[HN Gopher] IBM is splitting itself into two public companies
___________________________________________________________________
IBM is splitting itself into two public companies
Author : dredmorbius
Score : 485 points
Date : 2020-10-08 16:16 UTC (6 hours ago)
(HTM) web link (www.reuters.com)
(TXT) w3m dump (www.reuters.com)
| code4tee wrote:
| IBM went from a great tech company into some sort of overly
| financially engineered Franken-firm that has tons of employees
| and yet nobody on the outside seems to know what they really do.
|
| Throw in there various expensive hand-wavy marketing campaigns
| about AI, blockchain and quantum computing to add to that "but
| what do you actually do?" confusion. Case in point if I go to
| IBM.com I'm presented with a giant fluff PR piece about quantum
| computing.
| protomyth wrote:
| So, is this Global Services splitting off or is it something
| else? Is there a better announcement?
| abrowne wrote:
| Exactly what I am wondering.
| splap wrote:
| Anyone know what effect this will have on folks drawing a pension
| from IBM?
| ciarannolan wrote:
| How is a post with 9 points and zero comments, at 8 minutes old,
| at the top of the front page of HN?
| edejong wrote:
| dx of points over time.
| ajb92 wrote:
| Not sure, but I think the algo around placement has something
| to do with upvote velocity (now at 23 upvotes 10 minutes in)
| gus_massa wrote:
| The order is approximately upvotes/(1+time)^1.5
|
| Comments don't give extra performance, but too many comments
| may trigger an automatic penalty.
| Xelbair wrote:
| mods can give posts a second chance, by hand. but only once per
| post.
| dredmorbius wrote:
| In this case the rise seemed to come from the beginning ---
| 2nd chance queue usually takes a day or two and tends _not_
| to be newsworthy. I 've had no 2nd chance notice (HN
| generally emails when resubmitting).
|
| Several submissions earlier today of the IBM split by others
| didn't take. This one's success surprised my. HN is quite
| fickle.
| Someone wrote:
| So, what does this mean for their hardware?
|
| I guess their mainframes will continue slowly getting less and
| less important, but what about their Power CPUs? If they end up
| in the company with fewer resources, do they have a future?
| edejong wrote:
| Bit late to the game. Only when the company is in existential
| crisis it knows how to act. First step: restore trust with
| potential customers after gambling it all away with dirty sales
| tactics.
| admax88q wrote:
| IBM is always an interesting company. They seem to get dragged
| kicking and screaming into the next paradigm shift every 10
| years or so, but they do still seem to manage to actually
| _make_ the pivot and stay somewhat relevant.
|
| They're never a leader, but their staying power is impressive.
| ponker wrote:
| And their businesses can generate revenue for decades after
| they're obsolete. I pay $30+ for OEM IBM typewriter ribbons.
| danans wrote:
| Are they actually required for your business or just for a
| hobby? If for a business, I'm curious what kind of business
| still relies on those.
| ponker wrote:
| For me it's just a hobby but plenty of businesses still
| use typewriters. Any time there is a international
| bureaucratic process like "Affidavit of intellectual
| property for imported electronics" when shipping between
| two countries that don't have huge shipping volumes (say
| Ecuador to Senegal or whatever) you will see the
| typewriters come out because bureaucrats often only trust
| the true rubber stamped copies.
|
| The IBM typewriters are rock solid enough that they'll be
| a supply for the next several decades. There are
| mothballed Selecteics in attics that for $2-300 can be
| made good as new.
| segfaultbuserr wrote:
| > _There are mothballed Selecteics in attics that for
| $2-300 can be made good as new._
|
| Wow! I need to get one now...
| Miraste wrote:
| I don't understand. They type important legal documents
| on typewriters? Why can't they rubber stamp a printed
| one, and what do the shipping volumes have to do with it?
| ponker wrote:
| Let's say you have a affidavit from your Ecuadorian
| supplier saying that the goods do not contain lead. It's
| then rubber stamped by the Ecuadorian government office
| that does this. The Senegalese customs official says
| "this needs to be notarized and attested by the CEO of
| the supplier." So now you have an official document that
| took months of work and lots of bribes to Get. You just
| take this document as is to get attested and notarized.
| So the CEO types his attestation on the typewriter and
| signs it and the notary applies their seal.
|
| Large countries like the US, EU, China have solved this
| with automated processes but the smaller countries
| havent.
| markus_zhang wrote:
| Wow I don't know they still sell the ribbons...
