IBM's STG Is On Track With Smarter Computing
December 21, 2011
IBM is a for-profit company and has to report back to its stockholders periodically. Like almost any other IT vendor of at least decent size, IBM is subject to the hockey-stick effect, where vendors sweat out sales to the very hour of midnight ending a quarter, and it seems that most sales come at the end of the quarter (i.e., the third month of a quarter has much higher sales than the first month of the quarter). This has gone on for decades. Why do I mention this?
Well, while the hockey stick effect is important to IBM, the company thinks not only in the quarterly and annual results terms that drive most public companies, or even in the five year or so strategic planning cycles that drive some vendors to think beyond the short term, but also in the long-term (a decade or more). That is very unusual for companies outside of Japan.
Two examples of this long-term investment perspective are growth markets and R&D. In growth markets, IBM has been in Africa (although concentrated in a handful of countries) for a long time, and it has stayed the course. The second is R&D, as illustrated by IBM’s commitment to Watson and similar cognitive computing-focused efforts. Practical products may not come out for a long time, but that doesn’t stop IBM from moving forward. Watson took over half a decade of effort and its full impact will take a number of years to develop.
The same might be said of Smarter Computing and Smarter Planet and growth markets. They have a here and now value, but reaping the full harvest will take years of sustained effort. Other vendors who are unwilling or unable to make similar commitments may very well look upon IBM with envy and with statements like: “if we would have or if we could have …”
That said, IBM does not neglect the present. After all, it has employee mouths to feed, as well as shareholder expectations to meet, so products such as Easy Tier and Active Storage Engine represent measurable efforts to drive additional revenues. Recall also that, recently, Warren Buffett gave IBM the economic equivalent of a Good Housekeeping Seal of Approval by buying over $10B of company stock. You don’t have to follow Buffet’s lead but everyone should pay attention to what IBM is doing as a bellwether and how it will impact their lives today and in years to come.
IBM is a current client of David Hill and the Mesabi Group.