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FOR BLUE IT'S DIFFICULT, FOR MEME IT'S EASY
Thomas J. Watson started using the slogan "Think" while he was still at National Cash Register. He took it with him to CTR, which became IBM. It's still part of IBM lore. "Think" has outlasted the typewriter, once a ubiquitous desktop symbol of IBM. "Think" is a meme, an intellectual artifact broadcast by cultural intercourse. IBM's meme opened minds and doors to computing. Today a different meme is the harbinger of technological progress in the white-collar workplace. It is the Staples slogan, "That was easy," and its corporate curio kin, a red button that says "Easy."
For more than a decade, customers for whom IBM was once the premiere supplier of end user technology cannot turn to Big Blue for this equipment. They didn't leave IBM. IBM left them, first selling its typewriter and low end printer businesses to Lexmark, then selling its PC operations to Lenovo. Today, IBM's former customers get their desktop PCs, laptops, scanners and office printers from other vendors, often HP or Dell, sometimes directly, sometimes through resellers. But these incumbents are not very secure right now. They don't have the account control they had a decade ago, the kind of power IBM had a decade before that. Customers have more freedom to choose suppliers then they used to, but they also suffer more uncertainty surrounding their choice of vendors.
Notwithstanding their current insecurities, HP and Dell (along with their agents) have capitalized on opportunities to supply upstream equipment, software, support and services, where they compete with IBM. Particularly in small business settings, IBM has struggled to retain footprints, in part because its logo is no longer ubiquitous on office desktops. Things are different in medium and large enterprises. Among larger customers, IBM isn't likely to be displaced as the primary supplier of central systems. Nevertheless, very often IBM is confined, retaining its legacy footprints and proprietary systems while other vendors win deals that boosting the computing, storage and communications capacity that surrounds or cohabitates with IBM's glass house iron.
So, it's a mixed picture. In some of these large user organizations, IBM is quite secure. In others, IBM is well fed but awaiting Martinmas. And, it turns out, Dell and HP may be vulnerable, too, on both the client and server ends of the wire, in goods and in services.
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In the 9th century BC, in northern Israel, Princess Jezebel, Phoenician wife of Hebrew King Ahab, was thrown from a window to her death by political opponents; her body was left to be eaten by dogs. In the 15th and 17th centuries, in Prague, government officials were flung from windows by their adversaries; the incidents, by now called defenestrations, each started a war. In the 21st century, all over the world, Windows clients are getting tossed out by end users; this is a disruptive and disconcerting trend to some, but ordinary, welcome progress to others.
This year, according to IDC, sales of tablets, in units, will surpass sales of portable PCs. The operating environment of most tablets is either Android or iOS; Windows barely counts. Most PCs run Microsoft Windows. Apple's OS X has a slice of this market, and so, increasingly, does Google's cloud-oriented alternative to client-centric software, Chrome. In another two years, IDC adds, tablet sales volumes will exceed aggregate shipments of portable and desktop computers. But this isn't necessarily a disaster for PC makers, because unit sales of laptops and desktops will rise a bit during the next few years. If IDC is right, tablets may be keeping a lid on PC sales, but they are not wrecking the PC business.
It's obvious that for some purposes tablets are replacing PCs. It is equally obvious that tablets, which come out of the box with virtual keyboards and touchscreens, are not the best devices for cranking out spreadsheets, writing text documents, or developing slide shows. When it comes to business applications, the jury is still out. For now, and very likely forever, a mix of PCs, tablets, and smartphones will constitute the client base.
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DRONES WITH PHONES
Cisco TelePresence is a software system that gives functionality and character to a robotic rolling plastic column dubbed Ava 500. Ava, ambulatory hardware from iRobot, is five and a half feet tall. It is packed with media transponders and features a display showing a remote operator's head. Ava has plenty of company these days. Some roving devices bring doctors to distant patients.
And back in computing country, both IBM and EMC are testing machines that patrol data centers. If this catches on, you might get a glass house robot yourself, or be replaced by one.
It's probably about time ambulatory robots caught on in the business world; they have long since become popular at home.
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IBM'S THIRD QUARTER SUFFERS AS HARDWARE SALES DIVE
In what proved to be a difficult quarter, IBM reported a 4.1 percent decline in revenue to $23.7 billion but managed to boost net income 5.7 percent to $4 billion. IBM's increased profit came from a jump in reported income from services and a small upturn in profit from software. Still, the company's pre-tax income fell. The upturn in net was a consequence of lower taxes and other factors not part of operating income. IBM's most serious problem appears to be a steep drop in hardware sales led by a 38 percent decline in Power product intake.
IBM's Power systems, sold as platforms for AIX (IBM's Unix variant), Linux and IBM i/OS, failed to meet the company's sales expectations. IBM said this was due to a sharp drop in sales to China, and that decline was, IBM said, a reflection of the company's inability to meet its goals for sales of the fast calculating engines, really small supercomputers, based on Power family processors. Sales in other geographic areas, including the USA and Europe, were flat, the company indicated, and thus unable to compensate for the shortfall in China. Mainframe sales rose slightly, 6 percent, as IBM installed 56 percent more processing power than in the prior year's third quarter. Most of the MIPS shipped came from sales of specialty engines with prices that are low compared to the price of general purpose engines.
IBM's weak hardware sales disappointed investors who sold off IBM shares in the wake of the report. But investors generally seem to be patient. If IBM can show progress during the fourth quarter and particularly if it makes a strong case for improved business next year, Big Blue will win back the trust of the financial community. On the other hand, if mainframe and X86 sales follow Power down the drain, IBM will have to make sweeping changes in its executive ranks and, more importantly, in its business strategy.
IBM THIRD QUARTER 2013 PERFORMANCE BY SEGMENT
|Systems & Technology||3,247||168||3,415||-167||-4.9|
|Global Technology Services||9,494||262||9,755||1,895||19.4|
|Global Business Services||4,558||177||4,735||948||20.0|
|Total for All Segments||23,599||1,863||25,461||5,579||21.9|
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