back to article Twilight of the idols: The only philosophy HPE and IBM do these days is with an axe

The cloud has not been kind to legacy tech vendors like IBM and Hewlett Packard Enterprise. With their enterprise software and hardware businesses ravaged by cloud alternatives, and their efforts to get into cloud stumbling, it's not surprising that these erstwhile bellwethers would shed employees as they seek out profitable …

  1. HmmmYes

    I not buy any long lived service from either HPE or IBM.

    Ive software from both, which they dont maintain - they have a bug list thats been increasing for the last 5 years. Not a single one has been fixed.

    All sales calls are dealt with quickly - fix my existing issues and then we'll talk. Otherwise dont bother.

    The HPE and IBM general fuckwittery of the lat 10-15 shows how a company can burn though its goodwill. There really needs to be a better way of rewarding execs - share prices is too easily gamed in a short time - 5-10 - at *huge* expense to the company at a later date.

    Just look at the fuckup at GE - Jack Welsch was basically using long insurance fraud to game short term earnings 20 odd years ago. Now the insurance liabilities are landing due and GE is fucked. *All* the smoothed, increasing earnings were a total fucking fraud.

    As far a labour arbitrage goes. It doesnt work. Or, at best, it only works for a very short time.

    The only example of labour arb I can think of in the last 50 eyars would be when the likes of Czechlands and Slovenia gained independence from the USSR in the 90s. There, after a 5-10 years of extreme adjustment, the middle classes/educated population that survived 50 years of Corbynism sorry, Communism, were able to dust themselves down ad continue, socially, where they were frozen in the 1920s.

    Other labour arb - India, Vietnam, China - just have not worked.

    Once you factor transport and fuckups in, a lot of manufacturing is a *lot* cheaper in the the UK than China. This was not true 20 years ago - China was dead cheap. Labour in the Pearl River delta is very expensive - about 40% than the UK + US.

    India. No, never. Had to pickup he fuck up of both sw and business outsourcing. I could not even lie to make the work look good. Everything about it was dreadful - typically anything you outsource to India will come back in 3-5 years time and you'll have to do it yourself, at great expense. Thats a short bit of multy mullion - andI mean that - advice there. Dont. Ever. Do. It. Ever.

  2. Voland's right hand Silver badge

    Workhouses and Sweatshops do not work

    History of human technology has shown this again and again and again. A society which is more advanced technically will destroy the one which is based on large scale exploitation of cheap labour.

    Starting with the Greeks and Romans vs Egypt, going through the appearance of machines in textile, the assembly line and till this day.

    Moving a job to a low cost region is only a temporary reprieve, you are back to basics in 3-4 years time when the economy pressures you to make it MORE EFFICIENT so that more is produced by the same amount of labour. That is where the move to a slavery destination bites you in the arse. Slaver labour setups NEVER INCREASE their efficiency. There is NO known case in the history of human technology for this.

    In fact, doing the move instead of looking at improving efficiency is an obvious trap - you are setting yourself for a downfall later.

    1. HmmmYes

      Re: Workhouses and Sweatshops do not work

      Oh I dont know, the Pyramids are cool.

      But, in 2000 years time, I dont think youll find many OAPs taking trips to look, awestruck, at some of Wipro's work.

      1. John H Woods Silver badge

        Re: Workhouses and Sweatshops do not work

        Pedantic note: a lot of pyramid constructors were quite well paid.

        1. HmmmYes

          Re: Workhouses and Sweatshops do not work

          Until the long forgotten Pharaoh , Gordonush Cuntush Brownush, introduced higher taxes on the workers to pay for his pissing the the wealth on a load of layabouts.

          1. Anonymous Coward
            Anonymous Coward

            Re: Workhouses and Sweatshops do not work

            What you're forgetting is that Rometty, Whitman et al couldn't care less. That's the whole point of the article. They make their dosh, get out, and leave the pieces for the next person to pick up.

            This is essentially what publicly traded companies have become.

  3. Anonymous Coward
    Anonymous Coward

    Add DXC to this burning pile of shite

    Same game, 10% falling revenues year on year, no money for anything (investment, travel, workers pay) but massive payouts for the CEO (makes Carillion execs look like paupers) and huge chunks sold off but the cash gained paid straight back to shareholders rather than invested.

