It is just a stunt from IBM to promote their WATSON software. a 200k$ prize is a small price to pay to get dozens of smart people to team up and work/test/enhance your products for free...
It does seem like IBM has been caught out by freely available alternatives which are simply better at most scales. It reminds me of what happened to companies selling compilers or corporate VOIP solutions; they didn't just fail to keep up with the market, their entire market was supplanted by open-source solutions and single features in much larger offerings.
IBM has made a fairly productive effort to avoid that, I think, via their consulting/outsourcing divisions and value-added things like cloud solutions. As a result, their data science products are still appealing in terms of ecosystem integration and strong support options for less-technical buyers. But that doesn't seem like a wonderful position to be in long term, since it puts them in competition with AWS/GCP on one end and free tools on the other.
Maybe I'm being naive but what do their 350,000 employees actually do? That's nearly as much as Apple, Google and Microsoft combined.
However, like you said - brilliant fellows aside, IBM employees as a whole are much less technical.Most would never pass a tech interview at FAANG.
I used to think it was "make chips", but they contracted that out a few years back. IT outsourcing is a big part of it, which tends to drive up staff numbers much faster than in-house projects. They're also still fairly big in business tech like POS systems, although I think that's been shrinking?
(I suppose the other answer is "IBM doesn't know either", given that they've made huge staff cuts to a lot of their older divisions.)
IBM has a cultural issue that will take far more than strong leadership to change - starting to change those incentives would require a disruption to IBM's business model that could truly hurt short-term financial performance, way more than Microsoft's "hey let's start releasing dev tools for Mac/Linux in ways that don't actually cannibalize PC sales - it's not like those devs were going to switch to Windows anyways - but do make it easy for them to become long-term Azure users."
And rather than fighting on the dev-tools turf, they're trying to gain mindshare with AI-as-a-service for people who aren't really innovating in AI. I'm looking at the icons in my Mac's Dock right now, and Microsoft's winning a ton of them with best-in-class IDEs and productivity software. Watson isn't in every startup developer's Dock. Now, if IBM bought Tableau and moved Cognos in that direction, adding generous free usage tiers, maybe they get Watson-branded icons on that Dock? But I doubt this happens any time soon.
1. mid-level staff that's not technical, unable to get results quickly (one tends to get that mentality from massive open-ended consulting engagements w/o clear success metrics in place)
2. surreal TV ads aside, their brand is not visible on a daily basis, there's no consumer offering with IBM logo on it
3. there is no modern cloud offering (Softlayer ain't one)
4. their marketing of Watson has been so extreme, and so out of touch with technical realities, it's becoming a liability
1. solid mainframe business (yes)
2. massive customer list
3. significant infrastructure (softlayer etc) that could be turned into a cloud offering
4. huge long-term consulting engagements that can turn into success stories, if run by ppl capable of delivering quick results
One more thing I would do if I were CEO - I would come up with a way to put that IBM logo in front of people... Perhaps something along the lines of "Alexa for business", based on IBM's flavor of business AI.
Of course, the new direction he set them on (stop developing innovative things, focus instead on high-margin consulting and services) is the one everyone's complaining about now. So...