IBM Tops Microsoft to Become Second-Most Valuable in Technology | Hacker News Reader

IBM Tops Microsoft to Become Second-Most Valuable in Technology

businessweek.com

45 pointstilt15 comments

Microsoft still has the better P/E ratio. 9.4 for MSFT vs 14.5 for IBM. I can't say I understand why investors would value IBM's growth potential higher then Microsoft's.

The next big milestone is when Apple is worth two Microsofts. Heh.

Personally I see it as MSFT having no future growth potential other than the size of their main market. They can't innovate and they have little chance of doing anything in the mobile space.

That is not to say that it is a bad investment, because they can milk the clients in their space for a very long time.

>"they have little chance of doing anything in the mobile space."

In the context of IBM v Microsoft, that's probably a bit lacking in explanatory power.

I fail to see the issue. Now I could be wrong but it seems to me that IBM has successfully completed numerous transitions in and out of markets whereas all MSFTs success (which has been quite enormous, to be sure) is in one area.

It seems reasonable to me that IBM can innovate in new markets whereas MSFT can't. But as I said I could be wrong.

IBM has opportunities in the mobile space, just as they're deeply embedded in the console hardware space, whereas Microsoft is becoming increasingly irrelevant in mobile because nobody is buying their software and their hardware isn't licensed to OEMs like IBM does.

In the short term this is probably true. As long as the top execs stay in place, I'd agree. I seem to remember people having written off IBM as not having much of a future beyond milking clients, but they seem to have done some radical restructuring in the past 10 years or so, and seem somewhat rejuvenated.

MS could undergo a big shakeup/transformation and reemerge as more innovative and profitable. I just don't foresee that happening in the near term. "Never say never" :)

Your 'could' may be the difference between MS continuing its dominance or falling into obscurity. Right now they're heading down the wrong path. They're not lacking quality engineers but leadership. Some leaders are great as innovators and some are good at keeping the ship afloat. Ballmer is obviously the latter.

The engineers at MS have shown their talent. Metro is absolutely stunning. What they need is the proper leadership to push this company in the right direction and deliver the right message.

Huh. I thought IBM was in the 'enterprise consulting' business mostly, which means that "milking clients" and milking their brand is what they do. They are just very, very good at it.

It even worse for Microsoft. Post-PC means more tablets and people using desktops/laptops less, and upgrading less frequently. At this times, tablets are Apple and Google. This will certainly eat into the sales of Windows and Office, Microsoft's big cash cows. Even if Microsoft does well with tablets, it doesn't look like they will approach the 90% market share they currently have in desktops.

Microsoft continues to do very well in enterprise markets. It's true that their consumer mindshare is almost zero except for XBox, but there is a lot of growth to be had from enterprise servers and their various cloud offerings.

How does IBM make money?

Selling really expensive things to people with really big budgets.

Enterprise sales, consulting, services. Mainframes still make up a large chunk of their revenue. Perhaps research/patents? They aren't really that consumer facing anymore, I guess that explains their ads on TV to keep their name out there.

They also sell Enterprise Software (DB2, FileNet, Lotus, Rational, and a lot more).

The ads may be for their stock (indirectly) as much as for their products

Yes it occurred few months ago again I guess.

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