The voluntary offer is at management discretion which is the worst part. So you may opt for it but if management thinks you are key for them then they won’t give you the 6 month offer. So if you want to leave then you will just have to resign with normal pay terms (...)
Posted by @5nhz+1871XGwB This particularly interests me, who are those for whom the management thinks are the "key"? While it’s a matter of discretion, I guess it has some pattern.
@6caw+18c3MuEu Can you elaborate on "Z needs P because of requirements from Samsung on chip counts"?
I know that some designers from Power work on Z, but that is because they have no work left in Power. After P10 tape-out, the verification folks have nothing to do so they have been asked to work on Z. I think that the EDA team in Power supports both P and Z so that might be an exception.
Did I read that right, IBM is not working on P11?
What execs say is that Z needs P because of requirements from Samsung on chip counts and because some chip designers work both platforms and other interdependencies. Don’t expect a P11 that has stalled
So after Power dies, Z will be next.
Power Fellows and DEs have excited and moved on to AMD, Nvidia, State Street and other Austin tech companies, so many to choose from. With no leadership, beaten down from cost cutting and layoffs, people are just going thru the motions, quite a few will retire with P10, others are interviewing , some are waiting for covid to get by , it’s really sad.
What execs say is that Z needs P because of requirements from Samsung on chip counts and because some chip designers work both platforms and other interdependencies. Don’t expect a P11 that has stalled. It’s just a matter of time. The lack of talent and leadership alone would sink this ship,
"Why would IBM continue to invest in power if it’s shrinking at 25% per year?"
Because the management starting from Tom Rosamillia get to keep their jobs, it is as simple as that. I am not saying Power is not making any money; they sell to several large companies running massive databases, I guess because Power is more efficient than x86 in multi-threading. But it is a niche application, and the competition is catching up.
Why would IBM continue to invest in power if it’s shrinking at 25% per year? Almost all of the shrink is coming from AIX (shrink rate over 20%) Os/400 shrink rate (less than 2%) Linux shrink rate (almost zero as they have no install base) The question I would be asking is the AIX workload porting to LINUX on power? If not, why not Since Power is dropping my guess is AIX is moving to Intel.
I was one of the fortunate ones to get a package from Power in May this year. While Z system revenue was holding steady or marginally growing, but Power was bleeding money. That was in the spring of this year; I guess that sales will not pick up anytime soon because of the ongoing situation. Also, financial companies are porting their SW stack from AIX to Linux, so it is a matter of time when they move to the x86 architecture. One strong point for Power was the strong relationship with SAP HANA, but that may not be sufficient to keep Power afloat given SAP's recent troubles.
A company or a group within a company is as good as its people. While there were a few good engineers in Power, the team was top-heavy. First-line managers who could not distinguish technical stuff from greek or Latin. Directors and VPs were doing the work of project managers and DE of solution architects. I understand that people can coast in large companies, but IBM takes it to another level. When I pointed out that the writing is on the wall that Power cannot last long with this kind of culture, the usual response was we would be retired by then.
Power HW will not die, it will just be sold to someone else to manufacture. It’s become a commodity/Niche market. IBM can’t make money on just manufacturing a few thousand / tens of thousands mother boards a year. They will spin it off to a gray mother board manufacturer, or to someone who sees synergy with their current product line. (HPE, Cisco, Lenovo, Inspur, etc etc all jump to mind) Remember IBM keeps the SW stacks. (Inspur has more than doubled their manufacturing of Power mother boards in the last year due to open power, and sells approx as much per year as IBM does) Yes they are based in China, but if IBM got around the Lenovo issues, my guess is they can wade thru Inspur issues too. Why would Power SW die? Do you care who manufactures your Intel mother board if your SW runs on it? It’s the same equation for power Why would you care who makes the Power server as long as IBM’s or your ISV’s SW runs on them.
If power HW dies, won't the SW follow that death a few years later?
Although margins are vastly different from SW to HW, the Demand Interrelationships between (Z,power, storage) and SW at IBM is the utmost reason why HW has remained and will continue to remain key to IBM's business in the future. IBM is a multiproduct firm and the two goods depend on each other for revenue, lead generation, opportunities etc.,
This is why I say IBM needs to move faster Wallstreet knows this is strictly a financial play, so IBM has to get it in the rear view mirror faster not slower AK knows that, and is trying to move much faster than his public ally disclosed timeline
https://seekingalpha.com/news/3641350-jim-chanos-cuts-painful-tesla-short-sticks-bear-bet-on-ibm
2vgr The SW portion is anything SW related OS/400, AIX, Redhat, Cognos, SAP, PVM etc etc etc IBM’s profit margins on any of that stuff is far greater than the profit margins on HW. IBM’s IP is mostly invested in the SW stack which isn’t growing, but at 90% margins is still nice. The IP in the HW stack can easily be recaptured via a cross licensing deal just like GF and chips Throw in an IBM lab’s sweetener and a 10 year guaranteed contract and we have a winner NOTE the same can be said for storage too The HW is a commodity, with the SW being where the profit is
@2fxg+18c3MuEu nice explanation.
Can i ask what do you mean by sw portion of power? You mean powerai and other sw stack or something else?
Ibm missed out big time btw by not able to run ibm public cloud on power and successfully selling public cloud obviously. It had all the pieces to be successful and vertically integrate everything. I still think that's one reason they didn't sell power early on.
