I read Cringely's recent book about IBM and it sure makes the case that IBM is in a world of trouble. I can't say whether or not he's right, but what good software has come out of IBM recently? Eventually a tech company needs to be good at tech, no matter how great your sales guys and brand reputation.
I have observed that being a large corporation is an asset unto itself, regardless if the company has any valuable product. I believe this comes from connections to people in other big corporations that will funnel you huge sums of money if you stroke them sufficiently.
I currently am employed at a large corporation that pays astronomical sums to IBM and SAP and who knows what other enterprise consultants for software that either doesn't work, or at best is significantly inferior to free alternatives. The view from the trenches is insane, but I am sure it's cushy at the top.
"Too big to fail" + "Nobody got fired for buying IBM" + complicated & expensive tendering requirements. It's much easier for a big company to buy from another single giant company than to assemble a solution from smaller contractors. More expensive, but easier to organise.
Yep, I also worked for Big Co. and they wouldn't even consider smaller corporations. IBM has a history and a deeply ingrained "support" structure within other corporations.
I could have built in house solutions that deployed faster and better auditing in just a few weeks than what they paid hundreds of thousands in licensing fees and man hours to do the same job. Hell, I even pitched it and management said no.
Because management would have more work and responsibility with your solution.
> what they paid hundreds of thousands in licensing fees and man hours to do the same job
They spent shareholders money. So they don't care about costs. And what looks better in resume:
a) managed one programmer
b) two million dollars software system deployment
If these guys have created a start-up and payed with their own money, I guarantee they would have chosen your solution.
which makes sense for them... Lets assume they went with your solution. All fine. up and running in no time. Then you get hit by a bus or leave the company. Then things go wrong. How are you going to explain this to senior management.
If they take IBM/Oracle/etc. and things go wrong? you call them. they fly over an exec you can beat up and all is fine.
It's not irrational. I went from using an in-house DMS at my work to one made by Big Co. I'm sure it was more expensive, but at the end of the day, it's someone else's problem, not ours. If something goes wrong, there is someone we can call and tell at, someone else in charge of fixing bugs, etc. There are rational reasons to want those things.
IF you can really actually shove off the responsibility and all the attendant headache, yeah, sure, it's fine. I don't think I've ever been able to do that. Instead of spending my time trying to come up with a fix for a broken system impacting my users, I'd spend my time contacting someone else in a different company to see if they've come up with a fix for a broken system impacting my users.
If you really truly can just punt, sit back, and even get to say "I told you so" when the system/software/service in question doesn't work, that's great. But... in almost all cases I've experience, it was still 'my problem', I just had far less control over making it work.
True, but you're only dealing with the technical end of it. Later on your technical headache may be translated into dollar amounts for damages in a lawsuit or price negotiations in service agreements. But since that's legal and/or business stuff, chances are you won't be informed or consulted. You do the leg-work of getting the thing that's broken up and running again. Your manager does the tedious administrative business of estimating the value of resources spent on solving, the problem, which is added to the estimated losses sustained by other departments impacted by the outage. The people who negotiate expensive service and supply contracts are not interested in the minutiae of why something was broken, only in the measurable economic cost of the failure.
Suppose you rent your home and a plumbing problem leads to flooding and damage of some of your possessions. You take it up with the landlord and are credited two weeks' rent as compensation. Do you care about the specifics of the plumbing problem or the landlord's dealings with whatever plumber installed the system which later failed? Even if the plumber who turns up the house to fix the problem goes into detail about a previous plumber's ill-considered decision to apply PVC adhesive to ABS pipe, chances are that your interest is purely superficial.
In this case, I'm the plumber. I don't want to be in a position as a plumber where someone mandated that $pipeSystemX had be to used, for non-technical reasons, then it breaks, and I'm 'responsible', but can't fix it. The 'fix' is to replace some or all of it, but contractually, legally, I can't touch it, but the homeowners and neighbors keep coming to ME to 'fix' things, largely because no one else even answers the phone.
And turning it around, if a plumber told me "hey, I'm not allowed to replace this outdated hazardous inefficient $pipeSystemX"... yeah, I'd want to get in to some details.
