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What I've always said about IBM is that as a company is very, very good to its shareholders. But to its employees, not so much. It is a company which has completely internalized the philosophy of modern US-style capitalism --- namely, that the only responsibility a company has is to its shareholders --- other considerations, such as to customers, employees, etc. are incidental. It's basically, "focus on the shareholders, and all else will follow" (with apologies to Larry and Sergey).

So IBM may look just like Oracle by 2015, but look at Oracle's share price over the last 8-10 years. I'd never want to work at Oracle myself, but it wouldn't have sucked if I had purchased Oracle stock back in 2004 or so...

I thought about writing something like this for a while and kept avoiding it, feeling like I would somehow offend someone that I worked with at IBM. But this post isn't about them, it's about the bigger picture, one that the leaf nodes have very little insight into or influence over. Cringely's posts pushed me to finally do it. To all my current and former colleagues from IBM, I wish you the very best and I truly hope you can find the means to turn the ship around (or that Cringely is just dead wrong).
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As I told someone else, time to look for another job... and buy some IBM stock.
Oracle, Apple and Microsoft trools justice for Google's money.
IBM is ok.
IBM is not ok - it is severely damaged by this shareholder-only thinking, like Ted and others wrote.
+Wolfgang Lonien Well, it will be good for shareholders at least for the short term. I give it at least until 2015, maybe a few years after that. But after a while, you run out of buildings to sell and lease back, and you run out of US/Canadian employees to lay off and replace with workers in the BRIC (Brazil, Russia, India, and China) countries.

And if IGS is really breaking commitments made to customers because it's cheaper to pay the contract penalties instead of what it would cost to actually meet those commitments (as Cringely has claimed; I have no personal knowledge one way or another), that may be a short-term profitable move, but the long-term hits to the company's reputation are a lot harder to measure on a quarter earnings report.

Ultimately, that's the problem with the "focus on the share-holder and all else will follow" model --- share holders are stupid, and tend to only think of the latest quarterly results. The smarter ones might look at year-over-year quarterly numbers, and the dumber ones may only compare this quarter's numbers with last quarter's number. But if most share-holders don't look at longer-term issues, then in the end the employees, the customers, and ultimately the shareholders lose. (And in the meantime, the executives have chased out their shares before the shareholders have caught onto the game. Sigh...)
Does IBM even have a technological "moat" anymore? Once "We've been around for 100 years"; and 2) "Nobody's been fired for buying IBM" are no longer compelling sales pitches, IBM will be in trouble because it's busy extracting value (or trying to acquire it) rather than creating it. As an example, IaaS is being built on top of open source commodity cloud stacks which in turn is being built on top of commodity hardware, so I see the competition shifting upwards into the software and services layer (where Gerstner said it would be). If the rumors are true about IBM dumping their service business, that leaves software. Maybe WAS + friends are still compelling, I have no idea. All I know is that listening to people talk about WAS, Notes, etc makes my head spin (and oddly enough no one I know outside of IBM ever talks about these suites). From my POV, if IBM is not paying attention to its customers or successfully attracting new business, who's going to buy it? I don't think very many start-ups are and why should they? There are great products that do modern, enterprise-worthy work loads a git clone away. I knew IBM was headed down a bad path when we celebrated (and probably awarded many a bonus to our diligent svp's) that AIX was taking over the (shrinking) UNIX market.
The important thing to remember is that selling to the Fortune 500 is very different from selling to startups. This is something which companies like VA Linux and Sun learned to their great sorrow. IBM has a lot of great expertise in talking to legacy systems which the Fortune 500/1000 have in great numbers. That's why even relatively "new economy" travel companies would sometimes use IBM gear, because talking to the ancient systems used by Airline companies is something IBM software does really well.

Now, this won't last forever. For example, ITA Software, which has since been purchased by Google, has fielded the first airline management system that can be used by airlines that runs on Unix (as opposed to Mainframe or other ancient legacy architectures). ITA has had to learn how to talk to ancient legacy systems in the airline history (trivia fact: did you know that the six character passenger locator record was called a "locator" because it represented a physical hard drive address on a mainframe? True!), and now new systems can be developed that talk directly to the ITA software using new-fangled concepts such as RPC calls and (gasp!) JSON. If more airlines switch to using ITA systems, then they won't need to buy expensive mainframes, and they will be less dependent on IBM hardware and software. But that's probably a couple of years out, given how conservative airline companies tend to be. Which is something else that many companies that aren't used to selling into the Fortune 500/1000 market tend not to understand.

