IBM on reinvention, renewal and new businesses

IBM on reinvention, renewal and new businesses

Summary: IBM hits its centennial next year and the company hardly resembles the Big Blue of just a decade ago. PCs are out. Analytics in. Services and software now drive the company. A quick look at how IBM thinks about reinvention.

SHARE:

IBM hits its centennial next year and the company hardly resembles the Big Blue of just a decade ago. PCs are out. Analytics in. Services and software now drive the company.

IBM CFO Mark Loughridge mentioned a little about Big Blue's continuous reinvention on the company's earnings conference call. You're likely to hear a lot more about reinvention in the months ahead as IBM looks forward to another 100 years.

In many respects, Loughridge indicated IBM is a lot like a portfolio manager. The company makes big strategic bets and then lines up intellectual property under those efforts. General Electric is similar. Simply put, it's unclear what businesses will drive IBM in the future, but the company won't be shy about managing its units like portfolios.

Also: IBM posts solid first quarter; Sees IT spending rebound across categories

Loughridge was asked about IBM's move to sell some businesses and stay in others. Loughridge said:

Let's link the discussion on divestitures with acquisitions, because they are part and parcel -- partners in this strategy of ours.

Now first of all, if you look at the ongoing strategy we have, we want to move into intellectual property-based businesses that are highly scalable and related to the -- driving these Solutions offerings that we have. Solutions offerings like business analytics, as an example. What we're doing on the flip side, on the divestment side, is moving out of businesses that have lower growth prospects and lower margin prospects.

Loughridge then noted that IBM will be around in 100 years from now, but it's unclear what the business opportunities will be. He added:

We're looking at next year IBM's centennial. We are investing in driving for another centennial. So this is going to go on all the time. This is all -- this is going to be a constant process of regeneration and renewal and transforming our business base into new opportunities that we think have better margin and better growth prospects. And I think there's no better example than looking at the profit mix of the software business from 2000 to 2008.

The ability to grow gets increasingly difficult for companies the size of IBM, but the idea is one worth pondering for many enterprises.

Topics: Legal, CXO, Enterprise Software, IBM

Kick off your day with ZDNet's daily email newsletter. It's the freshest tech news and opinion, served hot. Get it.

Talkback

0 comments
Log in or register to start the discussion