| ponker wrote:
| There's actually a very thriving market for ribbons,
| especially generic half inch ribbons for manual
| typewriters. It's a very low capital business.
| nexuist wrote:
| The chewed-gum-stuck-on-your-foot of tech hardware companies.
| king_magic wrote:
| Good, IBM consulting is about as useless as you can possibly get.
| [deleted]
| 2bitencryption wrote:
| question about the "smaller guys" in cloud (Oracle, IBM):
|
| Do these companies operate their own data centers all over the
| world to make their cloud offerings work?
|
| "Cloud" is kind of a magical handwavy way to say "don't worry
| about where the computers are, it will just work." With AWS and
| Azure I don't worry about where the computers are, because
| they're all over the world (and even under water, if you follow
| publicity stunts).
|
| But where are the massive IBM/Oracle/etc data centers? Are they
| out there, and I just don't know about it?
| ksec wrote:
| I was under the impression ( Not sure if it still true ) that
| AWS and Azure do not operate and owe _all_ of their "own"
| datacenter, some of them were with Eqaunix ?
| wmf wrote:
| Yes, they have their own data centers. They tend to be smaller
| since they don't have demand for 100K servers in any one city.
|
| Weirdly, IBM's map seems to have disappeared but here's Oracle:
| https://www.oracle.com/cloud/architecture-and-regions.html
| sachinag wrote:
| The map is right here; you can scroll over and see the
| locations. https://www.ibm.com/cloud/data-centers/
| st1x7 wrote:
| IBM operate their own datacenters for IBM Cloud.
| alpha_squared wrote:
| As does Oracle. Oracle Cloud Infrastructure (OCI) is actually
| aggressively expanding regions.
| dragonwriter wrote:
| > Oracle Cloud Infrastructure (OCI)
|
| Not to be confused with Oracle Call Interface (OCI)
| jannes wrote:
| I don't know if this is the case here, but you can also rent
| space in someone else's datacenter. Meaning the datacenter
| itself wouldn't be run by IBM/Oracle, just some of the hardware
| inside it.
| b203 wrote:
| Oracle cloud is quite a thing. It's in 4th place behind AWS,
| Azure and GCP and has significant presence. For example zoom is
| a big customer:https://www.lastweekinaws.com/blog/why-zoom-
| chose-oracle-clo.... I assume under the new tiktok deal, tiktok
| might run on the Oracle cloud.
| [deleted]
| bee_rider wrote:
| It isn't clear to me what they're doing -- are they spinning off
| their cloud compute services _because_ those are more profitable?
| That doesn 't make any sense.
| pboutros wrote:
| My read is that they're spinning off the professional services
| wing.
| yourapostasy wrote:
| With IBM Cloud, this is more a Cortes-like point of no return,
| sink the ships (not burned like popularly thought), only move
| forward from here, do-or-die type of move.
|
| The other comment threads here are correct: IBM Cloud is
| struggling for relevance. There are some interesting ideas
| percolating around, but productionalized operations leaves _a
| lot_ to be desired compared to AWS. They 're in a very distant
| fourth or fifth place with the likes of Oracle Cloud. I'd
| possibly place IBM Cloud even behind Alibaba Cloud.
|
| The general idea is that once IBM Cloud sheds the chains of
| Legacy IBM, IBM Cloud will really take off, since it is
| _finally_ rid of that pesky, low-margin cruft dragging it down.
| That "cruft" is why IBM Cloud is even getting warm
| introductions and walking through the door at all, powered by
| high-levered sales spiffs to bundle IBM Cloud.
|
| Post-split, IBM Cloud is going to spend massive amounts of time
| and money trying to get their foot in the door, to get back to
| _status quo ante_ of easy introductions, swimming upstream
| against AWS, Azure, and GCP once they separate from IBM-not-
| IBM. IBM Cloud will also get dragged into brutal discounting
| wars against Oracle Cloud and everyone else 's Me-Too Cloud.
| IBM-not-IBM will initially proclaim a "close partnership" with
| IBM Cloud, but once freed from on-high diktats to always use
| and shoehorn in IBM Cloud, they'll gravitate in a few years to
| a vendor-agnostic-but-really-only-top-2-or-3 partnerships. If
| vendor-agnostic cloud even becomes realistic in a revenue-
| impacting way by then.
|
| I expect IBM Cloud will hold onto RedHat post-split, and will
| likely try to use RedHat as their warm introduction channel. I
| hope IBM Cloud surprises all of us with something good.
