back to article IBM. Sigh. Revenues. Sigh. Down. Sigh. For the 20th quarter in a row

IBM says it is right on track for the coming fiscal year: everything is going to plan and its sales are falling just as expected. Hurrah for Big Blue! For its first quarter of 2017, which ended on March 31, Indian Business Machines' "strategic imperatives" core of divisions were up 12 per cent, even as other areas of the …

  1. Chairo
    Unhappy

    How the mighty have fallen

    You would think that a company with the resources and the research power of IBM would be able to innovate, grow with new products and generally thrive.

    Instead they cut the research, abandoned products and tried to shift to services, where they are just a "me too". In my opinion they were only successful with services in the past, because they had the products in the first place.

    I wonder how long the tail can wag the dog until it breaks.

    1. Blank Reg

      Re: How the mighty have fallen

      When you lay off so many of your experienced staff it's hard to keep innovating. All those cheap, new offshore staff will take years to come up to speed.

    2. a_yank_lurker

      Re: How the mighty have fallen

      Itsy Bitsy Morons have had a festering sore since the late 80s. They never really liked the shift away from big iron and related products to PCs, servers, etc. Also, for more than 30 years they have not been real innovators but followers; often third rate followers at best. In one sense they never got over the trauma of the late 80s to early 90s where they first laid off large number of employees.

      1. naive

        Re: How the mighty have fallen

        It is sad to see how a once mighty tech giant is sliding down the same path as Sperry/Univac did in the 90's. From a vibrant tech company, full with innovative people who were given the opportunity to create technology, to a graveyard where accountants and bankers kill all ideas.

        Gone are the days their proud sales reps would give presentations about the latest innovations in "Copper on Insulator wafers", Power CPU performance, SSA disks or the great error recovery features of p-Series. Without innovations, they were overtaken left and right by competition. The failure to get VmWare running on Power architecture cpu's drove them out of the data center as well.

        So poor IBM, their soul stolen by Wall street bankers.

    3. Anonymous Coward
      Anonymous Coward

      Re: How the mighty have fallen

      Instead they cut the research, abandoned products and tried to shift to services,

      It is always the same when the marketing wonks and accountants take over in the board room. For them the service is everything because it doesn't need people that cost money.

    4. Anonymous Coward
      Anonymous Coward

      Re: How the mighty have fallen

      "In my opinion they were only successful with services in the past, because they had the products in the first place."

      That is definitely true. If you look at most of IBM's outsourcing and major services clients, they tend to have a mainframe and are an IBM shop. Services was an extension of the products relationship... not something that companies bought because they thought IBM was substantially better than everyone else at services. Services are inherently a commodity. It is just hiring people that the company could hire themselves.

  2. mr. deadlift

    Read title

    thought of Maurice Moss looking for his tea cup.

    On related note, could not happen to a nicer company.

    1. Ottman001

      Re: Read title

      Your title has an infinite loop bug.

  3. Sureo

    IBM should task Watson with the job of fixing the company.

    1. herman

      Brilliant suggestion - worthy of a Veep of R&D position in Indian Busyness Machines. Unfortunately they don't do R&D any more and is really just another Bangalore based computer service joint.

      1. Korev Silver badge

        Some of their R&D is still excellent; the problem is that whenever I see their salespeople present it's all hype and hubris.

    2. Nolveys

      IBM should task Watson with the job of fixing the company.

      Did you ever see the Looney Tunes episode in which Bugs Bunny and Yosamite Sam are in the cockpit of a plane that's falling from the sky? One of them presses the autopilot button causing a robotic pilot to spring to life, assess the situation, grab one of only two parachutes and abandon the whole situation.

      1. Anonymous Coward
        Anonymous Coward

        And here's a link to it...really the whole episode describes a lot of recent IBM shenanigans.

        http://www.supercartoons.net/cartoon/855/bugs-bunny-hare-lift.html

  4. Anonymous Coward
    Anonymous Coward

    IBM has lost it

    IBM was once a big player in IT, researching and developing new exciting powerful hardware. But IBM has sold off the majority of its hardware. Today IBM only has Mainframes, POWER and... something else? Today IBM is a consulting company, not in the forefront of Tech.

    Mainframes are extremely expensive and the Mainframe top performer cpus are much slower than x86, half the speed or even less. Mainframe customers are leaving as fast as they can. There are no new Mainframe customers. The customer base is dwindling faster and faster. Mainframes has no future and IBM knows it.

