IBM - International Business Machines

[LowIQinvestor]

UK,

 

Thank you for sharing that article. The author makes very compelling points about why this is undervalued/misunderstood. He is spot on!

 

Great disclosure at the end of the article!:

 

"Additional disclosure: All proceeds from this article will be used to fund the author's continuing IBM share purchase plan. No pundits or talking heads were harmed in the making of this article."

 

[LowIQinvestor]

IBM to share technology with China in strategy shift: CEO

http://www.reuters.com/article/2015/03/23/us-china-tech-ibm-idUSKBN0MJ14X20150323

 

The perennial bargain...

[fareastwarriors]

Call for Activism at IBM Is Likely to Go Unheard

 

 

http://www.nytimes.com/2015/04/07/business/dealbook/call-for-activism-at-ibm-is-likely-to-go-unheard.html?ref=dealbook&_r=0

[Jurgis]

Call for Activism at IBM Is Likely to Go Unheard

 

 

http://www.nytimes.com/2015/04/07/business/dealbook/call-for-activism-at-ibm-is-likely-to-go-unheard.html?ref=dealbook&_r=0

 

Still not sure if Rometty is the person for the job.

[rukawa]

What does IBM do? I never really have a strong sense of the company. Before I feel like there were a Linux/Java enterprise solutions company. Now there are trying to move into the cloud where I feel like they have no advantage. But at the end of the day I have a nebulous feeling about the company. Other companies are easier for me to understand:

 

Berkshire = insurance fueled conglomerate = Fairfax

Microsoft = Office + business/server software + Windows

Apple = Iphone

IBM = Java/IT middleware + Software consulting + ?

[Jurgis]

IBM = Java/IT middleware + Software consulting + ?

 

IBM still has large chunk high availability servers / HW that goes into big enterprises (banks/etc.).

They also do big size high availability storage.

They also have a chunk of enterprise software including databases, etc.

They are now stressing security and analytics solutions. I don't know the percentage of that in their sales.

Their Watson sub is pretty small now, but they are trying to grow it into some kind of analytics/intelligent solutions.

 

IBM is not present very much in small companies, especially not in tech companies that run Linux/etc. Most of their stuff is in big enterprises, so we'd need IT people from banks, insurance companies, etc. to get a picture of IBM products. I think that's where Buffett got his info about IBM.

 

In tech companies that I am aware of, I've only seen:

- Lotus Notes/etc. - not used much or liked.

- Rational - mixed opinions

- IBM storage solutions - high availability big size storage. I've heard about issues, but I can't say how the uptime or cost/etc. compares to others.

 

But this is very small part of IBMs solutions.

[ItsAValueTrap]

What does IBM do?

 

One way of looking at IBM is that it's an IT services company.  Many big companies have unique enterprise-level IT needs that are best fulfilled with products from various vendors:

- Operating system from a company like Red Hat.

- Servers from HP, Dell, IBM, etc.  (or even Amazon Web Services)

- Storage from EMC, Netapp, etc.

- Database software from Oracle, Microsoft, etc. etc.

 

When you add up all of the vendors, you get a very long list.  They need IT services to help tie together all of the different products+services and to make sure that it is all configured and works together.  As technology gets more complicated and as the world shifts away from turnkey solutions, there will be demand for IT services.

 

2- In the past, companies like IBM (and Wang Labs) would put together the entire system.

IBM would own its own semiconductor fabs.  It would manufacture memory.

It would assemble all of the parts into mainframes.

It would make the operating system.

It would make the software that runs on the OS.

 

The world is shifting away from that model.  (Though Apple is moving back towards this model, minus hardware manufacturing and adding in retail stores.)

 

3- IBM does do other stuff like make software, design CPUs (POWER), etc. etc.

 

4- I think that IBM has turned out poorly due to bad management.

[peter1234]

This might be a bit controversial.

 

Does IBM sell expensive high availability mainframes where there is not much of an alternative and then you are locked in with them.

 

Once you are locked in, do they sell you expensive services?

 

If they lose the grip on expensive mainframes, will their biz model take a hit since you do not need expensive services from IBM anymore?

[sleepydragon]

I have heard that last quarter they would have done better if sales people didnt have to ask the head quarter to nod on contracts. It's seems too centralize in decision making. I hope they are changing to more decentralized model

[Jurgis]

This might be a bit controversial.

 

Does IBM sell expensive high availability mainframes where there is not much of an alternative and then you are locked in with them.

 

Once you are locked in, do they sell you expensive services?

 

If they lose the grip on expensive mainframes, will their biz model take a hit since you do not need expensive services from IBM anymore?

