The Decline and Fall of IBM, book review: How Big Blue lost its direction

The Decline and Fall of IBM, book review: How Big Blue lost its direction

Summary: A new book by Robert X Cringely raises an intriguing question about IBM today: are we witnessing the end of the American IT icon?

SHARE:
TOPICS: IBM, Reviews, After Hours
5
ibm-cringely-left

Robert X Cringely knows his stuff — or should I say, they know their stuff. For Cringely is a pseudonym used in the column Notes from the Field, which has appeared in InfoWorld magazine for what seems like aeons and is written by a string of reporters.

This was not always the case, though. For many years that column was written by one of the most famed IT reporters, Mark Stephens. While working at InfoWorld, Stephens made his name with the seminal IT book Accidental Empires: How the Boys of Silicon Valley Make Their Millions, Battle Foreign Competition and Still Can't Get a Date in 1992. Along with Charles H Ferguson's 1999 High Stakes, No Prisoners: A Winner's Guide to Greed Glory in the Internet Wars, it was one of the books that defined Silicon Valley's spectacular 1990-2005 boom years.

Worth reading to this day, Accidental Empires laid out the compelling story of how many of the famous names in computing got started. By his own account a prickly character, Cringely/Stephens fell out with his employers and became a freelance writer and blogger, writing his lively I, Cringely blog as well as producing some excellent TV on IT and related subjects.

Is this the end of IBM?

Now Cringely is back with a new book, The Decline and Fall of IBM: End of an American Icon?, which he has self-published following the breakdown of a deal with a traditional 'old-school' publisher. Given the title, is Cringely putting the supposed demise of an IT company in the same bracket as the end of the Roman Empire — one of history's greatest civilisations? Not quite.

This is not so much a book for the competitive world of IT publishing, but more of a labour of love. It turns out that Cringely, the man who in Accidental Empires revealed himself to be the arch-cynic of the IT revolution, actually likes IBM. In fact, he does not so much like Big Blue as love it.

The Decline and Fall of IBM appears to have two main goals. The first is to give a resumé of IBM's formation and early history, plus a detailed assessment of the past three decades. The second is a call to arms — a call to get rid of IBM's current level of failed management and go forward with a new one.

Many at IBM think the $20 earnings-per-share target and everything surrounding it is a distraction. Some even call it 'Death March 2015'.

Why would Cringely want to do this? One possible answer, related in the preface, tells the story of the author's first visit to the company. He had an idea for a product and wanted to do a deal with IBM. He asked for an appointment at their office near his home in Ohio and got one. They listened to him politely and then told him, politely, that they had that area covered already. They thanked him for the opportunity to hear his idea, and told him to come back if he ever had any more. Cringely was eight years old at the time.

That meeting obviously had a tremendous impact on the young Cringely, judging by the trouble he has subsequently taken to air his opinions on Big Blue's future. As Cringely tells it, the IBM of his childhood was the IBM then, and what we have today is IBM now — and Cringely does not like it. Big Blue has lost its direction, according to Cringely, and the early pages of his book outline how he thinks that has happened.

Much of The Decline and Fall of IBM is taken up with the words of people working at IBM. It seems that they were more than willing to talk to Cringely in a series of what, at times, sound like confessionals. You get a genuine sense that these people really, really like IBM. They like working for the company. They want to carry on working for it and they want those in charge — be it Ginni Rometty or somebody else — to keep the company in business so they can do just that.

The Deadline approaches

But along with that warm feeling, Cringely is also telling a much bleaker story — the story of The Deadline. Since the days of Sam Palmisano as CEO (he came after Lou 'The Man Who Saved IBM' Gerstner), the company has had an internal target to grow its earnings per share (EPS) to $20 by 2015. That's next year, and more than a few people are wondering if the company can achieve that.

At this writing, IBM's EPS is currently around $16 and a quick look at the press cuttings on the subject show a fairly even split between those who think that the target is the most important thing and those who think it's irrelevant.

Current CEO Ginni Rometty certainly seems to think it's important, according to Gigaom. Indeed, some believe that her job depends on it. Be that as it may, many at IBM think the $20 EPS target and everything surrounding it is a distraction. Some even call it 'Death March 2015'.

These doubters are likely to be those who have felt most threatened throughout IBM's still-ongoing cutbacks and job reductions. Cringely outlines this and more that the management and the company has gone through in its search for a cohesive idea of where it's headed.

Cringely being Cringely, he is ready with verbal weapons, firing at will as he covers every misstep, wrong turn, faux pas and hiccough in the company's recent history. But he also throws in plenty of constructive ideas and theories on how IBM could do better.

If Rometty has any sense (and she seems to have plenty of that), she should sign up Cringely (aka Mark Stephens) right now. He seems to know IBM as well as anybody does, he knows what ails it, and he has plenty of ideas on how to fix it.

If IBM's crisis is as dire as Cringely says it is, Big Blue needs all the help it can get.

Further reading

Topics: IBM, Reviews, After Hours

About

Colin Barker is based in London and is Senior Reporter for ZDNet. He has been writing about the IT business for some 30-plus years. He still enjoys it.

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

Talkback

5 comments
Log in or register to join the discussion
  • How can a company with a $16 EPS be in "crisis"?

    What are the EPS of the companies the Cringely has run?
    matthew_maurice
    • re:

      Have you ever heard the term "eating your seed corn"? Technology companies do it by distributing their revenues as dividends to stockholders instead of investing it in R&D. Driving earnings per share to some artificial, unsustainable level while starving development efforts looks good to and is rewarded by Wall Street. Not so much by history.
      Sir Name
      • re: re:

        Just as an aside, being always ready to invest in any exploitable new technology is why companies like Microsoft and Apple sit on mountains of cash instead of paying out big dividends. That philosophy of thinking long term is hard for Wall Streeters to grasp.
        Sir Name
  • IBM went from an excellent long-term career for professionals

    to a no-frills, low-cost contract house (if someone or someplace could do the job cheaper - GOOD BYE pleebs!). If it wasn't for big corporations being cowardly about updating decades-old software (i.e mainframe/COBOL), IBM would already be finished.
    Roger Ramjet
  • Will Microsoft be next?

    I've been casuallytwatching these two companies since Microsoft was born. I see a lot of similarities. The biggest, right now is Satya Nadella's move towards becoming a "service oriented" company. Let's see where it goes...
    dixonhoyle@...