    So, that's IBM, HPE and DXC doing this... what about the others? Accenture? Cap Gemini? ATOS? Wipro? TDS? Infosys?

    1. Anonymous Coward
      Anonymous Coward

      Re: Add DXC to this burning pile of shite

      Aren't Wipro and Infosys Indian companies? What low wage countries are they going to outsource to, Bangladesh?

      1. HmmmYes

        Re: Add DXC to this burning pile of shite

        You work for Bain and I claim my £5.

      2. Anonymous Coward
        Anonymous Coward

        Re: Add DXC to this burning pile of shite

        Yes Indian but not so much about off shoring but about hammering everything, losing revenue whilst not paying staff and all money for the ceo...

        1. Anonymous Coward
          Anonymous Coward

          Re: Add DXC to this burning pile of shite


          From what I understand over ambitious cost cutting targets as part of the ex EDS/HPE and CSC merger caused a revenue collapse to the point where they did not even get the short term profit kick they were after. This caused the entirely reactive management to U turn declaring a "return to growth". Their main whinge is that for some reason people view DXC as a cost cutting 90s CITO outfit not a high end solutions partner. After a year of haemorrhaging experienced staff and eating it's own CTIO dog food that destroyed the IT capability of so many of it's old customers one can only say "quelle surprise"- See House of commons reports for CSC (California State Circus) inc

        2. Anonymous Coward
          Anonymous Coward

          Re: Add DXC to this burning pile of shite

          Yes Indian but not so much about off shoring but about hammering everything, losing revenue whilst not paying staff and all money for the ceo...

          IBM and HPE should just outsource their CEO and Board of Directors to India. I'm sure they could find someone there to do the job for $33K rather than $33M, and not do any worse at it.

      3. jelabarre59

        Re: Add DXC to this burning pile of shite

        Aren't Wipro and Infosys Indian companies? What low wage countries are they going to outsource to, Bangladesh?

        Kingston NY...

    2. Anonymous Coward
      Anonymous Coward

      Re: Add DXC to this burning pile of shite

      How clients can ignore this behaviour is just as worrying....

    3. This post has been deleted by its author

  4. Chairman of the Bored

    "What is IBM?"

    Out of the mouth of babes...

    When I was a kid I remember 'IBM' was synonymous with 'computer'. DEC, Wang, Compaq, whatever were by far second tier and second class.

    Fast forward to 2017... My pre-teen daughter asks, "Daddy, what's IBM? What do they do?"

    How the mighty have fallen!

    1. Orv Silver badge

      Re: "What is IBM?"

      We're a long way from the days of "nobody ever got fired for buying IBM."

      1. Anonymous Coward
        Anonymous Coward

        Re: "What is IBM?"

        We're a long way from the days of "nobody ever got fired for buying IBM."

        Now it's "EVERYBODY got fired for working AT IBM"

    2. Anonymous Coward
      Anonymous Coward

      Re: "What is IBM?"

      Fast forward to 2017... My pre-teen daughter asks, "Daddy, what's IBM? What do they do?"

      They used to be in the IT business. Now they're in the Employee Reduction business.

    3. AKL_wino

      Re: "What is IBM?"

      "Daddy, what does regret mean?

      Well son, the funny thing about regret is,

      It's better to regret something you have done,

      Than to regret something you haven't done.

      And by the way, if you see your mom this weekend,

      Be sure and tell her, SATAN, SATAN, SATAN!!!"

      This wee interlude was brought to you by The Butthole Surfers (1987 model).

    4. rnturn

      Re: "What is IBM?"

      Fast forward to 2017... My pre-teen daughter asks, "Daddy, what's IBM? What do they do?"

      IBM's largely invisible to the general public. I can't recall the last time I saw an IBM commercial on TV. I think that last one might have been the one where the execs called in the police to report their data center was cleaned out but it turned out that their nerdy-looking admin had virtualized everything onto a single rack's worth of hardware. How old was that one? I'm guessing it was from /at least/ 4-5 years ago.

  5. Anonymous Coward
    Anonymous Coward


    Actually Marx did write the script. He was a pretty good economist with some inevitable 19th century short-sightedness but he forecast how capitalism would develop rather well. So actually did Adam Smith, but Smith didn't foresee large corporations. In Smith's day the largest corporation was public sector - the Royal Navy - with a host of small, dependent suppliers.

