IBM to focus on Big Data + analytics : Not exiting hardware, says Rometty
In January, IBM sold its low end server business to Lenovo, which prompted some to ask whether Big Blue was in the process of abandoning its hardware business.
In a letter to investors, Chairwoman and CEO Virginia Rometty clarified that the Lenovo deal doesn’t signify that it’s abandoning anything – rather, the sale was a means to improve the business overall. Rometty explained that the sale of the x86 server business is part of IBM’s strategy to exit the “lower margin businesses, such as PCs, hard-disk drives and retail store solutions.”
“But let me be clear—we are not exiting hardware,” Rometty adds.
“IBM will remain a leader in high-performance and high-end systems, storage and cognitive computing, and we will continue to invest in R&D for advanced semiconductor technology.”
In 2013, IBM’s revenue from its Systems and Technology Group totaled $14.37 billion, a year-over-year decline of 18.7 percent, or 18 percent when adjusted for the effects of currency. Meanwhile, its software revenue totaled $25.93 billion, a year-over-year increase of 1.9 percent, or 2.9 percent adjusted for currency, while its Global Business Services revenue reached $18.4 billion. The company’s total revenue from all divisions totaled $99.75 billion, down 4.6 percent from the year before, or 2.5 percent when adjusted for the effects of currency.
Despite a decline in revenues, Rometty described 2013 as a success for IBM, but admitted that their performance did not meet their initial expectations.
“So, while we continue to remix to higher value, we must also address those parts of our business that are holding us back. We have two specific challenges, and we are taking steps to address both,” wrote Rometty.
“The first involves shifting the IBM hardware business for new realities and opportunities. We are accelerating the move of our Systems product portfolio-in particular, Power and storage-to growth opportunities and to Linux, following the lead of our successful mainframe business.”
IBM will also be focusing on making new markets by transforming industries and professions with Big Data, by remaking enterprise IT infrastructure for the cloud era, and by enabling “systems of engagement” for enterprises.
However, the main focus for IBM going forward will be Big Data and analytics, with Rometty proudly stating that IBM is now the leader in enterprise cloud because of its “investments of $7 billion on 15 acquisitions, most notably SoftLayer in 2013.” She added that IBM provides “the full spectrum of cloud delivery models—infrastructure as a service, platform as a service, software as a service and business process as a service,” along with “1,500 cloud patents and … by thousands of cloud experts.”
