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It was December 1208 or 1209. New Year's Day in England was March 25; the month after December 1208 was January 1208.  Somebody bumped off a young woman who lived in Oxford.  The villagers blamed university students, and, led by their mayor, hanged two.  The remaining academics blew town right away, many moving east from their ford on the River Thames to a bridge over the River Cam.  That is how Oxford University gave birth to Cambridge.  They were the sole universities in England for 600 years, providing an organizational model for many academic institutions and some commercial companies.

The University of Oxford got its start a couple hundred years before the establishment of its rowing rival.  The village, well outside the reach and largely beyond the influence of London, became a home for schools, not yet colleges, engaged in training theologians for the holy and lawyers for those less so.  They were chartered and influenced by the Roman Catholic Church, but nevertheless retained some independence.  They were governed by canon law rather than civil law, a fact that made the hanging of two clerks, as students were known in those days, even for alleged participation in a murder, extralegal.

At the time, however, there wasn't much the Church could do to intercede.  England's King John had a falling out with Rome.  England was under an interdiction for five years beginning in 1208.  John, who didn't accept the Church's choice for Archbishop of Canterbury, was excommunicated by Pope Innocent III.

The last thing college masters, nominally supervised by bishops, wanted was to fight the political establishment.  They had a lot to lose, including the tax exemptions and other legal perquisites.  Eventually, John caved, apologized to the Pope in writing and thus ended the sanctions.  By 1213 the hubbub in Oxford had settled down to some extent and the University of Oxford enjoyed a rebirth.  A couple years later John make another important compromise when he signed the Magna Carta, sharing power with other nobles and putting England on a path that would eventually lead to democracy.

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Fifty years ago, the American computer industry had eight major participants.  IBM had about two-thirds of the market; seven dwarfs shared the rest, and none of them is particularly important anymore.  That is the nature of enterprise.  Many companies prominent in the Dow Jones Industrial Average back in 1966 have faded.  Looking back a century, only General Electric can be found in both the 1914 list and today's roster.  IBM was in the Dow from 1932 to 1939, when it was replaced by AT&T.  IBM didn't make the DJIA again until 1979 and now it might not get a 100-year run.  The way things are going, it might not even get half that far.

The last time IBM looked like it was headed for the glue factory was in the early 1990s.  The company's board brought in Lou Gerstner and within a few years it was clear that Blue was going to be big again.  Gerstner's reinvention of IBM as a services company gainsaid the naysayers.  By the time Gerstner left IBM in 2002, observers declared IBM saved.  Under Sam Palmisano, Gerstner's successor, IBM continued to forge ahead, propelled by growth in services, boosting the software business and taking IBM out of two classes of hardware that had thin profit margins: small computers and disk drives.  But all was not rosy.

Toward the end of Palmisano's reign, some old issues that many observers thought were dead came back like zombies to haunt IBM.  The client business, which IBM had abandoned, took off like a rocket.  It didn't rise because of traditional personal computers.  Instead, it blossomed as smartphones and later tablets began to perform many of the tasks that initially made PCs so popular and then learned compellingly attractive new tricks.  Smartphones and tablets incorporated sensors along with geolocation apparatus and merged these technologies with the communications capabilities that made PCs so popular.  The sensors enabled the clients to adapt to their motion, orientation and ambient conditions.  The navigation subsystems enabled client gadgets to know where on earth they were located.  And the communications features that expanded to include not only old text messaging and email but also telephony and videophone capability enabled app developers to give smartphones and tablets myriad amusing, informative and transformative capabilities.

All this stuff not only boosted Apple, which more than any other company has invented the new world of smart, interactive clients, but empowered Google, the master of mobile monetization, and fueled Amazon, the wizard of shopper-friendly systems.  The transformation of information processing into a collection of intensely interactive processes and services has stunned large, powerful and talented companies that only a few years ago were feasting at the dot com diner.

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At the end of February there was a big technology trade show, Mobile World Congress, in Barcelona.  MWC attracted more than 70,000 visitors.  It spanned mobile gadgets, electronic components, apps, and services—stuff for consumers, and stuff for the industry itself.  This year's unofficial theme was the transition from 32-bit to 64-bit processing, chosen last September 10.  That is when Apple unveiled its 5S phone with a 64-bit A7 processor.  Apple's circuit, manufactured by Samsung, is based on ARMv8A architecture.  It runs 64-bit iOS 7.  And, for now, it defies competition.

In the iPhone, as in other computers, whether clients or servers, 64-bit technology pretty much removes any logical barriers imposed by limitations on memory.  Physical memory, of course, depends on the configuration of the particular device.  In a 64-bit environment, it becomes possible for programmers to hide most distinctions between main memory and data storage peripherals and to leave issues that might involve virtualization to hardware, firmware and systems software.  The result can be an improved user experience.

In the case of the ARM processor family, the move from 32 to 64 bits provided other benefits, because ARM's engineers got a fresh chance to optimize the instruction set, to add more registers that boost performance, and to smooth multitasking.  Combined with glue circuitry, 64-bit ARM processors will take better advantage of advances in memory technology, peripherals, sensors, communications coprocessors and graphics engines.  But client technology is only part of the picture.

