What IBM teaches about open source

Dave Barry of AlterPoint has it right. Information Technology has to get ahead of the change curve, and IBM's strategy for this is sound.

Our discussions yesterday on Microsoft and hand-made software lead directly to what IBM teaches us about open source. (That's IBM CEO Smilin' Sam Palmisano to the right.)

As a 92-year old company IBM's aim is not just to make money for shareholders. It must carry its employment costs, which are generous.

Besides looking at its stock price you can see the present success of IBM in the "job hops" put out by companies when they hire top executives. During the 1990s it was common to see Web start-ups, venture capitalists and investment bankers hiring ex-IBM executives. Now it's far less common.

IBM's aim is always to extract the the maximum price for each hour of employee time. It doesn't push commodity hardware, but specialized gear commanding premium prices. And it doesn't sell software, but contracts for custom solutions and management services.

Open source is a big part of this. It unites IBM's hardware lines. It makes customers into partners in maintenance. It brings transparency to its relationships, which leads to trust, customer satisfaction and big checks. (This cute guy was found on an IBM page teaching about animated .gif files.)

There are often rumors, like Robert Cringely's latest, of massive job cuts, which may exceed IBM's actual employment numbers. This leaves unions to stage actions aimed as much at recruitment as anything. And headcount is rising fastest in India and China, where the new business is.

But we're not talking about Chrysler here. We're not even talking about Sun. Or AMD. We're talking about the industry's strongest balance sheet. Dave Barry of AlterPoint has it right. Information Technology has to get ahead of the change curve, and IBM's strategy for this is sound.

The lesson is that open source does not kill companies, nor does it guarantee success. It moves the targets, it makes you more intimate with customers, and it keeps you lean. But if IBM can stay alive with Linux so can many others.