    Where Marx and Smith went wrong is that the solutions they came up with - genuine fair markets on the one hand and socialism on the other - were immediately identified as a threat by the capitalists, who proceeded to attack them relentlessly - while the dystopia predicted by Marx was considered by the capitalists to be a textbook, not a warning.

    Jeremy Corbyn isn't a Marxist, but these executives are. They're exactly like the CEO "Christians" who tell everybody else to follow all that stuff about doing what people in authority tell you to do, while conveniently ignoring that other stuff about rich people giving away their possessions.

    1. HmmmYes

      Re: Marx


      Marx was wrong as he operated with a strict separation of capitalist and worker.

      And assumed that capital trumps Labour. Dumb, unskilled Labour, yes. Skilled Labour - No.

      Real life is more complex and nuanced than Marx could ever concieve or model. Ditto all the fucktard Pols since.

      Stay out and just try and keep stuff fair and funded.

    2. Roj Blake Silver badge

      Re: Marx

      Adam Smith was around at the same time as the East India Company, so he certainly should have been aware of large corporations.

      1. JacobZ

        East India Company Re: Marx

        The EAC is a pretty fascinating example. Although it started out as a trading company, and was certainly a very large corporation in every formal sense, before long it was hard to tell the difference between it and a country in its own right. It controlled a huge amount of trade, established rule in India (laying the foundation for the British Raj), and even fought wars with its French counterpart. Real wars, I mean, not just trade wars.

        From Wiki: "By 1803, at the height of its rule in India, the British East India company had a private army of about 260,000—twice the size of the British Army. The company eventually came to rule large areas of India with its private armies, exercising military power and assuming administrative functions."

        There are probably fascinating parallels to be drawn between the EAC and companies such as Facebook or Google, but I leave that as an exercise for people smarter than I.

        1. Laura Kerr
          Thumb Up

          Re: East India Company Marx

          "There are probably fascinating parallels to be drawn between the EAC and companies such as Facebook or Google, but I leave that as an exercise for people smarter than I."

          The end of the East India Company might have some lessons for the future... imposition of a new product on people who were unable to refuse, unsubstantiated rumour being taken as gospel and then a huge outbreak of violence, an equally brutal response from TPTB and when the dust had settled, the EAC had been consigned to history.

          1. BebopWeBop

            Re: East India Company Marx

            A genuine question - posters use East India Company and abbreviate it to EAC - why?

        2. Orv Silver badge

          Re: East India Company Marx

          I'm not sure you can compare corporations from the East India Company era to the way corporations work now. Back then they required a royal charter, and were in many ways privately-operated arms of the government -- in return for which they got limited liability. Nowadays they're all essentially free agents, and the limited liability is just taken as read, not a reward for doing the government's bidding.

          Adam Smith, interestingly, believed that corporations would not be as effective as private ownership because people would not be as careful with others' money as they were with their own. I think this article demonstrates this argument was correct, but also irrelevant.

          1. Guevera

            Re: East India Company Marx

            "Back then they required a royal charter, and were in many ways privately-operated arms of the government -- in return for which they got limited liability."

            Good point about LLCs which no one seems to remember. The LLC is a legal fiction which is created by the state because doing so serves a purpose. It is not a god given right.

      2. sprograms

        Re: Marx and Adam Smith

        If you read Wealth of Nations carefully, you'll see that Smith emphatically decried the likes of the East India Company, monopolies, and politicians who thought they should be businessmen (as well as businessmen who thought they should be politicians). Smith is held as the big cheerleader for "the invisible hand." That was imply his phrase for the effect of individuals with liberty. His main thrust was to get politicians to think of the wealth of the nation, not of the guilds and trade monopolies. JMO.

    3. vtcodger Silver badge

      Re: Marx

      Russian Joke - circa 2013: Everything Marx told us about Communism was wrong. Unhappily, everything he told us about Capitalism was right.

  6. Blotto Silver badge

    Hammer nail head

    It’s great to read an article that cuts through the dross and looks at the actual direction of travel that prompted these behaviours.

    If ibm & hp where focussed on growing revenue rather than cutting costs and jobs, their onshore customers may have more well paid consumers to target their products at.

