Now the decision to buy IBM is more around software and services. Outsourcing contracts have long lives, but software and implementation less so.
This is where the Growth investor looks at something different than the Value investor. The growth investor says, "They're technologically irrelevant. They're still hawking Lotus Notes!" [0] The value investor says, "Their PE is 11, and they're buying back every share in sight." [1]
IBM realized a while ago that the actual machines were replaceable, but the expertise needed to do integration on the scale they operate at less so. And given the poor success rate of major upgrade/integration projects, I expect "hire IBM" is still a fairly safe decision at the C/VP level. Whether legacy enterprises* are running mainframe or fail-tolerant distributed infrastructures, most of them are more than happy to throw money at someone to reliably turn the crank and keep them working.
Edit Side note: Does Amazon actually not have a services org to build on top of AWS? Seems like they could create one just from IBM layoffs and start helping some of these sorts of customers migrate to AWS.
*Excludes the vast majority of companies mentioned on HN
I'm a BH investor, and frankly I don't like them going into this space.
I hope their Apple purchase isn't an indicator of the same.
Whether it is dying or not I would not listen to him.
Edit: Grammar mistake
Managing to the future by getting rid of the dead weight is the only way you can survive to be a 100+ year old company in the technology space.
The aspect of dying is a forward looking thought which presumes that growth has ceased within the organization and the best they can do is to maintain their current state. I think that's a fairly accurate depiction of IBM's business although the recent performance notes I've seen of the Power chipset with PG_SQL are pretty encouraging.
Be careful! at 95% world-wide saturation for smartphones the answer is very different now than it was in 2009...
China's median income is maybe $8,000/year or so.
India's median income is $1,600/year.
They're big countries, but they aren't that big. Each is about 4x the size of the United States, or about 2x the size of all of Europe. And obviously with those kind of incomes, the addressable market at anything vaguely close to US/European prices is a small fraction of the total population. And China at least is pretty protectionist.
At the same time, yes, everyone in the US/Europe already has a smartphone, noted. And yes, perhaps the upgrade market is getting a bit softer -- but still, it's not THAT soft. There are plenty of people in the US or Europe who will happily buy an iPhone every year or two for the next several iPhone generations, and a larger contingent who will buy every three or four years, but that's far from nothing. And Apple can at any time it feels like it wants to cut some margins and fight with Android for market share, in whatever judicious way it wants to.
Apple in 2015 was a unique company at the pinnacle of a unique moment in technology. It's may never be the company it was in 2015 again. But it turns out that there's a hell of a lot of value in a company that's not quite what Apple was in 2015.