| nexuist wrote:
| I believe the argument they are making is that their non-cloud
| units are so huge that they overshadow any progress they are
| making in the cloud space - if cloud profits increased 1000%,
| it would increase overall revenue by only a few percentage
| points, essentially. That makes their work on cloud look
| useless and unsuccessful, when in reality they could be killing
| it.
|
| That's what they're telling us, anyways. Who knows the real
| reason.
| OpticalWindows wrote:
| Now the red hat buy makes sense
| Operyl wrote:
| Fun fact, IBM Cloud still does not have Ubuntu 20.04 images
| citing "lack of demand."
| egberts1 wrote:
| Great way to send IBM pension group into a soon-to-be
| bankruptable division.
| bpodgursky wrote:
| Wonder if the increased H1-B salary bands also had an impact
| the profitability of their IT consulting arm.
| airstrike wrote:
| Could be an extra factor but a decision like this takes a lot
| of consideration and would have been in the works for months
| if not years
| msoad wrote:
| Very clever accounting!
| dcolkitt wrote:
| Genuine question: Who's actually using IBM Cloud?
|
| All I hear is mediocre to terrible reviews. How are they staying
| in business? Admittedly I could just be hearing a one-sided
| story. Maybe there's some redeeming feature vis-a-vis AWS or GCP?
| einpoklum wrote:
| I've never used cloud services.
|
| But I do know IBM has some interesting hardware available in
| the cloud servers. The Power architecture allows, for example,
| "1st-class citizen" status to GPUs w.r.t. main memory access:
| They can access main memory using NVlink. NVIDIA has therefore
| had some on-mainboard, non-card GPUs available mostly (solely?)
| in IBM power machines.
|
| Obviously this is not enough for an entire cloud business but
| they're not just an "also-ran" cloud offering.
| microtherion wrote:
| I absolutely can believe IBM being successful as a cloud
| provider.
|
| I have considerably more doubt about them as an AI player. And
| their efforts to brand themselves as a blockchain player don't
| even seem to have merited a mention. Have they given up on that
| already?
| toast0 wrote:
| I worked at a company that used Softlayer before we were
| acquired and before Softlayer was acquired by IBM. We moved off
| to the acquirer datacenter, because that's what you do.
|
| Softlayer was a very nice place to get bare metal hosting. You
| get a whole machine to do whatever on, they provide a solid
| network, and replace components when they fail (and you open a
| ticket). We didn't use any ancillary services for the most
| part, we had been using their included DNS, but switched off
| because update delays were getting too large and we didn't like
| the support response on that; we used their loadbalancers for
| one service for a few months, but it had worse uptime than the
| hosts behind it. I have heard their other ancillerary services
| were (are?) bad too. From what I saw, support in general was
| getting worse, but that could have been because of IBM takeover
| or because we were going from a top ten customer to an average
| customer.
|
| I would consider them an option in cases where you want to run
| all the services you consume, but you don't want to run your
| own datacenters. They had a decent worldwide footprint, and
| post-IBM they got a lot more datacenters outside the US; that
| could be a big deal, because sometimes you just need a couple
| machines in another continent, and it's easier if you already
| are on board. Also, at least when we were there, private
| network traffic was free, worldwide, which is nice to manage
| replication for disasters.
|
| If you're more cloudy though, and make use of integrated
| services, and small instance types with per minute billing, I
| wouldn't consider it. Also, they had that global routing issue
| earlier this year, which would have been hard (impossible?) to
| mitigate as a single vendor customer.
| zn44 wrote:
| Lloyds bank in UK has signed PS1B contract with ibm that
| includes use of IBM cloud
|
| I'd imagine it could be popular at banks that are used to
| working with them for 30 years
| danans wrote:
| > banks that are used to working with them for 30 years
|
| Given that banks were among the earliest commercial customers
| of computing machinery, it's more like 70 years:
|
| https://www.ibm.com/ibm/history/ibm100/us/en/icons/bankauto/.
| ...
| sachinag wrote:
| Techmeme runs on IBM Cloud.
| goatinaboat wrote:
| _Who 's actually using IBM Cloud?_
|
| Same as Oracle cloud, their users are organisations locked into
| long-term support contracts, who are offered sweeteners to use
| their clouds. Which of course only makes them more locked in.
| RulerOf wrote:
| We finalized the choice to use OCI for an upcoming project
| because they're the only major public cloud in the country
| we're deploying to.