    It’s not all about a race to the bottom while charging customers the most, despite what the spreadsheet shows.

    1. HmmmYes

      Re: Hammer nail head

      Well .... thats what they did. They grew shor term revenue.

      However its profit that a company should be growing, not revenue - see GE.

      And the only way to grow profit is to work hard, do complex things and invest in your workforce and technologies.

      All that HP, IBM <whoever< did was chase revenue and not bother with the margins.

      1. sprograms

        Re: Hammer nail head

        I would politely disagree. Chasing profits as opposed revenues is often a disaster, since cutting labor radically can preserve and grow profits for quite awhile. I'll give you a huge example: My associates were arguing with me against dumping money into equities in March, 2009. They didn't bother to check, but the reality was that at the retest of the lows corporate profits had not fallen. Revenues and financing did. Amazon, as an interesting case, chased revenues and sales, not profits. Build the base, run efficiently, and profits should follow if the business model was good to begin with. Just another point of view!

      2. Blotto Silver badge

        Re: Hammer nail head

        there are 2 ways to chase profit,

        1) work hard and sell more thereby increasing revenue and the profits that it generates.

        2) lower costs and sweat your assets.

        IBM, HP have decided that option 2 is the way to go. lowering costs for them means swapping staff numbers in expensive countries for cheaper countries. They have not taken into account the value of their experienced staff and have decided that 1k experienced heads in the west is the same as 1k newly graduated heads in the east. They literally have attached zero value to the skills, acquaintances and customer relationships their staff in the west have gained over many years of working with their (IBM's) customers. the fact that all their competitors are racing to do the same vindicates their approach and changes the market as everyone is offering a terrible barely bearable service & the customer doesn't seem to care.

        Once customers realise their competitors are getting increased revenue after in housing their IT, more will follow.

        1. Anonymous Coward
          Anonymous Coward

          Re: Hammer nail head

          Blotto - there is a lot of "me too" in business.

          Hard to say who was the genius behind this particular game plan, but the others followed suit so as not to be left behind.

          Not every "idea" is a good one though.

          Probably the root cause of the decline of the US ITO megacorps was the threat from the new Indian owned ITO's themselves. They decided that the low cost alternatives were gaining traction quicker and they had to react.

          After the mad waves of offshoring had happened the next problem was the financial crash of 2008. How do you grow to meet the demands of Wall Street in a flat/declining market?

          The problem was root and branch though as the client base was facing the same problems in their own businesses (whatever those were) and they too needed "growth" to meet the demands of their share holders.

          Next idea, axe everything, buy back shares, artificially manipulate the share price and collect huge executive payouts.

          And here we are... what's not to love eh?

          Markets are still flat, the post 2008 "recovery" is utterly artificial and the share indexes have an elephant bigger than the room its standing in.

          Crash time is inevitable.

  7. CheesyTheClown


    HPE is never a good idea to buy from. They are an acquisitions and mergers shop only. With the exception of servers which for the most part are just PCs with a half-assed and unloved remote KVM... which is borderline unusable... an ILO system which is as reliable as a politician... etc they don't produce anything themselves. They simply find a company with a lot of sales or specific inroads into the government and buy the company and run it into the ground. They get most of their sales from things like Aruba for example. The market has two players in enterprise wireless communication, companies chose Aruba and invested heavily. They don't want to replace their entire wireless network to switch to Cisco, so they just keep buying Aruba. Of course, HPE killed off most of Aruba's best products... dumped all their aging and shitty Procurve A and S stuff on them and lost most of their developers by killing all the fun in the organization and outsourced most of the rest to India. Investing in HPE is generally never a good idea except for the stock prices.

    IBM... well ... let's talk Softlayer.

    1) Most of what they do isn't even cloud. They simply let you rent servers or VMs. This is great for the loser companies out there who actually think they can save money by going cloud... and think IaaS is cloud. It's not. It's basically colocating servers. You still have to do almost all the management. You don't get anything useful from them. You still need to run updates, run your own security, etc...

    2) PaaS... their PaaS platform doesn't even seem to have a NewSQL platform. Where Microsoft has Azure Tables and Google has Spanner and Amazon has Aurora. IBM is peddling DB2 in what only appears to be a containerized version where you still need to build and maintain a DB2 environment. The other platforms are simple, you just say "I want a database" and you have an always available database. With IBM, you have to build and manage a database platform. Even Microsoft, who has SQL server knew that you couldn't make something like DB2 cloud scale.