    POWER is slower than x86 and much more expensive. POWER8 is slower than x86. POWER9 might catch up x86 but that is doubtful. AMD Ryzen 32-core cpu has kicked butt in leaked tests. POWER9 will be no match for AMD Ryzen. POWER sales are dwindling and IBM knows it. In fact, IBM has officially said that AIX will be killed and replaced with Linux. POWER has no future. IBM has stopped focusing on POWER, there is no heavy R&D in POWER anymore. Why? IBM has been leaving Tech for a long time now. They will leave Mainframes and POWER too.

    1. Steve Todd

      Power8 slower than x86?

      That very much depends on what kind of workload you throw at it. See https://www.hpcwire.com/2015/06/09/ibm-power8-outperforms-x86-on-stac-benchmarks/

      The Power CPU has vastly more memory bandwidth, so it may be slower at headline FP numbers but it can chew its way through more data. It's also got much better fault tolerance and recovery. It isn't the no-brainier you seem to think over which you should chose.

      1. Doctor Huh?

        Re: Power8 slower than x86?

        Even conceding that Power8 is better than x86 on more realistic data crunching loads than on the kind of tick-box benchmarks that non-techies and like-to-think-they-are-techies consume, what is the cost/performance ratio. IBM doesn't do "inexpensive." IBM has traditionally done high-margin, high-cost. That is why the Cloud transition is so difficult. IBM doesn't have a commodity mindset. When you look closely enough at their Cloud play, the public Cloud is a head-fake, and the real play is to entice large corporate enterprises to have IBM come in to install and administer a private Cloud, either on-site or in an IBM data center.

        So, the question is what it always is: can I buy a metric butt-load of commodity processors for the same amount as a number of Power8 chips and out-perform the Power8 chips? Bear in mind as well that the commodity chips have an entire ecosystem around them designed to do exactly what you want to do. You can go to AWS right now, fire up some x86 VMs or real hardware boxes, load up some pre-configured Docker containers, and start chewing away at your workload within 15-30 minutes. Until and unless Power8 gets to THAT point, it really doesn't stand a chance in the new world.

        1. Anonymous Coward
          Anonymous Coward

          Re: Power8 slower than x86?

          It is a problem for all of the legacy hardware manufacturers. All of the arguments for scale up fall away as compared to the massively scale out and cluster architectures of the GCP and AWS. You don't care about reliability of the server because the cluster handles it. You don't care about the performance of the individual server if you can run your workload in parallel and just throw another low cost whitebox x86 server or four at it. A lot of commodity hardware in a cluster works better than one scale up server in every way, provided the software is written correctly.

          A lot of companies are not all that motivated or sophisticated though and take an 'if it's not broke and no one is yelling, don't fix it' approach... so I suspect that these proprietary hardware and software players will be around for a number of years to come despite the future being available.

        2. Anonymous Coward
          Anonymous Coward

          Re: Power8 slower than x86?

          "public Cloud is a head-fake, and the real play is to entice large corporate enterprises to have IBM come in to install and administer a private Cloud, either on-site or in an IBM data center."

          Probably true, for all of the legacy IT providers. No one is going to be able to keep up with Amazon and Google in IaaS. They can just produce huge amounts of compute for nothing and are subsidized to some extent by their other businesses, especially Google.

    2. Roland6 Silver badge

      Re: IBM has lost it

      >Mainframes are extremely expensive

      Depends on what you are comparing. Years back I purchased a couple of top end IBM mainframes the total annual cost of ownership was about the same as an equivalent Sun Starfire configuration with the added bonus that IBM included an on-site support consultant...

      We did a Linux/WinTel configuration as a joke: The comparison between the two (IBM/Sun v Linux/Wintel) solutions were comparable to the differences between taking delivery of a Lexus ("Here's the keys Sir") and a kit car ("Sir does have the skills necessary to assemble this?").

      Obviously, today enterprise cloud would be an option.

      >POWER

      POWER suffers from exactly the same problems as have bedeviled Sparc and other non-x86 chip architectures; it is a very expensive game and requires high volume production runs if the final product is to be priced for mass market consumption.

      > IBM has officially said that AIX will be killed and replaced with Linux.

      Only it is taking a rather long time over it. The IT press was full of AIX being replaced by Linux in circa 2003...

      Also I doubt AIX will be replaced by Linux ie. IBM kills AIX and buys in a third-party distribution. IBM through it's partnership with Red Hat is working on Enterprise grade Linux distributions, so I expect the Linux that replaces AIX will actually be the Red Hat version, with all the good enterprise stuff from AIX ported to it (or IBM effectively sells it's AIX development division to Red Hat). However, given the IP investment, I don't expect this distribution to be fully open source.