 

It is a good question. However, I think that a lot of "expensive high availability mainframes" are not easily replaceable by commodity server farms or cloud solutions. You are talking about places that need 99.99%+ availability and to get that with server farm or cloud solution requires quite high redundancy and specially engineered software or might not be possible at all.

 

Of course, the "somewhat high availability" HW possibly can be replaced by server farm/cloud solutions, but even there it depends what you are running on top of it. If you have a huge enterprise DB/etc. solution, ripping it out and replacing by new one is very expensive and can disrupt your business.

 

There might be some gradual loss of this business at IBM, but it's not big IMHO. I think some other IBMs businesses are more likely to lose customers, e.g. expensive consulting when not directly tied to IBM HW/SW.

[sleepydragon]

This might be a bit controversial.

 

Does IBM sell expensive high availability mainframes where there is not much of an alternative and then you are locked in with them.

 

Once you are locked in, do they sell you expensive services?

 

If they lose the grip on expensive mainframes, will their biz model take a hit since you do not need expensive services from IBM anymore?

 

It is a good question. However, I think that a lot of "expensive high availability mainframes" are not easily replaceable by commodity server farms or cloud solutions. You are talking about places that need 99.99%+ availability and to get that with server farm or cloud solution requires quite high redundancy and specially engineered software or might not be possible at all.

 

Of course, the "somewhat high availability" HW possibly can be replaced by server farm/cloud solutions, but even there it depends what you are running on top of it. If you have a huge enterprise DB/etc. solution, ripping it out and replacing by new one is very expensive and can disrupt your business.

 

There might be some gradual loss of this business at IBM, but it's not big IMHO. I think some other IBMs businesses are more likely to lose customers, e.g. expensive consulting when not directly tied to IBM HW/SW.

 

I agree. I was doing thia about 15 years ago. It takes about 6 to 12 months for ibm, emc, dell or HP to integrate everything and tested. We are talking about many vendors whose systems try to communicate to each other based on different interpretations of network protocol standards, and everything such has to work such as automatic failover. It's a lot of work. ibm's ceo was an system engineer, which basically does this

[Jurgis]

http://bits.blogs.nytimes.com/2015/03/17/ibm-introduces-twitter-fueled-data-services-for-business/?ref=technology&_r=1

 

No comment.

 

<snicker>

 

Oh, OK, what the heck: IBM is now run by twits.

[constructive]

As technology gets more complicated and as the world shifts away from turnkey solutions, there will be demand for IT services.

 

That is not how I would describe trends in software. I see software becoming increasingly consumerized, discrete and cross-platform over time. There is more emphasis on approachable user interface design and stuff that works out of the box. With SaaS systems, people can roll out software without having much specialized "hacker" knowledge.

[schin]

<quote>With SaaS systems, people can roll out software without having much specialized "hacker" knowledge.</quote>

 

I manage several software development contracts. The basic trend in the industry is SaaS, cloud, APIs, etc. I can barely get "techie" people to use APIs correctly.

 

If I give my friends an API, they wouldn't know what to do with it.  Much less "roll out software".

 

The best I see people doing is getting a CSV/Excel and going from there. No SaaS, just a download.

[ItsAValueTrap]

As technology gets more complicated and as the world shifts away from turnkey solutions, there will be demand for IT services.

 

That is not how I would describe trends in software. I see software becoming increasingly consumerized, discrete and cross-platform over time. There is more emphasis on approachable user interface design and stuff that works out of the box. With SaaS systems, people can roll out software without having much specialized "hacker" knowledge.

 

Cross-platform actually kind of makes things more difficult as the greater variety of hardware adds complexity.

 

Security is becoming more important as more and more companies have their security breached.

 

I don't see IT getting simpler anytime soon.  An enterprise salesforce (SaaS) implementation will require lots of consultants to make Salesforce talk to the company's other IT systems.

 

2- In general, more and more companies are using IT to automate parts of their business.

[sleepydragon]

http://bits.blogs.nytimes.com/2015/03/17/ibm-introduces-twitter-fueled-data-services-for-business/?ref=technology&_r=1

 

No comment.

 

<snicker>

 

Oh, OK, what the heck: IBM is now run by twits.

 

The Twitter's data is quite valuable. it's used in marketing, trading, ads. etc.. IBM can help them package the data for more audiences..

[original mungerville]

This might be a bit controversial.

 

Does IBM sell expensive high availability mainframes where there is not much of an alternative and then you are locked in with them.

 

Once you are locked in, do they sell you expensive services?