I've been using this plumbing metaphor for a while, and believe me I feel your pain. Having since become a homeowner and having to deal with my own plumbing problems (or engage a plumber directly), I not appreciate why plumbers are so highly paid yet so grumpy :-|
A lot of this pain is self-inflicted by Big Co., your employer in your specific case but I'm not picking on you in particular just offering some observations.
I take it you haven't gone through many large companies' procurement processes and procurement culture as a vendor. It literally takes entire man-days to man-weeks of effort (and for especially large and/or complex requirements, man-months to man-years) to respond to the procurement demands of these large companies, and vendors know it is a "my way or the highway" arena with these large customers. Perhaps the software might not work for you, but for varying definitions of "work", it satisfies one or a consortium of constituencies within your company. You, personally, are simply not at a position of sufficient power within your company to be privy to what that specific definition of "works" is for the specific software that is used by your company.
You probably haven't had the pleasure of working many months over an RFP strictly gated by the procurement staff, with only two one-hour, chaperoned meetings with the technical staff to attempt to clarify wildly lost-in-translation contract verbiage. Generally the more clarifying questions you ask, the worse the procurement team looks, and the more hostile they are towards you, so you also have to carefully choose your questions. And a good proportion of the time, you only find out after losing the bid that they dragged you through all that pain and suffering simply to get a number to beat up an incumbent over the head with to get a lower maintenance renewal, all along never intending to consider any change at all, and never admitting during the process they even have an incumbent solution in place already in the first place. The chaperone from procurement actively monitors and mutes the technical staff during the conversations, to prevent the technical staff from divulging whether or not a solution is already in place, for example.
This and other behavior forms an enormous torrent of obfuscation from the customer base; it hugely bloats the sales costs. This is what incentivizes the production of the software you experience, because it sells. There are many big companies who are happily using open source alternatives for all sorts of requirements, but when you see poorly-fitting software in the trenches, a lot of the time that is produced by a severe disconnect between the procurement process and the trenches at the customer itself. Sometimes this communications gap stems from the procurement department, sometimes from the trenches, sometimes from the company culture, etc.; the reasons are all over the map and I've never discerned a pattern, but the gap is real and problematic.
I should touch upon internal customer political factions that muddle the picture even more. When these political factions are not managed by a single strong managerial hand, this frequently causes the design-by-committee feature bloat you see, because different factions demand all sorts of features for their specific concerns to obtain their "buy in", with no coherent guidance that prioritizes and establishes required features to meet a focused, accomplish-able goal. This also produces the ironic result of software procured that meets all the official, politically-sanctioned requirements, but does not meet the daily needs of the trenches. I won't even go into the dynamics of dealing with political factions who are at odds with each other.
There are solutions to this state of affairs, but customers by and large turn away from them because buying these packages and services is to the decision makers at these customers less painful than the alternatives. It is maddening and infuriating to outsiders not already familiar with the workings of these processes, but outsiders can take heart that the situation is slowly changing over time as better technologies evolve.
Keep in mind that IBM is the 3rd largest software company in the world, behind Oracle and Microsoft, with around $28 billion in annual revenue JUST from software (out of their total $100 billion). Revenue has been mostly flat for the past 7 years, though they've been squeezing out more profitability. That's a big ship to turn around.
That said there are plenty of examples of IBM doing new things, just the question is whether it's enough...
- The Jazz.net products for agile requirements and development tracking are fairly modern and has a happy customer base (replacing the older crap Rational ClearCase stuff): https://jazz.net
Pretty much the entire software sales force is pushing cloud/devops, mobile, and analytics, which are the bulk of their new license streams. Their maintenance stream is still the large annuity from the mass of WebSphere, Tivoli, DB2, Lotus, and mainframe legacy deployed out there over the past 30+ years...
IBM has its place, especially in the big enterprise. However, more and more I'm seeing that's not the case.
Working for a big insurance co., we're seeing a big shift toward a "devops-like culture", and a lot of the time that means less IBM.