    They don't really offer a platform either. What they offer seems more like a bunch of containers. Of course you can do kubernetes... yippie!!! but it's not a platform. You still need to build and maintain your own infrastructure.

    3) No IBM technologies other than DB2. Where's the CICS? Where's the WebObjects? Where's the RPG? Where are all the things which make IBM worth using in the first place. IBM has more than 50 years in the PaaS business. They have more than 50 years in the FaaS/Serverless business. And they don't even have a single worthwhile IBM technology to build on.

    In the past 10 years, Microsoft transformed themselves from a product company to a platform company and are now shipping Azure Stack which is a mainframe in a box. You can install and operate Azure Stack as a fault tolerant mainframe. They are committing to platforms and APIs. With Azure Functions, Microsoft is shipping their own CICS system with all the underlying technology to make it happen. They have developed the best development tools ever seen in a mainframe environment to work with them as well.

    And IBM is delivering what appears to be little more than Ubuntu or OpenShift with Kubernetes.

    The biggest problem with companies in general is that everyone seems to implement features based on what they read in the news. Or they hire a manager of a product from another company. What's worse is that SoftLayer looks like they learned what cloud means from VMworld... TOTAL FAIL!!!!

    They need to take a team of developers and have them make a demo product on Azure, Google Cloud and AWS and learn what cloud is. No frigging containers. No frigging virtual machines. Build the real deal. That means use the platform. Then they need to talk to the guys at IBM who have 50 years experience in PaaS and learn how to make something special.

    When they do that, they need to throw a billion dollars at it and make it happen.

    1. Fortycoats

      Re: Critique

      About HPE: "With the exception of servers..... they don't produce anything themselves"

      HPE servers were also acquired.... from Compaq

      So was their EVA Storage, which was based on tech from DEC

      1. rnturn

        Re: Critique

        If memory serves, the EVA moniker came about during the period of Compaq's ownership of DEC's StorageWorks hardware but I think the technology, if not the name, may have already been well along in the product development pipeline when Compaq took over DEC.

        I still remember having to stay late one night while someone from DEC, er, Compaq field service came in not long after the takeover. I thought that someone had made a call to replace a component but it turned out that the reason for the visit was to put "Compaq" stickers over all the "Digital" logos on the equipment in the data center. The funny thing was that there were several different sizes of the Digital logos but Compaq had properly sized stickers for every one. Compaq innovation at its best.

  8. Roj Blake Silver badge

    Have a Cigar...

    You're gonna go far.

    Well done on the section headings.

    1. Anonymous Coward
      Anonymous Coward

      Re: Have a Cigar...

      I thought most people would have got the section headings. Clearly not, you were the first, well done!

      Shine on you crazy diamond...


    2. Thommy M.

      Re: Have a Cigar...

      Oh, by the way, which one's Pink?

  9. Anonymous Coward
    Anonymous Coward

    From a shareholder POV, at least with HP, it could be argued that the splitting up of the company and selling of part of it with clear focus could

  10. Anonymous Coward
    Anonymous Coward

    From a shareholder POV, it could be argued that the splitting up of the company and selling of part of it with clear focus and a profit stream makes sense. Splitting the whole into better understood parts, and putting the risk with outsourcing, or enterprise hardware into different companies probably makes at some level. Lenovo and HP-Inc seems to be doing ok in the consumer space after all.

    Seeing the outsource/consultancies shrink as they can't make profits on the renewal deals, and the core of HP-e fail as it can't combat off-site cloud, or internal cloud-centric infrastructure doesn't mean the strategy was wrong. It probably saved the "good" bits, from contamination by the bad bits of the company.

    It will be interesting (for some) to see how the software spin-merge goes over the next couple of years....

  11. This post has been deleted by its author

  12. a_yank_lurker

    Delusional Thinking

    Dumbshoring and its relative dumbsizing only work as bandages over gangrenous wounds at best. It never addresses the real problem: being out of sync with the market. Cutting costs for the sake of cutting costs means you have lost sight of your customers' needs. Customers will react with time and the vicious cycle will continue.