So if it isn't going to last forever, how long will it last? Whether the time frame is 2, 3, 5, or 10 years is an interesting question.
I think people are looking at this from the developers point of view. Ibm's long history of supporting legacy equipment not appeal to internet startups. But it appeals to people who maintain mainframes, servers, and industry. When I say industry, I don't mean technology companies, I am referring to store chains and the medical field where buying the latest equipment every two years is not appealing.
I mean, who is ibms competition? Dell, hp, oracle, emc, t systems, microsoft to a lesser extent? As a retailer, do those companies sound more appealing compared to ibm? They have their niche, sure. But the quality in support is astronomically different.
Furthermore, ibm has been doing some amazing work in hardware and has been for years (albeit, not always directly) the move to multicore processing due to the limitation of transistor size was primarily lead by ibm and their recent work in cpu architecture and graphene transistors is amazing.
In fact, any time I hear something actually interesting going on in actual technology it is usually an ibm lead project. Besides, it seems like this former employees grief was not the technology, but the financial incentives.
Besides, I respect the fact they are not embracing the culture of constant patent lawsuits like oracle, microsoft, apple, and everyone else is embracing.
Perhaps I'm just a fanboy, but I see ibm has continuing ever onward (props to anyone who gets the reference ^.^)
+Zachary Bittner IBM to its credit has always plowed back the huge profits it makes in the Mainframe world into R&D for the mainframe, and that technology waterfalls down to the Power architecture and then eventually to their Intel chipsets. Along the way, they have also made money licensing or selling patents or selling excess fab capacity to other companies, true.

However the reality is that as a percentage of revenue and revenue to the company, the Systems group has always been tiny compared to its sister Software and Services department.

The bigger problem is that it's not clear the mainframe "scale up" model is the wave of the future. If you start using "scale out" computing, then you need a very large number of cheap computers --- and IBM doesn't do low margin very well. Historically any time a product enters the commodity (high volume, low margin) space, IBM sells the division: example: printers, hard drives, laptops, etc.

Maybe IBM could sell software to control the large scale out, "big data" wave of the future. But the problem there is that IBM software has always optimized for big machines, where it's acceptable to take the overhead hit of having dozen or more Java Virtual Machines chewing up a large amount of CPU and Memory. The argument IBM has always used is that programmers are expensive, and memory and CPU is cheap in comparison. That maybe true with a few dozen machines. But if you now have several thousand, or tens of thousands, of machines in a big "scale out" cluster, the overhead of putting a half a dozen or a dozen JVM's on each server starts taking its toll. Originally IBM was pitching using its Tivoli management software and WAS, which used JVM's and which had a heavy memory and CPU footprint for its cloud initiative. Now it's looking at some of the open source cloud management software, which is (a) not written in Java, and (b) open source, which means a big hit to IBM's software margins, at least insofar as it pursues that market.

So I recognize IBM's contributions on the hardware side, and that's all good. But in terms of long term future where the a large part of the industry is going (huge cloud deployments with small mobile devices as the access points), it's not clear to me IBM can follow. Sure, there will always be a half dozen big Oracle database machines running SAP or Oracle Financials, and maybe those will be on a big Power Iron. But if the rest of the data center is populated with thousands and thousands of cheap Intel servers, I don't see where the next stage of IBM's growth is going to come from.
+Zachary Bittner That's the trouble with bringing up financial incentives, it tends to be what people focus on. That was maybe half the issue for me, and it was just a symptom of the larger issue. IBM often treated employees as replaceable cogs. Even when your immediately management wanted to do more for their direct reports, their hands were tied. And I don't just mean financial incentives. I mean things like providing the development team with the hardware they require to properly support a customer (hardware manufactured and sold by IBM even). Cringley's blogs were about IBM seeking short term stock price gains at the expense of their .us and .ca employees and possibly the long term health of the company. My response was intended to provide an internal glimpse of how that behavior has been evident "in the trenches" for a while.
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