IBM not only needs to refresh their offerings, they need to refresh their image. The common feeling around here is IBM products are slow, buggy, and pieced together quickly from a ton of other acquisitions who are then "IBM-ized" together.
They look beautiful on paper, in a way that speaks to both execs and real tech people alike. But once you build it out and start trying to support it...
WebSphere, calling it a bloated, buggy, outdated, overpriced pice of shit would be a compliment. I'll do PHP before I do WebSphere. I'll go jobless before I do WebSphere.
> They look beautiful on paper, in a way that speaks to both execs and real tech people alike. But once you build it out and start trying to support it...
To be fair, you just described most enterprise software systems. :)
I don't know about that. Most software can be bad, but enterprise software tends to be a special kind of bad. The big problem with enterprise is that the buyers are not the users. Therefore, the incentives are not aligned and the result is extremely poor quality software.
I agree with most of what you just said, but that doesn't really contradict what I said. I guess I could have been more verbose, but I meant to reply to:
"But once you build it out and start trying to support it..."
which suggests that the topic is something like "systems that start out elegant, pristine and pure, and slowly accrete functionality and complexity, and become brittle, unstable, and hard to maintain and support". And I posit that this applies to pretty much all software, not just "enterprise software".
I mean, there's a reason we have aphorisms and memes like Greenspun's Tenth Rule[1], Zawinski's Law of Software Envelopment[2], the Turing Tarpit[3], the Inner Platform Effect, etc.
Yup. The ship can be saved (and probably will - they have many smart people), but it's not clear how yet. Currently they have a major brand problem among the young generation.
I grew up when IBM still had a cool factor with Team OS/2, etc., but other than BlueMix there's not much left.
I've declined job offers specifically based on the line "Experience with ClearCase is a plus", even when I needed a job. I'll never use that irrational BS again. When your company's source control is so unintuitive/messed up that you need to hire people to keep it working, things have failed.
Visio? That terrible UI that makes drawing even a simple flowchart or network diagram a total pain in the ass? I have not seen 2013 but earlier versions were not MS-ified as far as user experience. It always stuck out. In fact, I use Word's drawing editor for some diagrams because it's easier than Visio. It was not PnP and took them a few versions to even make it look like it might possibly been made by Office.
As a former IBM'er, I believe IBM has lost their edge as a competitive company, and is now in a state of dysfunction and damage control. Bluemix, Watson, Jazz SCM, in my opinion all these initiatives are too little and too late.
In their attempt to meet the now defunct 2015 road map, IBM has axed many talented and experienced employees. You can only layoff so many individuals before it starts negatively affecting your product and talent pool.
From what I hear on the inside, STG has been cut to the core after numerous rounds of layoffs and product/division sell-offs. SWG appears to be the next target, current rumors indicate that there may be another large layoff sometime between Thanksgiving and Christmas.
I have friends who work at IBM and I haven't heard anything good about big blue in the past few years about them. The entire management seems to have no clue what they're doing. They went through a huge investment period during which they expanded way to much, after that they had to tighten the belt to meet the stock targets and let go of a lot of experienced people and promoted young people way too quick with too little resources for them to succeed (despite them being more than capable of succeeding). Leading to a very bitter and cut throat culture.
I applied a few years back (during the investment splurge), they seemed very enthusiastic, several friends who worked for them confirmed that I would be a pretty good fit in the team/culture.
I nailed the challenging IBM IPAT test with a pretty decent score, I called them twice to ask what the next step would be and they promised me that I would be invited soon. After the second call without a fixed date I forgot all about it and found a better job. I had a friend ask his manager about the status of my solicitation and his manager told him that their team was not a priority for HR because they were on schedule and under budget (thus able to hire new developers) to meet their requirements/release. In other words, if you are doing well you're being ignored until your team screws up.
The called me six months(!!!) after I took the test and almost begged me to come talk to me. I asked my friend how his team was doing and they slipped up on the schedule because colleges and budget were pulled of the release until it was obvious that they couldn't meet the requirements/release. Guess that explained their desperate phone call. He couldn't recommend that I took them up on the job offer and asked if we had any openings :)
Considering what I've heard it doesn't surprise me that some parts of the organisation are so dysfunctional.