IBM took the ax to Power in May Whole depts were RA’ed Power delivers in the neighborhood of 1.3 billion in revenue to Systems. Of that number approx 20% of that comes from Storage with their P9 DS boxes. (Yep 20% of sales are already captured). Power has been shrinking at a 25% rate (year over year) for the past 4 quarters, which is quite alarming considering server sales over the world (including Z) have been growing. Add it all up, and Power is looking quite bleak. It’s a niche market, that IBM can’t figure out how to move to cloud due to the unique nature of its legacy SW stack. To compound their woes, IBM eliminated the sales force (yes you actually have to sell power to Intel focused customers) in favor of the channel, and that has completely gone castors up in a cloud centric world. Their distributor model has broken. Partners don’t have the time or interest to sell power when customers want to buy cloud. Partners like electricity move to the least resistance. The bean counters at Armonk see this, and know that it’s only a matter of time till a replacement business model wins out. IBM will most likely keep the SW portion of Power (yep that’s where the profit is), and dispose of the remainder as that’s where the cost is. The only factor to be looked at is where does Power fit in the Enterprise Hybrid Cloud strategy that IBM is restructuring to.
I am not certain that POWER is right sized yet. The revenue is dropping drastically, so, it is hard to keep up with the shrinking pace.
POWER future is very uncertain, IMO
1wox You may be correct that more RA’s are coming, BUT IBM has a history of freezing Headcount once a deal has been announced, and letting the new company deal with the dirty work. Essentially they bake the future layoffs into the deal. They did this with Intel servers and again with the chip sell off. Ask yourself as far as NA services is concerned. Who’s left to lay off NA has always had a 12-18 month lead on the rest of the world when it came to “labor”. IBM sent GTS and GBS work loads overseas years ago, and NA has been running on a skeleton crew. Given that, you are seeing some pretty ruthless cuts filtering thru Europe (approx 10k worth of heads). 10k worth of heads given the 9 months of pay assumption equates to approx 1 billion of restructuring. So where does the 1.3 billion (2.3 announced - 1) go? I expect IBM will trim the NA work force that is not in scope, but via an exiting of those businesses. What does this mean? It means dumping pieces of IBM that don’t fit into the Enterprise Hybrid cloud model that IBM is ruthlessly pursuing. So who doesn’t fit in? Almost all of IBM’s scale out offerings. They have become commodity/niche marketing opportunities, and IBM has publicly announced they don’t want to play there anymore. So what’s a Fortune 500 company to do. YES you could RA them down till they are a non-issue, essentially exiting that marketplace and giving up any and all revenue and profits including IP, or you could sell/spin them off allowing you to capture some intrinsic value on the sale (stuck revenue and investment from the past 20 years) plus making the terms capture the IP value over the course of 10 years going forward. RA’s don’t help you once you get down to skeleton crew levels of service. That’s where the legacy NA headcount is at. This is just the Bain playbook from 2017-2018 being executed
zkt+18c3MuEu
I cant say enough how wrong you are. Sales is going to be cut further. GBS too. Marketing etc etc.
And, while its true AK wants to move on, this spin off, layoffs, and been in play way before he became CEO. It is NOT something he miraculously dreamed up since he started.
@zkt+18c3MuEu - So long story short... you believe massive RAs are not coming to GTS/NewCo in 2021?
Or do I misread?
NO I believe IBM has rightsized the NA services organization to the approx headcount they want. (they have had multiple bites at that Apple) In services they will now decide where folks will land. (newco or IBM) The dual headcount via Redhat vs legacy can be addressed there when they split up. There is a reason that headcount movements are frozen for GTS/GBS right now. Folks are deciding where you will land. The remaining headcount that needs to be addressed, is something you can’t RA your way out of. IBM shrunk BTV and EF down till GF agreed to take them. They did the same with Intel servers. IBM has been executing the shrink with Power, Storage, and the channel / sales teams across NA for the last 3 years. They have shrunk them down till they are now rightsized. Someone will realize value just in the replacement market for these legacy products. IBM most likely will sweeten the pot via a guarantee to the buyer for a 10 year cloud supplier contract. Throw in IBM’s lab doing the IP research going forward with a return cross licensing agreement, and you can see a spin-off/selloff in the works. My guess is all will be disclosed right around 1/20. Why? Because AK needs to get this behind him FAST, if Wall Street is to believe his new restructuring story (Hybrid cloud, AI, Redhat) Remember come 1/1/21, Ginni exits stage right, and he takes the slings and arrows of the strategy. He needs to act faster not slower
So basically we're saying January Earnings report plus 4 weeks to get to "RA Thursday" before we see any clarity?
I believe 4th q earnings comes out 01-21-2021... so 02-18-2021 would be the next big RA week in the USA?
Wish they would just get it over with, so we can go on with out lives away from the job.
The USA has always had much easier labor rules vs Europe due to the European unions. IBM has always taken advantage of that, thus NA labor takes the bigger and earlier hits. The Mostly May layoff was just under a billion dollars (see 1st and 2nd q earnings report) With the 90/30 rules, that equates to approx 15k worth of headcount. IBM NA still has more headcount to deal with due to IBM scope changing under AK (Austin, Rochester, Pok, Tucson, Raleigh dual headcount (cognitive vs Redhat redundancy)). They will address that in late Dec to early Jan Most likely Jan as they will take their bad news with 4th Q earnings. IBM has a habit of mixing bad news with earnings. See GF spinoff, and Intel server selloff.
Some say the early 2020 hit (March? May?) was the US RA for the NewCo spinoff.
I'm wondering if 2021 is when the real RAs will begin?
Nothing like trying to read tea leaves...
Who in the US was hit ? Service was a hand full of people with many making charts or s—ing up to management . Management was a joke , they knew very little and would even admit it .