IBM's focus on cloud and software isn't novel – it's survival

IBM believes it is closer than ever to returning to overall revenue growth for the first time in more than four years. That's looking at the whole picture, though: while cloud and software are pulling in the right direction, the corporate goliath's remaining hardware operations are still looking pretty grim. Big Blue said …

[Sokolik]

Quite the coincidence

Cheers (can a Cousin say that?), Shaun. Thank you for the answer to a question I was pondering just the other day.

I was reminiscing on the steady deaths of all the "blue-chip" stocks I grew up with. And, of course, I came to Big Blue...made open-source the very PC with which they are credited in some quarters with inventing*, and then dumped it...dumped OS2...dumped ThinkPad...and I could only wonder, "What on earth do they do now"?

Nuremberg...early mainframes...the Selectric alone was a historic achievement in several facets...

Lo, how the mighty fall.

*"Who or what invented the PC?"-- always a great pub-argument starter!

[GruntyMcPugh]

I'm a little suspicious of the actual contribution of cloud platforms to the success of IBM, given the other areas that are bundled into that revenue stream (a stream I used to work in until I took VR from IBM last year (Infrastructure) ).

The IBM method was to sell it's own hardware and software to customers, perhaps charge for hosting, then gain additional revenue from support contracts. Cloud requires IBM to stump up the hardware cost upfront itself, this is a change of culture, and a leap of faith. The future is cloud, but can lumbering giants like IBM and HP make a profit when we're seeing computing cycles become a commodity? Commodity sales (PCs) were sold off, and split off respectively. We've seen the HP DRM debacle, trying to maintain post sale revenue on a commodity (printer) sale. For Cloud to appeal to both sides, it's got to satisfy the corporate growth vampires, while delivering cost savings to the customer, so expect more 'rightsizing', offshoring of support, and job losses in the USA and Europe. Glad I got out when I did. Mind you, new place are looking at Office 365, but luckily, still hosting our own virtual servers for the next few years at least. I can see Azure creeping in at some point however.

[Anonymous Coward]

IBM doesn't seem to include all of those acquisition costs it had to make in order to build it's cloud business. Revenue figures are useless without the detail. What still needs to be paid off? What actual profit was made? What about the costs of hardware, software, people etc. which are part of something else but are unavoidable contributory factors in the creation of this revenue?

I suspect some of it is being counted in the "stuff we don't want any more" pot to make the numbers look good for the "strategic" stuff.

[GruntyMcPugh]

In the category 'stuff we don't want anymore' was to pay our bonuses. Ginni Rometty announced that PBC level 2s weren't going to get a bonus, in the very same podcast she earmarked the funds for Watson 2. So Cloud was probably financed by the savings from the recent involuntary redundancy programs.