ARM Holdings also wants its chips to be adapted by server makers.  With 64-bit technology, ARM can foster the development of similar hardware platforms at both ends of the wire, something currently only available in the case of the X86.  Similar hardware allows the use of similar software, as is the case in X86 country, where there are client as well as server versions of both Linux and Windows.

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IBM is a modern day Titan.  In Greek mythology, the Titans were children of Uranus who preceded the Olympian Gods.  If an observer were to pick one Titan to compare to IBM, it would be Cronus, whom the Romans called Saturn.  Cronus ate five of his children in an effort to preserve his power, the way IBM has eaten the compatible mainframes and Power and mainframe emulators its technology spawned.  A sixth child of Cronus, Zeus, eluded that fate, as the PC did in IBM's case.  In the end, Zeus deposed Cronus.

IBM has done a fantastic job of preserving the uniqueness of its mainframe and Power systems.  But it hasn't always been easy.  IBM's victory over mainframe clone makers and emulation system vendors involved an arsenal of technical and legal strategies.  Even so, one viable mainframe emulator is still freely available: the Hercules system.  Hercules can run 31-bit and 64-bit mainframe apps including entire IBM and mainframe Linux operating systems, middleware, compilers and actual applications programs.  Users cannot, however, get licenses for production grade IBM software; Big Blue insists on licensing its code only to its own hardware or the handful of alternatives that are grandfathered in, such as Flex-ES.  There are basically two groups of Hercules users these days: Experimenters who are happy to run ancient IBM software that predates Big Blue's decision to take its code private and underground users who have figured out how to put some or all their work on systems using unlicensed code.

To understand just how dramatically IBM would be impacted if it didn't eat its mainframe-imitating children, all one has to do is check out the Raspberry Pi-based Hercules mainframe that a hobbyist can build for a hundred bucks, more or less.  It will boot ancient MVS.  It will boot mainframe Linux.  It will boot stuff that IBM says you cannot legally run, such as current VM and VSE.  Raspberry Pi is an ARM computer that runs Linux.  Hercules can live inside a suitable Linux, such as the Debian distro.  IBM's software can execute inside that Hercules.

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In what is likely to be viewed as IBM's worst quarter since the days of John Akers, Big Blue reported diminished revenue and profit, disavowed the promise made by prior CEO Sam Palmisano to bring in $20 a share in profit next year and disposed of its semiconductor manufacturing operations in a complex transaction that led to a $4.7 billion write-off.

IBM reported losses in the hardware business, which diminished in revenue by 3.8 percent compared to last year's third quarter.  Mainframe revenue fell by 35 percent and conditions in this market were so poor that IBM, for the first time in memory, failed to report the change in MIPS shipments.  Power server sales declined 12 percent.  IBM's X86 business, sold to Lenovo but for this quarter still on IBM's books, saw a 10 percent drop in sales.  Storage revenue was off by 6 percent.

Software revenue from customers fell 1.6 percent but a rise in internal sales led to a reported overall gain of 0.4 percent.  Software profitability was sufficient to bring IBM a 35.5 percent pretax margin.  Services revenue fell about 2.7 percent and profit in services declined about 12.5 percent.

IBM said it was disappointed with the results and specifically said falling productivity was a factor.  That pretty much clinches the likelihood of significant layoffs during the fourth quarter, a process that could lead to some large one-time charges.  Combined with the loss in semiconductor fabrication, the result could be a very poor year for IBM, particularly if it decides to take a very large hit now and not carry expected costs forward into 2015.

Wall Street was very disappointed.  IBM shares were sold off, yielding a loss of about 7 percent in value.  As investors ponder the bad news they may be joined by investment institutions.  Dow Jones could drop IBM from its Industrial Average.  And many institutional investors, including IBM's largest shareholder, Warren Buffett's Berkshire Hathaway, could decide to reduce their IBM holdings.


Systems & Technology 2,434 182 2,616 -99 -3.8
Percent change -15.0 8.7 -13.7 NM  
Global Technology Services 9,218 252 9,470 1,680 17.7
Percent change -2.9 -3.8 -2.9 -11.3  
Global Business Services 4,459 135 4,594 805 17.5
Percent change -2.2 -23.7 -3.0 -15.0  
Software 5,708 862 6,570 2,333 35.5
Percent change -1.6 15.9 0.4 -3.2  
Global Financing 487 598 1,083 475 43.9
Percent change -3.2 16.7 6.9 -3.7  
Total for All Segments 22,305 2,029 24,334 5,195 21.3
Percent change -3.9 8.9 -3.0 -9.5  
Eliminations/other 92 -2,029 -1,937 -835  
Total 22,397 0 22,397 4,361 19.5
Percent change -4.0   -4.0 -12.3  

The Eliminations/other line reflects an adjustment for activities that involve sales among IBM divisions that later yield sales to customers.
NM:  Not meaningful


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