    1. Death_Ninja

      Re: Delusional Thinking

      When offshoring happened big time I stated the (seemingly obvious) that the fall in quality would cause rejection by clients, like it did with offshored call centres.

      What I hadn't realised at the time was that clients actually care less about quality and more about cost. If you pitched the offshoring deal as "same price" (not not "cheaper") vs onshore "more expensive" (ie price RISES) to the client, they took the cheaper option.

      Clients care about their SLA's being met. Their SLA's being defined as a good enough service to meet their requirements and supplier cock ups are a positive financial thing to their balance sheets as long as it doesn't totally kill their business. The SLA and indeed the entire deal is "good enough" and as cheap as possible.

      Basically, most clients do not reject offshoring, despite every person in the Western IT world knowing that its an inferior service.

      In the same way as people buy a cheap car brand and not a premium one. Its good enough.

      If you were able to find someone exclusively offering a truly gold standard service, I doubt if you'd find their order books full.

      1. Aitor 1

        Re: Delusional Thinking

        I mostly agree.. but not with the last statement.

        If the were large enough to matter, they would find their order books full. BUT then their managers and directors, coming from the same pool as the rest of the industry, would decir to offshore "non critical tasks", etc, large benefits would come, and client loss would follow, as they are paying for premium services, and if it is average quality, they would go for the cheapest.

  13. Nolveys

    Spread The Love

    Has anyone told Microsoft, Oracle and Fecebook about this self-cannibalistic business model? I wouldn't mind seeing that lot go down the same road IBM has been going down for the last 10 years.

  14. RareToy

    Possible solution

    How about we outsource CEO's and other upper executive officers? Maybe reduce the board of directors to a council of 7 with one of those members representing the hard working labor force? They help create the idea. They worked the long hours to debug the dang thing. Why shouldn't they have an advocate at the upper levels?

  15. Mark 85

    Some companies like Apple reward executives based on their ability to increase revenues and profitability. Not so IBM or HPE.

    There it is in a nutshell. If you care more about "shareholder value" than your customers, they will go somewhere else. I was taught the first thing any company should embrace is "income, sales, and service" to be viable. These two turds (and others) are more about the board and shareholders than about their products and services. They deserve to die off.

  16. Anonymous Coward
    Anonymous Coward

    Corruption on an epic scale

    Senior people hiring their own cronies, setting their own multi-million dollar pay checks, raping the companies for all its worth for their own benefit whilst killing off all the people who do the real work to bring in that money.

    I say we burn the fucking lot of them. Cunts.

    1. Death_Ninja

      Re: Corruption on an epic scale

      El reg post of the week for me!

      Have an upvote!

  17. Michael H.F. Wilkinson

    History repeats itself?


    an ancient remedy, applied by people often referred to as leeches

    Seems to fit the bill very accurately

  18. dubious

    Every time they cut staff, reduce executive pay/compensation by at least the same %.

    Unfortunately their pay is already so out of wack compared to most people, they might not notice.

    1. Anonymous Coward
      Anonymous Coward

      In DXC's case, he earnt more than the IBM and HPE CEO by a fair old amount... something like $46 million... only just missing the top 25 highest paid execs in the world!

      As I said earlier, Carillion execs, you were paupers!

  19. Anonymous Coward
    Anonymous Coward


    This reminds me of this cartoon on levels of compensation:

  20. Big_Boomer Silver badge

    Goodbye my Son

    Goodbye tooooooo the Machiiiiiine.

    Shame it's a long drawn out painful death rattle of a demise but the larger the machine, the longer it takes for all its component parts to die, although given the lack of maintenance perhaps they ARE trying to accelerate the demise?

  21. Anonymous Coward
    Anonymous Coward

    What no Nimble?

    Anyone care to comment on the Nimble purchase?

  22. The Empress

    I can't understand why IBM's board isn't indicted

    I can only conclude that they're being paid to be indifferent. At some point someone has to say they're not meeting the standard of fiduciary responsibility. Billions of dollars flushed down the toilet as executives award themselves absurd bonuses and rewards.

  23. Dave 13

    Shrinky Dinky

    Both HPE and IBM are rapidly shrinking themselves to irrelevance, having made poor bets on trends and value. Sadly, the folks at the top do *very* well while those who traditionally provided customer value don't.

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