Has anyone ever had great things to say about IBM?
I did my 7 years there, FWIW... It's not a geek friendly company, I think it just happens to be that simple. They do some great technology, they've invented a ton of great stuff but where geeks embrace the technology for the technology and dream, IBM does technology because they can sell it and, again, it's just that simple. Whereas Microsoft and a lot of the SV companies are based on the idea that a great tech company needs to be run by a great engineer/nerd. IBM is firmly rooted in the camp that great companies are run by great sales folks and they've had an incredible run. That's why hackers so consistently hate them. Hackers and geeks just see the technology differently.
I really don't know what their future holds, their downfall has been predicted for decades. Getting out of PCs made a lot of sense to me, I still think HP and Dell are potentially in heaps of trouble as soon as some Russian, Indian or Chinese company decides to really go after them and starts to figure things out, they're just putting commodity parts together at the end of the day anyways. Getting out of semiconductor manufacturing doesn't seem like a bad idea either, there are some very very good fab shops out there and they're only going to get better and the margins on fab-for-hire will drop so you have to corner the volume. I definitely can say I'd love to just screw around with a Watson, maybe even have a Watson app on my iPhone and just ask it stuff throughout the day, I'd pay some subscription for it (maybe like $20-30 a month if it's as good as it looked) but I bet what I'd pay is a drop in the bucket compared to what law firms, certain doctors or various financial executives would pay for one and so long as there is that market, I'd assume IBM will go after that and not the solo geek that just wants to have a really fancy google and wikipedia search.
I'm not sure what they're going to build in the future, but I'm pretty confident they'll make piles of money and be disdained and have their demise predicted by geeks though.
Other software companies are run by software guys/gals. IBM is run by the finance people and just happen to sell software/services as a product. At least that is what an IBMer explained to me when I question why some of the internal software was so terrible and it makes complete sense to me.
This is consistent with enterprise software as an industry in general, particularly ones under companies that have lost enough engineers and "product people" that causes a bit of a downward spiral as more and more salespersons are leveraged to make up for diminishing momentum of a once-high traction product / service.
Sure, Google sells stuff to governments and same with Amazon, but these teams are usually isolated or farmed off to third parties that serve as bullshit shields for the primary engineering-oriented company. In the inverse, a sales-oriented culture will shed engineering and hold them at arms length in precisely the same way. Neither are "better" exactly, but I like to point out the stock performance of these companies as evidence of the reality that you can't rely upon salespeople and M&A to produce results that pleases anyone.
A lot of times teams want to hire people but they are not allowed due to some other business reason like a hiring freeze prior to posting shitty earnings:) I'm guessing that or just the extremely slow process at IBM is what happened to you. I know my team has needed people for some time but we're not able to bring in anyone. Sometimes not even to backfill.
".... doesn't surprise me that some parts of the organisation are so dysfunctional"
The "some parts" is worth bearing in mind. In my opinion, the mode of classifying or looking at a company like IBM as a single entity is plain wrong and outdated. Size, geographical distribution, org setup and variety of businesses they are involved in practically dictates that there will be no uniform culture in terms of management and performance.
Cringely has been talking up IBM's demise since I was watching Triumph of the Nerds in the fifth grade (1996). Their stock has gone up 500% in that time, and they've been paying regular dividends. [1]
I'm sure he'll be right one of these days, but he might not be around to gloat.
you are assuming here that IBM is a tech company. It isn't. It is a financial engineering company. And the problem is that there is only so much you can do in this space (otherwise you become like Enron).
Not as a rule, no -- I believe IBM does offer business consultants, but most of their consulting business (by revenue) is technical consulting - you know, "charge us a lot of money for some medium-low-quality tech infrastructure".
Well, Netezza is super fast and sometimes makes my life really easy. Though it it's neither particularly new nor pure in-house IBM. But their logo is on the manual, etc.
I find it kind of odd, but IBM pretty much wrote the book on building reliable data center services. I've met the CEO/GM of SoftLayer (Lance Crosby) and he is a smart guy so I'm guessing he will have a lot to add to the bottom line going forward. But it did not seem like Lance was working with IBM so much as he was working for IBM, and that strikes me as something that will be corrected once the integration is better.