 

If they lose the grip on expensive mainframes, will their biz model take a hit since you do not need expensive services from IBM anymore?

 

Large banks - specifically their retail banking platforms were/are run on mainframes (IBM). Too expensive to rip out therefore the idea, as computing developed, was let's shove a piece of middleware (again IBM) in there to interface with the mainframe and the many other more modern systems which were available and developing. That was 13 years ago (when I worked in IT strategy at a large bank), I don't think that core has changed but can not be sure.

 

Another thing to note about IBM - as my Indian business partner keeps telling me (I haven't checked) - is that a very large number of employees are working out of India, not unlike the very large Indian processing and IT outsourcing companies there. And one would imagine that business is growing/profitable. "Hey board, we didn't outsource to India, we outsourced to IBM." This is another angle to look into.

 

 

 

 

[atbed]

Hey all - check out these 17 rockstar employees. I imagine someone who talks to IBM IR also reads this forum...

 

http://www.businessinsider.com/ibm-rock-star-employees-2015-4?op=1

 

A good friend of mine who went to Princeton started out at IBM consulting. He's now a product manager at a firm I'll leave un-named. He met plenty of bright & hard-working undergrads while he was there.

[fareastwarriors]

IBM strikes digital health deal with Apple, Medtronic and J&J

 

http://www.ft.com/intl/cms/s/0/c6ac2792-e179-11e4-9b30-00144feab7de.html#axzz3XCv7Q0bV

 

 

 

IBM has struck partnerships with Apple and the world’s biggest makers of medical devices, to put health data from Apple Watches into the hands of doctors and insurers, and to create personalised treatments for hip replacement patients and diabetics.

 

IBM’s push into digital healthcare will allow users monitoring their heart rate, calories burnt and cholesterol levels using Apple’s HealthKit platform to upload the information from an IBM app to a storage cloud, where it will be accessible to their doctors and insurance companies. Those who opt in to Apple’s ResearchKit will also be able to share their data with medical researchers.

 

The agreement is the latest instance of deeper ties between the healthcare and technology sectors, in anticipation of an explosion in the amount of medical data that people collect using their smartphones or “wearables” like the Fitbit or Apple Watch.

 

John Kelly, senior vice-president at IBM, described Apple’s HealthKit and ResearchKit platforms as “really unique” but said there was currently “no systematic way of pulling the data together and sending it” to physicians or clinical researchers. “We are . . . providing a huge cloud and a secure database as a backstop,” he said.

 

IBM’s partnership with Apple is not exclusive, but the group said few companies could offer the iPhone maker the same storage and security capabilities. “[Apple’s] sense is that this is very sensitive data. They feel really good about our reputation for operating secure data centres,” said Mr Kelly.

 

IBM said it would also market a set of analytical tools to physicians, researchers and insurers, enabling them to collate the data from Apple’s devices with patients’ electronic medical records so they could spot patterns to support clinical trials or help bring down rising healthcare costs.

 

The tools will be built using Watson, IBM’s “cognitive computing system”, which can query large sets of statistics and identify patterns.

 

“The average patient will collect a terabyte of medical data in their lifetime. Our analytics will be able to find the dots, the clues that are eluding us, and find new breakthroughs,” said Michael Rhodin, senior vice-president of IBM Watson.

 

Mr Rhodin said he expected consumers, especially younger ones known as “millennials”, to opt in to having their data used in clinical research trials because they had a vested interest in contributing to the next big medical advance.

 

“The generation who buy Apple Watches are interested in data philanthropy,” he said. “Many of them have been touched by relatives or parents struck down by disease. Why wouldn’t they help researchers figure out what’s going on?”

 

IBM’s partnership with Apple was announced alongside a handful of other healthcare tie-ups, including with Johnson & Johnson and Medtronic, the world’s largest makers of medical devices such as insulin pumps and replacement knees and hips.

 

J&J has asked IBM to build a “coaching system” to ensure patients are fit enough to undergo spinal surgery or joint replacement, and to encourage them to do the right exercises after their operation. The system would prod the patient into doing more physical activity if they were not losing enough weight ahead of their procedure, for example.

 

J&J recently announced a separate collaboration with Google to build a new generation of surgical robots.

 

IBM is also working with Medtronic on a smart diabetes treatment system that would take readings from a patient’s glucose monitor and ensure their insulin pump dispenses the precise amount of drug required.

 

A new IBM unit known as Watson Health will house the healthcare ventures, which the company hopes will help revive its flagging fortunes. It said it had reached agreements to acquire Explorys and Phytel, two US-based companies in the field of healthcare analytics, to bolster its data crunching capabilities. Financial terms were not disclosed.

