IBM’s Lucky Decade

Rob Enderle

I’m at IBM’s analyst event this week and much of what is being said is convincing me that this is IBM’s lucky decade. HP appears to be in meltdown; Oracle has been caught repeatedly making false claims and its purpose to make its CEO wealthier at the expense of IT buyers has become far more obvious; and IBM’s Smarter Computing initiative is starting to reflect more on buyers (smarter computing is purchased by smarter buyers) positively.  

Oh, and one additional thing: Like Apple, IBM has successfully taken focus off sales volume and shifted it to revenue, profit and unique customer benefits.  

Let’s look at each of these advantages in turn and put them into context of how this is giving IBM an Apple-like advantage.

HP Meltdown

The Wall Street Journal article that spoke about HP’s loss of cash reserves and massive increase in debt hit during the IBM event. There was little focus on HP’s products and a great deal of focus on HP’s financial performance, its diminished market dominance and failing image. This created a sense that this competitor was largely imploding and is choking on recent acquisitions/mergers that aren’t integrating well.   

IBM presented numbers suggesting that its most successful market share expansions have shifted from being mostly from old Sun accounts to being mostly from HP accounts and they said that HP accounts were the most willing to migrate to alternatives at the moment.  

Oracle’s Dishonesty/Anticipated Collapse

This message was coming more strongly from fellow analysts than it was from IBM. But the scenario that was being presented was that Oracle appears to be driving customer dissatisfaction aggressively by increasing charges and ever more aggressively mining these customers for cash.  

The other analysts were reporting complaints by customers that Oracle was becoming ever more difficult and costly to work with and IBM was pointing out, with some excitement, each of Oracle’s misstatements with regard to competitive performance. Apparently, there have been significant forced retractions and it is also apparent that increasingly the only people who could cite these false Oracle performance advantages with a straight face were Oracle’s own executives, who either were too dumb to know they were false or too dishonest to care.  

The resonating message was that Oracle isn’t in business to solve customer problems; it is in business to fuel Larry Ellison’s increasingly expensive hobbies. IT buyers apparently don’t have this as their highest priority and the coming anticipated Oracle meltdown is being presented as tied to these changing perceptions. Oracle is their second largest source for competitive expansion.

Smarter Computing = Smarter Companies

Clearly, of the three established companies, IBM is benefiting from not having internal turmoil and having the greatest sustained funding of strong R&D. The end result has been a better focus on both image and product and IBM’s lead effort is Smarter Planet. IBM has one of the most diverse lines, ranging from its Z Series, large-scale, mainframe-class computers focused the largest of systems; its Power systems focused on computational performance; and its Intel-based systems targeting x86 opportunities.   


These systems not only provide a substantial number of IBM line choices, but they are wrapped with similar software and services offerings that increasingly have imbedded expert systems that assist in deployment, management and use.   

IBM presented a large number of cases and one customer spoke to the solutions and emphasized and validated the customer benefits that IBM had promised. In short, I think much of this analyst audience is coming around to the idea that “smarter” doesn’t apply as much to the solution as it does to the buyer. The way the buyers were presented it was clear that smarter buyers — those who do their homework, put in place strong metrics to measure actual benefits and don’t just take the work of a vendor — prefer IBM’s Smarter Computing effort.

One of the more interesting and unique sessions was done by Carl Boisvert, who is vice president of Worldwide Sales for System Integrators and Independents Software Vendors. This is a fascinating program where IBM not only drives IBM solutions through this powerful channel, but it searches for and often helps fund, much like a VC, smaller firms that have solutions that fill solution gaps either in product lines, vertical markets or regions.

Carl interviewed several of the channel partners who raved about the value of IBM’s partnership and the success they have enjoyed by being part of it. I actually had dinner with these guys and they were incredibly positive about this powerful program and resulting benefits. It appears, according to the executives being interviewed, that the unique tools and products IBM has provided these firms are resulting in huge financial benefits. 

Wrapping Up: Think = Smarter

I’m ex-IBM myself and as I watched and listened this week, I have to admit I got a little of that old IBM magic back. What is fascinating, because I cover Apple as well, is how similar IBM’s strategy appears to map to Steve Jobs’ Apple. Focus is on revenue and profit, not on volume, and to get there they emphasize quality and customer experience, not just cost, and the products enhance the reputation of those who buy them (smarter).   

Ironically, before the new Apple, long before, this same strategy was common at IBM once and now appears to be again. Since the most successful years, and the most satisfied customers, for Apple and IBM were enabled by this strategy, it is great to see this emphasis again.     



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