VPS hosting is a commodity business, and Digital Ocean is driving every penny out of it (they are sort of the Dell of VPS it seems). But the "cloud" is a services and consulting play I believe. A couple of the things I learned at Google was that uniform server design didn't work well, but integrated compute and services did. A Gmail cluster was a thing to behold. The challenge is that if you're building petabyte and exabyte scale infrastructure you can't have your "storage cluster" over here, and your "compute cluster" over there, ever move a petabyte of data over a 10GB link? It takes forever. So your goal has to be to build an API/Services rich environment in a high bandwidth fabric but to ruthlessly use locality as a "feature" in your scheduling.
With Softlayer's gear, and IBMs resources that is really doable. Remember that IBM is still going to have 12 - 13 billion in free cash flow. So they have the horses to build infrastructure just as fast as Google does (which calls out that expense in their quarterly reports), but IBM also needs the services infrastructure play which is something they are really really good at. I'm not counting them out until the decide to divest themselves of SoftLayer :-)
> But it did not seem like Lance was working with IBM so much as he was working for IBM
Ugh. I was a TP and then SL customer for years. Having somebody controlling Lance strikes me as a very bad idea. Maybe a good way to trigger the founding of another Dallas-based provider.
I kind of wondered about this when IBM bought them, but I'd been entirely Linode-based for a while so didn't have much stake in things.
The big challenge is storage. If you don't treat storage as a first class service and instead make it part of the standard 'atom' your storage requirements grow faster than your compute requirements. And while you get some relief by replacing the storage component with denser ones, you always seem to end up with high priced and under employed compute capabilities going to waste while it provides access to data on some spinning rust.
I was an advocate of variation in the form of 'storage focused' and 'compute focused' atoms but at the time the mantra was 'identical blocks.' Never got much traction on that. The trick is of course mixing nodes the the mesh of services, that aspect of it really benefits from a colloidal solution of resource nodes :-)
and that is why Warren Buffet is not too worried either. because the share price has come down IBM will buy more of its own shares. Therefore Buffet will own a bigger part of the company with out actually buying more shares. almost a win-win!!! (except for the people who are going to loose their jobs as a result of this, but who cares about them?)
Which is a proxy bet for interest rates being low for some time to come. They go up, the buy back game is over for everyone. This may be a good bet, for now.
Again. Last time was a bit over two decades ago. They dumped their PC business. They mostly abandoned OS/2 development. Because they were unprofitable.
Wall street freaked out. Linkbait headlines sell newspapers and stock picking advice. Look who IBM linked up with: A sovereign investment fund backed by petroleum reserves. If you can't spot the bumpkin at the table...
Financial headlines have been really clickbait-y forever. Would anyone click if the headline was "IBM loses two months of gains" rather than "plunges"?.
It looks like a 3 year low to me (as IBM has been trading sideways for years) personally I think the headline is accurate (down 7% for a stock with a float, institutional base, and capitalization of IBM is a huge amount of paper losses).
Abandoning the 2015 forecast is probably the bigger news vs any kind of daily price fluctuations, but the stock fluctuation underscores that this is somewhat big deal.
Sorry if you hold IBM. Oil stocks have been painful for me, I wish I was doing as well as IBM is doing.
Yeah, financial reporting tends to focus on "effect" (stock price) rather than "cause" (earnings/projections), but there is still usually a cause worth paying attentions.
Nope. Every three year period contains a low-within-that-period but that's not what "three-year low" means.
Consider, e.g., an asset whose price is just going steadily upwards. Every 3-year period has a low point -- the start of the period -- but there is no point at which you can say "The price of this asset is now at a 3-year low".
By that reasoning, IBM is not at a 3 year low since it is up from earlier today. The concept remains meaningless. That's why it is used by those speaking to dumb money.