      Otherwise yes IBM, like many IT companies, are struggling to come to terms with the new world of commoditization. The worrying thing, isn't necesarily the downsizing, but the end result. Back in the 1980's the companies that lead the digital print revolution became multi-billion dollar businesses as news media organisations went digital, by the end of the 1990's all had practically disappeared and none of the survivors had, in the early 2000's, sufficient capitalisation necessary to fund the development of web editorial and news management systems...

  5. stevebp

    I have heard of apocryphal tales where IBM have schmoozed execs from financial institutions on the golf course, only to have IBM converged products appearing at the DC loading bay without anyone in IT having any idea where the new strategy has come from. In one case, once the IT staff successfully lobbied the CTO, the decision was reversed and the offending V-Blocks were ditched for more effective systems. Essentially, where once IBM would have been the 'safe choice' for execs because "no-one ever got fired" for choosing them, they are now an anachronism in the marketplace, annoying IT staff through their ineffectiveness and high price, low value offerings.

    IMHO, to get back on track again, they need to ditch the "IBM first" policy they have in their consultancy stream, and look to provide real value to clients at a keen price.

  6. Doctor Syntax Silver badge

    Did they ever consider reviewing their strategy?

  7. rotmos

    Cognitive solutions, up 2.1 per cent? Considering it seems that they are betting the farm on this it should be 21 per cent up.

    1. Anonymous Coward
      Anonymous Coward

      It is more of a branding term. All kinds of legacy product falls in the Cognitive Solutions bucket.

  8. druck Silver badge
    Unhappy

    Not the solution

    "In addition, we are developing and bringing to market emerging technologies such as blockchain and quantum,..."

    Hype and bullshit isn't going to save the day this time.

  9. Anonymous Coward
    Anonymous Coward

    It's Been Monetized

    Or, the Insatiable Bone Machine strikes again?

  10. Anonymous Coward
    Anonymous Coward

    Like HP, DXC

    > Today IBM only has Mainframes, POWER and... something else?

    That's the problem. "Something else". ie. many probably don't know IBM has the largest security org behind Symantec. I guess companies get labelled and it's hard to change. HP = printers, Apple = phones, VMware = virtualisation, DXC = no idea

  11. ssteve

    IBM is dying - for many good reasons

    It is actually a really GOOD idea to force marketing to work together cause they certainly don't work well from home. The inside joke was "marketing? what marketing?! We don't HAVE any marketing".

    I'm one of the many who "got a package" last March. In my case, it's was "great! thanks!" I'd only been there for nearly 3 years - in sales - and knew it would be no big to deal to get a new job, especially coming off a year where I did nearly 300% of quota.

    Yep read that right - a TOP performer but they decide to cut me? LOL. Idiots. There are SO MANY THINGS they do badly that you simply would not believe it. IBM is the worst run company, of any size, I have worked for in over 20 years. I won't miss it and expect that we'll see a massive decline in stock price in the next 1-2 years. Upper management is totally incompetent and has no idea how to re-invent or run IBM.

    You want to know HOW stupid and badly mananaged IBM is? Here's a perfect example. Twice a year they re-assign territories and accounts (Feb and August) - between 6-8 WEEKS after the start of each Half Year (Jan-June, July-Dec - the commission-able structure). So ... for 6-8 weeks at the start of each half year cycle, most people in sales have little or no idea what accounts they will actually get to KEEP! So, they'll ONLY work on stuff that they THINK they'll keep and ignore all the rest. On top of that, they'll generally work ONLY on accounts that they think they can close a deal before the next 6 month cutoff. Otherwise, they're just working on something that "the next guy gets paid on".

    On top of that, most people in sales have BIG portfolios of products to sell to a set territory or account list. So, again, they'll ONLY work on deals that they strongly believe they can conclude within 6-12 months and ignore ALL other deals and all other products.

    Management somehow thinks that "coin operated" people in sales will "do the right thing" and work on all the accounts, and when things get traded off people will "win some / lose some" and be fine with that. Oh? Really? Nope! It's totally against human nature, especially for those making 50% of their money on COMMISSION.

    It gets better! The Sales Engineers are compensated on lines of products, rather than linked fully to the sales people they support. Yet the SE sales quota is "adding up the quotas of their sales people". So, most sales engineers won't hit their quota since one or more of their sales people won't either. Or worse yet, their sales people will hit their #s but with products that particular SE isn't actually compensated for! Lunacy!

    But that same policy applied to anyone in Sales is a total Cluster disaster. Good people won't do it and those people are the one's who DRIVE REVENUE and have RELATIONSHIPS. Without sales, the company goes under. It doesn't matter what you make or how good the stuff MIGHT be if you don't have a really good team selling it.

    1. mrk1941

      Re: IBM is dying - for many good reasons

      How can a tech firm fail who have created ibm watson? They can always refer their problems to dr watson.

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