|
| That said, as a person who's coming from AWS, their demo and
| documentation have thoroughly piqued my interest. There's a
| decent amount stuff to like. It's got a slick UI, and the
| APIs appear to be comprehensive enough to cover our use case.
| edejong wrote:
| The most redeeming feature is that normal cloud providers have
| a zero friction onboarding funnel whereas IBM seems to make you
| want to meet as many "sales engineers" as possible.
| ALurchyBeast wrote:
| IBM tries to capture the 1% of the market that accounts for
| 99% of the revenue. You or I spinning up a micro instance is
| not who IBM wants.
| mathgorges wrote:
| I'd imagine shops that are tightly coupled to the z/OS stack
| would find IBM cloud attractive.
| curiousllama wrote:
| IBM had a successful hosting business before cloud (I.e. you
| could outsource your data center to them). AFAIK, that just
| rebranded that to "cloud" when AWS came along, despite lacking
| all the things that made it a cloud rather than a regular data
| center.
|
| The people who use IBM cloud are the same people who used them
| for data centers in the past.
| mhh__ wrote:
| If it's like some areas of IBMs business it could be a _We 'll
| take your money but we don't actually care either way_
| situation (e.g. try and buy a POWER machine)
| ivalm wrote:
| I work for a large company that uses IBM as part of our "hybrid
| cloud." I am pretty sure we have an at least 9 digit contract
| with them. We have a private cloud by IBM (click2cloud) and IBM
| Bluemix. Honestly they are both bad. We also have azure and
| that's night and day. But then again we even have oracle cloud,
| which I guess just means we like to step on mines in a
| minefield.
|
| I think part of why we use IBM cloud services is we also use
| their consulting heavily. Everything runs on rhel and is
| supported by ibm.
| quacked wrote:
| I work for a large organization that uses IBM-maintained
| tools, and they're awful. Is anything IBM does good?
| johnward wrote:
| Their legal team is pretty good?
| kbrwn wrote:
| SQL
| mixmastamyk wrote:
| They supported Linux early, at a time when it was
| vulnerable.
| actuator wrote:
| I used to think the same about Azure. Most of the experience I
| have heard about it is not positive, yet it is comfortably
| number 2. I think the overall pie is huge enough. So you can
| have advantages in niches in product or good customer
| relationships and still do well.
|
| Though, I haven't personally needed a compelling feature which
| AWS or GCP was missing, so I have never had to use any other
| product for work.
| jariel wrote:
| MS is not IBM though.
|
| Azure is a 'best effort' attempt at a seriously important
| strategic vertical by a very smart company with deep pockets.
|
| MS would throw zillions of dollars and blood at Azure to make
| it work.
|
| MS has very deep enterprise relationships, way more so than
| Amazon or Google and in the long run, that may be the
| advantage.
|
| A lot of 'fancy services' that we see are not 'the thing'
| that corps want: they want to spin up servers, basic
| networking and security, do things at scale. That's the bread
| and butter and Azure can surely provide that.
|
| Being on the buying side of some of these things, even 100%
| aware that 'other offers may be better' it's extremely hard
| to fend off the professionalism of a well managed sales
| effort. It's even rational: entities that are so
| operationally effective at managing the relationship 'surely
| must have tech that works'. And it's a 'safe choice'.
|
| I always assumed Azure would carve something out, IBM, not so
| much. Oracle, somewhere in between.
| actuator wrote:
| I am not dismissing Azure. Outside of AWS or GCP, the only
| IaaS platform I can think of using is Azure. MS certainly
| has the competency to run a good competitor alongside AWS
| and GCP in the long run.
|
| I was just pointing out how easily we can misjudge things
| based on our echo chambers.
|
| > MS has very deep enterprise relationships, way more so
| than Amazon or Google and in the long run, that may be the
| advantage.
|
| I think this is something even their competitors realize.
| That's why the current and previous heads of Google Cloud
| were from enterprise software companies, Oracle and VmWare.
| disgruntledphd2 wrote:
| It doesn't really matter, tbh. Culture eats strategy for
| breakfast, and Google have a terrible partnership
| culture. FB are a little better, and I assume Amazon must
| be OK, but MS have a sales force that can actually sell,
| supported by an organisation that commits to products for
| the long term.
|
| MS will do very well with Azure, but note that their
| cloud revenue is also Office 365 revenue (which I suspect
| is a _lot_ higher).
