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Comment by alienreborn | Hacker News Reader

Wow, that revenue graph is pretty shocking and enlightening to me. I know IBM is a huge behemoth but never knew it had much higher revenue than Microsoft for most of 2000s.

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That's the problem with public perception. Everybody talks about the current superstars and thinks the the older companies are declining. If you have read news for the last year it would be hard to imagine that Microsoft just overtook Amazon in terms of valuation.

Microsoft took over Amazon in terms of Market Cap, but not valuation.

  MSFT
  Market Cap              $839.7
  Less: Net Cash           (59.7)
  Total Enterprise Value  $780.0

  AMZN
  Market Cap              $834.5
  Less: Net Cash            (5.6)
  Total Enterprise Value  $828.9

The discrepancy is all the more evident in terms of multiple (or the "exchange rate" for investing in these companies). MSFT trades at 21.0x 2019E P/E and 12.5 TEV / 2019E EBITDA while AMZN trades at 60.8x 2019E P/E and 19.5x TEV / 2019E EBITDA multiples.

I guess I confused the terms but I think my point still stands.

Any comparisons to Amazon need to be taken in context. Their stock price went from $300 4 years ago to $2000 2 months ago and now is around $1500.

They were ahead on both metrics for a while but since they are a super high growth stock, it's been highly volatile.

The perception issue is less about the current superstars vs the older companies but rather about the highly visible consumer products vs B2B offerings. Everyone things IBM is gone because it stopped producing products for end users - but the majority of money and development effort is spent on software that's purely for business internal use.

It seems to be a common thing for giant companies to extract massive profits even while the world has shifted underneath them— look at blackberry post-iPhone. It took a few years to collapse.

The Blackberry story is an interesting one. They kept growing in the aftermath of the iPhone through corporate sales because enterprise preferred the tight integration between BES and Active Directory, and they liked that BB phones could have nearly the same draconian IT lock-down policy as office computers.

Even after growth stalled, they had a ton of cash to keep their operations afloat. But they burned up a lot of it in manufacturing the Playbook tablet, which was a big flop.

Interestingly, Blackberry Messenger had 75 million subscribers in 2011, and had a similar cachet of exclusivity as early FB, when signups were limited to those with .edu addresses. CEO Jim Balsillie pushed for BBM to become a cross-platform software product, but his co-CEO wanted to focus on devices and security, and not build software for other platforms. We all know how that ended.

They really are a sleeping giant. And they had half a million employees at one point. Now I think its more around 380k.

And yet no one really knows what they do. How many regular people have had their life improved in any way by IBM? Compare to Apple's strong stance on user privacy and easy-to-use technology, Google's wealth of free high quality services like Maps, Gmail, Youtube, and good affordable notebooks, and streaming companies like Netflix providing high-quality media content for much lower prices than cable, with little to no ads. IBM can't go bankrupt soon enough. They're a waste of engineering talent and have contributed nothing to the world.

Apple, Google, and Netflix are consumer-facing entities- most people in the western world are customers of at least one of these companies. IBM does not sell to consumers, so you generally don't hear about "life-improving" things from them, since they don't really need to advertise or compete that way.

Exactly. They're not consumer facing. But I do think that selling off ThinkPads hurts their image as their logo is no longer on devices. Last time I saw an IBM logo on a device was at T.J.Maxx on the cash register that looked very dated.

I don't buy that. All businesses should be consumer-facing in that they should improve life for all people, not just software engineers.

> How many regular people have had their life improved in any way by IBM?

Anyone who uses a PC.

> They're a waste of engineering talent and have contributed nothing to the world.

That's arguably true now...but to claim that IBM hasn't contributed anything to the world is just hyperbole. I mean, they invented the relational database and hard drive, and practically every modern computing concept is just a reimplementation of what existed on a mainframe.

You're really gonna put Netflix up against IBM on total impact on the world?

This Thanksgiving, ask the table what they think of Netflix and what they think of IBM. I'm interested to hear what the consensus is.

What your man in the street thinks about who has improved/affected their life and who actually has improved/affected their life are in most cases disjoint sets. Ask the man in the street who the most important computer innovators are and they'll say Steve Jobs and Bill Gates (who are/were business-men before anything else), you won't hear them mention John McCarthy or Dennis Ritchie (or likely even Alan Turing).

The revenue graph is shocking, but I think MSFT overtook IBM in net income much earlier than catching up with revenue.

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