Can I ask if you consider yourself smart money, then? Because in almost 15 years of investing, fundamental research, and technical analysis [edit: and associated community participation, consumption of research products, and reading investment literature and publications] I have not seen anyone take issue with calling a 3-year low on a stock on the basis of an intraday low. It's a 3 year low. I didn't say that was particularly important, but it's true by any reasonable definition of the term (which is a common one). It might be important on the basis of the volume, as it crossed a technical level that it's held for quite a while and may be forming a downtrend, which is frequently interpreted as a sign of institutional selling.
edit: FYI, IBM hasn't traded below 170 since Oct 4, 2011. It hasn't closed below 170 since Sep 23, 2011.
The few times in my life I've made money from an "I've got a deal for you phone call" the person on the other end wasn't making money from a cut of my check. Instead, I was making the deal bigger.
Stock market literature is a respectable pony system. The Dow goes up because they drop losers and add winners. The index funds were that were holding AIG didn't get Kraft Foods shares and their investors lost money. I feel I'm just smart enough to recognize that intraday is dead money for the quants in HFT.
Look, we actually agree on most things. But smart money also knows there's a durable advantage in patience, time frame, and liquidity. Something that the individual can general have an advantage against funds in (given substantial knowledge in fundamental valuation techniques and market dynamics - no small order). Describing it as a 3 year low is completely accurate. Saying there's a lot of dumb money in retail is, too. I respect your not playing a game that is set up against you.
We're forgetting that the DJI itself has had some turbulence, too. IBM is not particularly out of step with the market itself... until just recently, which I believe lends some measure of credibility to the original headline because if you view stock behavior as something to be benchmarked with the greater market, it did certainly plunge beyond what most other stocks would have. See: http://goo.gl/fJkfpA
The only meaningful numbers are market cap changes or percentage changes. The numbers for the market cap are much bigger than most people can think of, and you need to know what the absolute value is to know how big of a relative change it is.
What bothers me are per share prices. I don't remember the precise value of any particular stock, so IBM drops $13 means nothing to me. Also that a stock is $500 a share, so it must be good is another thing you see a bunch, so it must be great is another fallacy I see all the time; when really all that matters is the market cap not how many pieces it is divided into.
Share prices have a strong psychological affect on many investors. This is why you will see increased buying and selling around certain price points and not market cap.
Is the cloud a low margin business in general? Looks like very few companies are prepped to handle that (read AMZN/GOOG). I'm not sure if I should be holding onto my MSFT stock anymore though :). Seems like just a matter of time.
MSFT is currently way bigger in the cloud business than GOOG (it's a lot behind AMZN though), so I'm not sure why you think that AMZN/GOOG is going to handle this better. Azure has a very strong momentum now and looking at how quickly that department of MSFT adapts, this is going to continue I think (they are really trying to accomodate all platforms, etc.)
A cloud service where you just spin up your own server instances is a commodity service which will have low margins. In contrast, a cloud service where you use an API to have the cloud do something for you instead of running your own servers will have much better margins. An examples of this would be Azure Mobile Services.
In your assessment I would switch out GOOG with MSFT. To me Microsoft is the better one at doing retail cloud than Google. Even Apple is using MSFT for their cloud backbone.
Apple is not selling cloud directly to consumers, but every app/device sold has iCloud backing, which developers can use for their apps for a ton of services.
Yep, they've been steadily ditching parts of their business for years now. This is just the short-sighted thinking coming home to roost. IBM R&D just isn't what it used to be and a company that isn't making new things, isn't going anywhere.
In an interview today, Ginni Rometty sounded like a TechCrunch Disrupt participant on HBO's Silicon Valley. "We are reorganizing this company around analytics, around cloud, around social, local, mobile" I can't believe she actually said SoLoMo.
Then later in the same interview: "Clients asking for more flexibility in our software to deploy for new workloads — social, local, mobile."
If anyone else caught her in Fortune's Most Powerful Women Summit just a few weeks ago (available on youtube), she appears anxious as hell with Warren Buffett in the crowd watching her. No wonder with a 0.02 EPS to report and a last minute ditching of the 2015 roadmap.
IBM is financial engineering company. Ginni visited my country twice because she considered important market here. But as you can see, IBM is on the path of declining. I think Apple or Amazon will help IBM in the future.