| Brendinooo wrote:
| >The new company will have 90,000 employees and its leadership
| structure will be decided in a few months, Chief Financial
| Officer James Kavanaugh told Reuters.
|
| >IBM, which currently has more than 352,000 workers, said it
| expects to record nearly $5 billion in expenses related to the
| separation and operational changes.
|
| What does the rest of their business consist of that requires
| 250,000 employees? Or are layoffs in the mix here?
| brailsafe wrote:
| Consultants?
| venatiodecorus wrote:
| as a services and solutions provider i imagine they employ a
| lot of technicians for on site work around the world, and will
| require much less of them in a cloud environment. just a
| thought though, anyone who knows better please correct me.
| xemdetia wrote:
| I think people who haven't worked in/around IBM struggle to
| comprehend the sheer number of products and services it
| actively supports and only a portion of that are mainframe
| products. There are many products that have 100+ engineers on
| them but might never even make common conversation for how
| specialized they are. Additionally IBM has a high headcount for
| supporting those products, with 24/7/365 phone/hands-on support
| so that can sometimes be almost the similar number of people as
| the engineers actually developing the product. Since the
| products are so specialized there are specialized support
| groups per product. It's definitely easy to have 150+ people
| per product (especially from the heavy acquisition style they
| had been doing pre-Red Hat) so the numbers quickly adding up.
| Many of these groups have enough organization to transition to
| a standalone company's product team if they could replace the
| HR, accounting, and other company pieces.
|
| There is certainly also consulting and other groups of people
| too, but they were not the majority.
| hinkley wrote:
| They still make and maintain mainframes, apparently.
|
| A lot of this 'cloud technology' we're using, including some
| that is still being developed, is functionality being ported
| from mainframe tooling.
|
| I saw a teardown of an IBM cpu module from the early 90's the
| other day. There were tricks I still haven't seen show up in
| rackmount hardware.
| curiousllama wrote:
| Mainframes are shockingly legit. Don't get me wrong, -
| they're the least sexy possible technology, imo. But they do
| _work_ in a way that I've rarely seen.
|
| There's a tradeoff between flexibility and stability - the
| mainframe is just hardcore stable. Sucks to work on a lot of
| the time, but _damn_ if there isn't a reason financial
| institutions still do mainframe batch processing.
| LinuxBender wrote:
| I would gladly take a z15 or two or three [1]. Ability to
| spin up any number of instances almost instantly, blazing
| fast speed between them... just super expensive and there
| has to be a business need to justify the support costs.
| People often mistakenly think this is old tech, but that
| could not be further from the truth. One could have their
| own massive VPS region in a box with much faster deployment
| of code.
|
| [1] - https://www.ibm.com/products/z15/details
| devdas wrote:
| After all, the cloud is mostly a mainframe with a self
| service interface.
| speeder wrote:
| I saw some old mainframes in a junkyard... considered
| buying them only to be told that someone that knew they
| were going to be sent there, purchased them before they
| even arrived...
|
| I think it would be hell cool to have a mainframe at home
| :) Assuming it is not ludicrously expensive to keep it
| running...
| bluGill wrote:
| I recall for y2k IBM was selling replacement mainframes
| because the new one was faster and you would pay for it
| just on power bill savings in 2 years. That the old one
| would never get the updates to work after y2k was not
| really a factor in sales. The old mainframes were water
| cooled and very power hungry, newer chips (now 20 year
| old technology) were air cooled and used less power.
| cptnapalm wrote:
| Keep an eye out for a Multiprise 3000 from 1999. It's the
| smallest of them and runs on regular household
| electricity at 1300W. If you do find one, make sure it
| has the hard drives intact or it'll be a 400 lb.
| paperweight like mine :(
| kingbirdy wrote:
| Could you share the video? That sounds quite interesting
| hinkley wrote:
| Sure:
|
| https://www.youtube.com/watch?v=xQ3oJlt4GrI
|
| Nearly a square foot, and the water block is built into the
| module.
| jaywalk wrote:
| Imagine bending one of those pins as you're putting it
| in.
| ktta wrote:
| Long shot, but I believe they're referring to this:
| https://www.youtube.com/watch?v=xQ3oJlt4GrI
| [deleted]
| cblconfederate wrote:
| Why is everyone investing in "cloud"? Datacenters became a cheap
| commodity the first time. Why not this time?
| sjg007 wrote:
| Call the cloud managed data centers and you have your answer
| basically.
