

How Samuel Palmisano of I.B.M. Stayed a Step Ahead - ez77
http://www.nytimes.com/2012/01/01/business/how-samuel-palmisano-of-ibm-stayed-a-step-ahead-unboxed.html?_r=1&hp

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hello_moto
People probably don't know this yet: IBM probably has stopped R&D for their
software (DB2, WebSphere family, IBM JRE, LotusNotes, etc). They're just
milking the license and support money. At IBM, the motto is: "It's not a bug,
it's a feature" when you call their tech support. Sometime you get bitten by a
bugfix that supposed to cure the problem for General Motors so the only excuse
they can give for you is that "it's a feature (for GM)".

The latest WebSphere Community Edition is apparently just Tomcat + additional
throw-in features. IBM HTTP Server is just Apache + IBM plugins (plugins for
integration with WebSphere, WebSphere Portal, etc). I wouldn't be surprised if
IBM rolls out new DB2 Community Edition based on PostgreSQL or something
(they're not currently, but who knows...). They even have their own Hadoop
thing going on too: <http://www-01.ibm.com/software/ebusiness/jstart/hadoop/>

With Open Source, they know that software has become a commodity. So why not
invest with moderate expense in Open Source as opposed to keeping expensive
Software R&D? They did what they had done to their PC division. By the way,
they still have their R&D but probably operates at a different level of
requirements.

"Combining research, specialized skills and sophisticated technology is the
recipe behind I.B.M.’s Smarter Planet initiative, begun in 2008. It now has
more than 2,000 projects worldwide, applying computer intelligence to create
more efficient systems for utility grids, traffic management, food
distribution, water conservation and health care."

This is probably one of the most crucial strategy at IBM. Once you're tightly
integrated in the core function of a city, a town, a state, a country, it's
almost impossible to replace you.

Microsoft is making in-road to the government too lately but judging from the
progress, they're frying small fishes: Sharepoint for Intranet, a bunch of
business processes, windows for desktops, MS Office for documents. Even with
their cloud initiatives, Azure and Sharepoint for the Cloud, they're still
stuck in that market: intranet.

IBM, on the other hand, is printing Driver's License and ID cards on behalf of
the government (<http://www.pss.gov.bc.ca/bcmp/id-card-production.html>).
They're charging per-printed-card by the way. So if you ever lost your card,
government will charge you X and IBM will get a piece of that.

Check out IBM recent purchases: cloud, cloud, storage cloud, cloud, software
for government (Curam: claim management system, social service, pension plan,
etc).

~~~
jakarta
I was reading a great investing book this weekend which mentioned that
companies seldom stay leaders if they only dominate in one discipline.

The author cited technology companies and how sometimes a great engineering
culture simply isn't enough to maintain leadership, you often need to combine
it a strong position in another discipline such as sales/marketing.

I think this rings true for IBM. I would guess that around 20 years or so ago,
they stopped being primarily a technology company and shifted to offering
services that were sold be a great sales force to keep customers hooked.

------
jessriedel
> In 2004, I.B.M. sold its PC business to Lenovo of China. Mr. Palmisano says
> he deflected overtures from Dell and private equity firms, preferring the
> sale to a company in China for strategic reasons: the Chinese government
> wants its corporations to expand globally, and by aiding that national goal,
> I.B.M. enhanced its stature in the lucrative Chinese market, where the
> government still steers business.

This doesn't surprise me, but I'm still blown away by this concept. It's
highly unlikely that Lenovo happened to offer the _same_ amount as whoever
else was the true highest bidder, so this was essentially a huge extortion
payment from IBM to China. The deal involved roughly $1 billion of assests, so
it's not unreasonable to think that IBM paid of order $100 million to get into
the Chinese government's good graces.

~~~
ww520
Or you can think of it as a small investment to reap the huge reward later.

Extortion is someone putting a gun on your head to demand for the money.
Investment is you CHOOSE to put money in for later reward.

------
ww520
IBM leverages the hell out of open sources. They had that 1 billion dollars
investment into Linux back then but they reaped massively from
servers/mainframe, services, and projects riding on the free OS, while they
saved on R&D/maintenance on AIX and others.

------
HilbertSpace
On close examination, you may find that their Research Division is mostly just
a patent shop.

Likely their 'services' work is mostly just 'help desk'.

Likely much of what they are doing is what they did decades ago called
'facilities management' or 'service bureau'.

Likely for new products, they find a small company with a good customer list,
buy the company, and have the IBM sales force include that company's products
in the list of products available. That is, they don't really try to 'develop'
such products on their own.

So, in many companies, the CIO can 'bring in IBM' and go play golf.

Likely a good CIO could give faster results, more innovative and valuable
results, at lower cost. But not all CIOs are good.

~~~
AlisdairO
Don't you think it's a bit silly that you didn't even bother to include
_anecdotal_ data, let alone something more? As it is, it's just worthless
unsubstantiated allegations. You could be right, you could be wrong, but your
post adds not a single thing to the discussion.

~~~
HilbertSpace
Yup. But in this case I know all too well just what the heck I'm talking
about, unfortunately. Hint: I live in Dutchess County, NY and for years worked
in Westchester Country, NY.

Besides, the NYT wrote just a puff piece. Now just why would the highly self-
esteemed, formerly highly revered, long pseudo-objective NYT do that?

Besides, what details did the NYT piece provide?

Wise up and appreciate a gift when you get it!

