GBS comes to mind. My vertical has not sold a large project in over 6 months, things are not looking good. Things are changing indeed. In your opinion, what IBM groups will shrink the most over next five years?
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Let’s look at Cloud and then ask what is going to shrink. Cloud can be segmented into SAAS, IAAS, BPAAS, PAAS, Cloud management and Security, and cloud advertising. SO which of these segments do you think IBM will walk away from, and which do you think IBM will invest in??? Certainly IBM has invested big time into the advertising piece. Security is growing like a weed, but IBM pretty much is a non-player when it comes to cloud management due to Intel standardization. All of the other offerings from IBM need to be further segmented into “enterprise” (think Z or fortune 250) vs everything else (think Intel and non-fortune 250). One last wild card is LINUX vs everything else. SO if you think IBM is going to shrink when it comes to Intel, you are most likely correct. Will IBM shrink when it comes to Z offerings, or to offerings where IBM offers performance advantage???? I doubt it. IBM is positioning itself into the performance/fortune 250/Enterprise cloud offerings. Everything else they don’t care about. So if you (IBM’er) are on the Intel side (especially commodity) side of the cloud house, wave goodbye. You would due better to go work for Amazon, Google, Microsoft. If you are on the Z, LINUX (performance), and Power (enterprise) side of the house, IBM has a future for you. Advertising and security are stand alone, and are major IBM investments. IBM has very little incentive to compete with Intel / traditional cloud providers directly. They intend to compete on where they have advantage. (Z, performance Power, HPC Power, security, and advertising). If they can leverage you into one of those offerings they will. Otherwise they will let you go. LINUX is still a work in progress as IBM has a superior HW offering, BUT they have very little “infrastructure” offerings vs the 10 year legacy Intel offerings. IBM needs to invest in Power LINUX infrastructure, or wave good bye to a superior HW offering
I say IBM Cloud will shrink the most.
Why? Because its a massive bust to begin with so shrinking would be an understatement.
6hxz. Yes you are correct in that the Mainframe is old and not growing appreciably (adding 10-50 customers a year is really not growing) Shrinking is another question. I believe the Mainframe’s shrink rate is actually almost nil. Customers who wanted to switch, switched may moons ago. The Mainframe is an annuity that IBM continues to mine. Does it innovate. Actually to an extent YES it does. The Z14 offers some unique security features, encryption features, and IBM actually is trying to harvest some LINUX out of it. Linux was conceded to the Intel market place Many moons ago, BUT there are unique parts of the Mainframe where LINUX works quite well. The same can be said for Power (speed and AI are the main parts of the equation). Remember the Mainframe mints money since it’s the only game in town (zero competition) and if you havn’t Switched off of it yet, the odds are that you either will not or cannot. There is a pile and I mean a pile of legacy apps that continue to run on the Mainframe, and that install base lends itself to an annuity stream. IBM knows this, and farms this. You can’t say the same for Power. YES P9 is impressive, BUT it has plenty of competition (UNIX legacy) and it lacks the investment into the basic LINUX SW plumbing As such it will scratch out a niche for performance hungry LINUX needs, but it has sacrificed 75% of the non-performance LINUX marketplace to Intel.
Anything related to the mainframe will shrink. They have milked that cow well beyond its lifetime. No new innovations and the market is not expanding. Only current mainframe customers are buying and they expect cheaper and faster. No more armies of IBMers supporting mainframe customers.
IBM biggest loser is legacy support. The top heavy structure just cannot compete with the other players today. So many companies are low balling now to get the contracts, something out of the Walmart playbook. It's a shame IBM never trimmed the fat years ago and kept it lean and mean.
Legacy will soon be spun off or just dissolved for obvious reasons.
Say goodbye to the shanty towns IBM.
As Lou Gerstner said in a meeting once...”IT is like trucks...”.
There is no high value IT. It’s all commoditized.
Verticals too hard to scale. Watson health on life support.
The margins that are made on services work are so abysmally low compared to other consultancies that I wonder how GBS continues to justify promoting people to partner who don’t bring in revenue. They are so top heavy with dead weight and redundant organizations to support said dead weight. It’s scary that as an individual working person you are just a pawn in some executive’s land grab. It is beyond unfair to the working person at IBM.
If IBM is to save itself, it has to shrink and shrink a lot. Tim Ringo years ago predicted IBM would go to market with approx 100k world wide head count. I believe he is correct. So where does the shrinking come from. Just look at the margins of the products and services IBM sells. If you are at 25% or less (we are looking at you GBS and GTS for the most part (perhaps 70-80% of you)) will have to go away. IBMwants to make 45-80% margins. Those pieces stay. All the low margin parts go. Now just do the math to get to 100k and you know if you are staying or going.
LOL!!! Watson AI was so oversold it isn't funny.
If this is what IBM is basing it's future on, just close up shop now.
Big deal, it can search the internet and play jeopardy, wow. Now let it kill medical patients.
LOL!!!
Watson is IBM's last chance to be a major player in a growing product market. If that fails all that's left is the legacy portfolio.
If Watson Health can't deliver Watson-based products in the next twelve to eighteen months they will be spun off or dumped. Truven and Merge had dated product lines that needed to be culled and refreshed. The hope was that Watson would use their vast stores of data to build new "cognitive" products, so, IBM has neglected refreshing their legacy products. There are no real Green Fields to pursue in their markets so they have vicious competition from competitors hungry to grow while trying to compete for the few replacement opportunities with the same stagnant products they've had for nearly a decade.
I foresee a near-future where US employees are highly valued...
...by Indian outsourcers who need us to front bids that require US-based / US citizen workers.
Strategic imperatives lol OMG, if I hear that again I will c-ap my pants with laughter and embarrassment to any IBM mo--n who bought into it.
Ok, next five years.
Can I say Clould & Waston Group? which are all Ginni bet on heavily!
Kvc. You are correct, that IBM is shopping “services”, BUT IBM plans to keep the strategic initiatives part of the services offerings. (Eg Cloud, as a service, AI, cognitive, security) In addition, IBM will keep most of the services that are offered to the fortune 250 accounts. Essentially IBM plans to get much smaller head count wise,, but only sacrifice approx 30% of their revenue. IBM has stated via their previous CFO (Martin S) that the fortune 250 world wide provides IBM with 85% of their revenue.
GBS-GTS are one now (IBM Services) so that will most likely be sold off to a company that will trim the bloat down to a normal functioning size where a profit can finally be turned.
If I worked in that division I would be on Indeed like 24/7
North America GBS has been shrinking for a while. We do keep adding resources off-shore. So, in the aggregate, things may not be as bad...