their data center to manage
their POWER systems ? Some customers probably won't be willing to do that (in
the US, at least, for other countries trusting Chinese vs. US companies may
look like comparable risks).

I suspect that a major selling point for IBM's software and services has been
its ability to provide the full range of hardware needed to run a data center,
from servers to SAN storage. If their transition plans involve giving up this
advantage then I think this transition will be a very rocky and risky one that
will result in many of their customers looking elsewhere.

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organsnyder
IBM has been divesting from hardware for quite some time. I think that they
have really learned from the "IBM compatible" commoditizing that occurred
three decades ago. A similar trend has taken over the data center.

Yes, IBM's customer's need hardware. However, I think that the profit margins
simply aren't that lucrative anymore, and IBM is right to be focusing on the
high-margin software market.

There will always be some customers that want/need non-commodity big iron, but
such use-cases are becoming more and more rare. It wouldn't surprise me if IBM
sees its hardware offerings as little more than accessories they can offer to
support their software offerings.

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chiph
I think she's doing a good job in some respects. Such as Watson -- it's good
strategy to invest in areas that will see future growth.

But at the same time, what's paying the bills is their consulting & services
business. And there they're laying-off high-skilled workers (because they're
expensive) in favor of fresh-outs and newbies (because they're cheap). That's
_not_ a good strategy. You can't starve the cash cow for too long. The result
is that their sales people are making promises the technology people can't
keep.

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alecco
I wonder if they plan to change the mood of IBMers, it's dismal and it looks
like in a death spiral.

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vo1aQXJ3
the moral of the IBMers does NOT contribute to the $20 EPS so therefore is
irrelevant. Firing people... ooohhh sorry RA-ing them does.

You know you are stuffed when execs talk with euphemisms like Resource Action.
They are no longer proud of what they are doing, they hide behind words.

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manishsharan
Can someone please explain why IBM raised their long term debt by almost $8bn
in last one year , while keeping their revenues and gross profits almost
static ? I am assuming that the interest rate for that $8B is pegged at near
zero rate -- what happens when the rate goes up by one percent ?

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vo1aQXJ3
the money was raised to buy back shares. That is actually a better investment
(saves on dividents, and you don't have to bring back any cash to the US). But
yes... what if interest rates rises... either buy back less shares (or sell
them again), but that is not really an option with the EPS target.

Maybe some IBM exec can answer this for us

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mathattack
There are a lot of comments that betray the facade, and show the old IBM.
Comments on keeping busy and reinventing careers shows a tremendous internal
focus.

“Our internal metric is we look to sign one to two new customers a week,” he
says. “That keeps us going, keeps us busy.”

“It [Watson] will reinvent careers and reinvent industries,” says Rometty. “It
is the third era of technology.”

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pesenti
The newly launched IBM Cloud PaaS offering mentioned in the article:
[https://bluemix.net/](https://bluemix.net/).

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vo1aQXJ3
bluemix looks actually quite good... but I wonder if it is enough (ie. can it
make up for the billions lost in hardware sales) and how long before these
things get commoditized? And we all know how good IBM is at that!!!

