Seemingly on a daily basis we get another example of how tectonic shifts in the technology world are impacting on vendors. Yesterday it was the news that, counter-intuitively, increased sales of its cloud products look set to hurt
The last weeks have seen big announcements of legacy vendors taking other actions in order to regain competitiveness -
And today it is the turn of Big Blue.
Pre-tax income from Global Technology Services decreased 11 percent and pre-tax margin decreased to 17.7 percent. Global Business Services pre-tax income decreased 15 percent and pre-tax margin decreased to 17.5 percent
Like so many other legacy vendors, IBM is trying to chart a course that sees it go from big, bulky, monolithic solutions to dis-aggregated ones. Whereas its traditional revenue has seen tightly coupled hardware and software backed with big maintenance contracts, today's world sees enterprises mix and match - a bit of commodity hardware here, some open source software there and perhaps some consulting services to tie it all together, but not to the extent that IBM is used to.
It's the same issue that companies like HP, Cisco,
The existential question here is whether these vendors actually have the ability to change or are they locked into a business model that simply won't allow them to complete. IBM and its ilk have cash reserves and momentum, but as we've seen so many times before, the rise of cloud, big data and flexible solutions is inexorable. There's plenty more pain coming for these vendors.