IBM Turns to Software as It Reboots

by Volker Weber

WSJ reports:

The top priority this time for Big Blue—which famously dumped its personal computer business in 2004 to focus on consulting and services—is software. Mr. Palmisano wants that high-margin business to account for about half of the company's pretax profit by 2015, up from just over a third in 2003.

In particular, Mr. Palmisano wants to sell programs that help clients sort through the mountains of data being generated by the growing number of transactions and record keeping that have moved to electronic form. Those programs, called analytics, help retailers dig through real-time sales figures to spot unexpected trends or governments plow through piles of records to more quickly catch welfare fraud or find fire risks.

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Pure logic - just look at the pretax profits of HP, Dell, Oracle, ...

Martin Hiegl, 2010-05-14

If IBM is just looking for high margins, they might consider opening a brothel. What makes them think that they can do software better than others? Where is their larger idea. I believe this is not only the end of the M in IBM, but also the B.

Hubertus Alvensleben, 2010-05-14

Hubertus, the 'B' would then stand for brothels? ;-)

Mariano Kamp, 2010-05-14

Hubertus - the B (no, not brothel) is exactly where the high(er) margins are. Except for Apple all the IT consumer vendors are in quite a bad shape regarding profits ... look at the numbers of HP's PSD or Dell ....
If you believe it or not, there's a reason why IBM is not further in the personal computer business.

Martin Hiegl, 2010-05-14

vowe: While I don't think that you ever given out a "Blog Comment of the Year" award, I would like to nominate Hubertus as a finalist. That comment is comedy gold!

Gregg Eldred, 2010-05-14

Cold Dead Fish and Brothels. IBM seems to have a bright future here.

Henning Heinz, 2010-05-14

Sounds very "Cognosy"...The article itself basically paints IBM not as an innovator but as an "acquisitor".

Which seems to be true, they just buy up everyone else's ideas because they don't have many good ideas on their own ;)

Giulio Campobassi, 2010-05-15

I understand that everyone has got every rights to speak their mind but i feel it's a little unparliamentary if we start mentioning brothels and relate that with IBM.

Senthil Kumar, 2010-05-15

Giulio, Cognos is one of the more visible acquisitions. But take a look at Information Management, the artist formerly known as DB2. They have acquired quite a few smaller companies and renamed their products so that you can no longer recognize them. :-)

Senthil, Hubertus knows IBM from being exposed to Lotus Notes for quite a few years. This might explain why he questions IBM's ability to make better software. Brothels are legal here, and as he alludes, a high margin business. And no, I do not agree with him.

Volker Weber, 2010-05-15

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