IBM Plunges as CEO Abandons 2015 Earnings Forecast

I take it you haven't gone through many large companies' procurement processes and procurement culture as a vendor. It literally takes entire man-days to man-weeks of effort (and for especially large and/or complex requirements, man-months to man-years) to respond to the procurement demands of these large companies, and vendors know it is a "my way or the highway" arena with these large customers. Perhaps the software might not work for you, but for varying definitions of "work", it satisfies one or a consortium of constituencies within your company. You, personally, are simply not at a position of sufficient power within your company to be privy to what that specific definition of "works" is for the specific software that is used by your company.

You probably haven't had the pleasure of working many months over an RFP strictly gated by the procurement staff, with only two one-hour, chaperoned meetings with the technical staff to attempt to clarify wildly lost-in-translation contract verbiage. Generally the more clarifying questions you ask, the worse the procurement team looks, and the more hostile they are towards you, so you also have to carefully choose your questions. And a good proportion of the time, you only find out after losing the bid that they dragged you through all that pain and suffering simply to get a number to beat up an incumbent over the head with to get a lower maintenance renewal, all along never intending to consider any change at all, and never admitting during the process they even have an incumbent solution in place already in the first place. The chaperone from procurement actively monitors and mutes the technical staff during the conversations, to prevent the technical staff from divulging whether or not a solution is already in place, for example.

This and other behavior forms an enormous torrent of obfuscation from the customer base; it hugely bloats the sales costs. This is what incentivizes the production of the software you experience, because it sells. There are many big companies who are happily using open source alternatives for all sorts of requirements, but when you see poorly-fitting software in the trenches, a lot of the time that is produced by a severe disconnect between the procurement process and the trenches at the customer itself. Sometimes this communications gap stems from the procurement department, sometimes from the trenches, sometimes from the company culture, etc.; the reasons are all over the map and I've never discerned a pattern, but the gap is real and problematic.

I should touch upon internal customer political factions that muddle the picture even more. When these political factions are not managed by a single strong managerial hand, this frequently causes the design-by-committee feature bloat you see, because different factions demand all sorts of features for their specific concerns to obtain their "buy in", with no coherent guidance that prioritizes and establishes required features to meet a focused, accomplish-able goal. This also produces the ironic result of software procured that meets all the official, politically-sanctioned requirements, but does not meet the daily needs of the trenches. I won't even go into the dynamics of dealing with political factions who are at odds with each other.

There are solutions to this state of affairs, but customers by and large turn away from them because buying these packages and services is to the decision makers at these customers less painful than the alternatives. It is maddening and infuriating to outsiders not already familiar with the workings of these processes, but outsiders can take heart that the situation is slowly changing over time as better technologies evolve.

I could have built in house solutions that deployed faster and better auditing in just a few weeks than what they paid hundreds of thousands in licensing fees and man hours to do the same job. Hell, I even pitched it and management said no.

Working for a big insurance co., we're seeing a big shift toward a "devops-like culture", and a lot of the time that means less IBM.

IBM not only needs to refresh their offerings, they need to refresh their image. The common feeling around here is IBM products are slow, buggy, and pieced together quickly from a ton of other acquisitions who are then "IBM-ized" together.

They look beautiful on paper, in a way that speaks to both execs and real tech people alike. But once you build it out and start trying to support it...

That's what they sell, overpriced crap sold in a golf course.

In their attempt to meet the now defunct 2015 road map, IBM has axed many talented and experienced employees. You can only layoff so many individuals before it starts negatively affecting your product and talent pool.

From what I hear on the inside, STG has been cut to the core after numerous rounds of layoffs and product/division sell-offs. SWG appears to be the next target, current rumors indicate that there may be another large layoff sometime between Thanksgiving and Christmas.

I did my 7 years there, FWIW... It's not a geek friendly company, I think it just happens to be that simple. They do some great technology, they've invented a ton of great stuff but where geeks embrace the technology for the technology and dream, IBM does technology because they can sell it and, again, it's just that simple. Whereas Microsoft and a lot of the SV companies are based on the idea that a great tech company needs to be run by a great engineer/nerd. IBM is firmly rooted in the camp that great companies are run by great sales folks and they've had an incredible run. That's why hackers so consistently hate them. Hackers and geeks just see the technology differently.

I really don't know what their future holds, their downfall has been predicted for decades. Getting out of PCs made a lot of sense to me, I still think HP and Dell are potentially in heaps of trouble as soon as some Russian, Indian or Chinese company decides to really go after them and starts to figure things out, they're just putting commodity parts together at the end of the day anyways. Getting out of semiconductor manufacturing doesn't seem like a bad idea either, there are some very very good fab shops out there and they're only going to get better and the margins on fab-for-hire will drop so you have to corner the volume. I definitely can say I'd love to just screw around with a Watson, maybe even have a Watson app on my iPhone and just ask it stuff throughout the day, I'd pay some subscription for it (maybe like $20-30 a month if it's as good as it looked) but I bet what I'd pay is a drop in the bucket compared to what law firms, certain doctors or various financial executives would pay for one and so long as there is that market, I'd assume IBM will go after that and not the solo geek that just wants to have a really fancy google and wikipedia search.

I'm not sure what they're going to build in the future, but I'm pretty confident they'll make piles of money and be disdained and have their demise predicted by geeks though.

The "some parts" is worth bearing in mind. In my opinion, the mode of classifying or looking at a company like IBM as a single entity is plain wrong and outdated. Size, geographical distribution, org setup and variety of businesses they are involved in practically dictates that there will be no uniform culture in terms of management and performance.

I was an advocate of variation in the form of 'storage focused' and 'compute focused' atoms but at the time the mantra was 'identical blocks.' Never got much traction on that. The trick is of course mixing nodes the the mesh of services, that aspect of it really benefits from a colloidal solution of resource nodes :-)

What bothers me are per share prices. I don't remember the precise value of any particular stock, so IBM drops $13 means nothing to me. Also that a stock is $500 a share, so it must be good is another thing you see a bunch, so it must be great is another fallacy I see all the time; when really all that matters is the market cap not how many pieces it is divided into.

Their cloud services has higher overhead simply because they stick with Microsoft tech for obvious reasons.

Microsoft also has more focus on their sales force which may not be such a good idea when/if Office dies. Time will tell.