 

The group, known as “Big Blue”, has been contending with shrinking revenue for three years, as new cloud computing enterprises struggle to fill the gap left by the troubled hardware units it has sold off.

 

It struck a deal with Twitter in October to apply data from the microblogging network to real-time business decisions for IBM’s enterprise customers. Last July it signed a separate alliance with Apple to find business applications for consumer devices such as iPhones and iPads.

 

[nwoodman]

IBM strikes digital health deal with Apple, Medtronic and J&J

 

http://www.ft.com/intl/cms/s/0/c6ac2792-e179-11e4-9b30-00144feab7de.html#axzz3XCv7Q0bV

 

 

 

I like it!  This relationship is definitely hotting up and the potential is massive.  Exciting times

 

cheers

 

nwoodman

[LowIQinvestor]

For you Ginni Rometty admirers:

 

"IBM CEO Ginni Rometty on Cloud-Based Watson Health"

 

http://www.bloomberg.com/news/videos/2015-04-17/ibm-ceo-ginni-rometty-charlie-rose-04-17-?cmpid=yhoo

[Guest Schwab711]

This might be a bit controversial.

 

Does IBM sell expensive high availability mainframes where there is not much of an alternative and then you are locked in with them.

 

Once you are locked in, do they sell you expensive services?

 

If they lose the grip on expensive mainframes, will their biz model take a hit since you do not need expensive services from IBM anymore?

 

 

Large banks - specifically their retail banking platforms were/are run on mainframes (IBM). Too expensive to rip out therefore the idea, as computing developed, was let's shove a piece of middleware (again IBM) in there to interface with the mainframe and the many other more modern systems which were available and developing. That was 13 years ago (when I worked in IT strategy at a large bank), I don't think that core has changed but can not be sure.

 

Another thing to note about IBM - as my Indian business partner keeps telling me (I haven't checked) - is that a very large number of employees are working out of India, not unlike the very large Indian processing and IT outsourcing companies there. And one would imagine that business is growing/profitable. "Hey board, we didn't outsource to India, we outsourced to IBM." This is another angle to look into.

 

Great answer mungerville, it really hasn't changed. Mainframes still have the lowest downtime and cheapest operational cost vs substitutes. IBM is actually earning high margins from mainframes now because so few students learn about them or can program in COBOL or JCL (from what I remember, can't remember what 10-k said). My mom stopped programming 6 years ago and still gets offers pretty consistently to go back to it because of the demand. Banks and telecoms are still the largest customers (massive amounts of data with less security issues then healthcare). Great business over next 10-20 years for IBM.

[KCLarkin]

http://www.wsj.com/articles/behind-ginni-romettys-plan-to-reboot-ibm-1429577076

[fareastwarriors]

IBM Continues Painful Transition

 

Tech giant hurt by stronger U.S. dollar, hardware business

 

http://www.wsj.com/articles/ibm-reports-another-revenue-decline-1429561027

[cubsfan]

This might be a bit controversial.

 

Does IBM sell expensive high availability mainframes where there is not much of an alternative and then you are locked in with them.

 

Once you are locked in, do they sell you expensive services?

 

If they lose the grip on expensive mainframes, will their biz model take a hit since you do not need expensive services from IBM anymore?

 

 

Large banks - specifically their retail banking platforms were/are run on mainframes (IBM). Too expensive to rip out therefore the idea, as computing developed, was let's shove a piece of middleware (again IBM) in there to interface with the mainframe and the many other more modern systems which were available and developing. That was 13 years ago (when I worked in IT strategy at a large bank), I don't think that core has changed but can not be sure.

 

Another thing to note about IBM - as my Indian business partner keeps telling me (I haven't checked) - is that a very large number of employees are working out of India, not unlike the very large Indian processing and IT outsourcing companies there. And one would imagine that business is growing/profitable. "Hey board, we didn't outsource to India, we outsourced to IBM." This is another angle to look into.

 

Great answer mungerville, it really hasn't changed. Mainframes still have the lowest downtime and cheapest operational cost vs substitutes. IBM is actually earning high margins from mainframes now because so few students learn about them or can program in COBOL or JCL (from what I remember, can't remember what 10-k said). My mom stopped programming 6 years ago and still gets offers pretty consistently to go back to it because of the demand. Banks and telecoms are still the largest customers (massive amounts of data with less security issues then healthcare). Great business over next 10-20 years for IBM.

 

The death of the mainframes have been predicted for 20 years now. And they are still going strong and provide great profits to IBM.