| Nemo_bis wrote:
| Because investors hope that companies like Amazon will get a
| global monopoly on an entire giant segment of the economy,
| probably an "economic moat" reinforced by bogus patents or
| copyright or trademark claims (like Oracle vs. Google).
|
| Think how the advertising business was formerly divided in
| thousands of small actors in each country (publishers) and now
| it's dominated by a handful of global internet companies.
| cblconfederate wrote:
| aws's competitors keep popping up though (ibm included). on
| the contrary google was buying up everything, and there are
| only so many advertisers. there is no moat in datacenters,
| it's just computers and they are infinite
| stallmanite wrote:
| This is an excellent question that I've never seen addressed.
| Replying just to call attention to it in the hopes that someone
| knowledgeable HN'ers can answer. It seems like cloud would
| quickly become a commodity but I have no special insight.
| cblconfederate wrote:
| the common answer is that tech is in a huge bubble that makes
| it very profitable .... until it pops
| CivBase wrote:
| Can someone explain why they're doing this? I'm so used to tech
| companies merging and acquiring one another. What does IBM gain
| by splitting up?
| [deleted]
| goatinaboat wrote:
| _What does IBM gain by splitting up?_
|
| They isolate the compensation of senior management from the
| company's debts and liabilities, which will by pure coincidence
| be in the "other" company.
| jpttsn wrote:
| Stonks. Sometimes the market will value the parts higher than
| the sum of the parts. It sounds a bit concocted but happens
| often in practice.
| theonemind wrote:
| Well, maybe the parts are worth more than the sum of the
| parts. I remember AOL and Time Warner merged, then dropped
| the entire value of AOL. (Though you could argue the market
| was still just irrationally overvaluing them as parts and
| adjusted down when they merged.)
| fmeyer wrote:
| I remember my days at redhat where a poster was hang in the
| cafeteria with Gandhi's quote
|
| First they ignore you, then they laugh at you, then they fight
| you, then you win.
|
| They really meant. Even being swallowed by a behemoth, they
| managed to cut the beast belly and break free.
| freedomben wrote:
| That poster still hangs. There's a copy in the Annex also just
| down the street a little from Red Hat Tower (I took a picture
| last time I was there for training around this time last year
| actually).
| st1x7 wrote:
| How is this announcement related to Red Hat?
| kyuudou wrote:
| "The NewCo spin-off leaves IBM with Red Hat as its crown
| jewel, "laser-focused" on the US$1 trillion hybrid cloud
| opportunity, IBM CEO Arvind Krishna said in a press release."
| https://www.crn.com.au/news/ibm-spins-off-global-
| technology-...
| st1x7 wrote:
| But that's not RedHat "breaking free" as the parent comment
| sugggested. They're exactly where they were before, just
| with a slightly smaller parent company now.
| teruakohatu wrote:
| If Oracle beats Google in the Supreme Court, IBM legal could be
| their best performing business unit.
| pavlov wrote:
| Does IBM own some widely used APIs they could realistically
| start charging/suing for?
|
| For example, SQL was invented at IBM, but it's been published
| in ANSI and ISO standards. Surely the formal standardization
| process precludes an Oracle-style attack on implementors...?
| pdw wrote:
| Now I'm wondering how closely the old Windows APIs resemble
| OS/2.
| ch_123 wrote:
| Microsoft still owns rights to OS/2, I believe this is part
| of why IBM cannot release OS/2's source code to third party
| distributions of OS/2 such as eComStation and ArcaOS
| skissane wrote:
| I don't think Microsoft has copyright on the whole of the
| OS/2 source code, just components they developed. I don't
| know for sure, but I think it is likely that some
| components, such as SOM or WPS, contain very little or no
| Microsoft-developed code. New features developed after
| OS/2 2.x were developed solely by IBM, without Microsoft
| involvement - Microsoft was only involved in OS/2 1.x
| (and possibly earlier stages of 2.x development.) There
| might also be some components which IBM licensed from
| third parties (non-Microsoft), but they are likely just
| individual DLLs or drivers, easily separated from the
| rest of the code.
|
| I think the real problem here is IBM, not Microsoft or
| any other third-party. There are significant sections of
| the OS/2 code which are only under IBM's copyright, and
| there is nothing legally stopping IBM from supplying the
| source code to those sections, but it doesn't want to.
| Also, regarding the sections co-owned by Microsoft, I
| wonder what the story is - did IBM ask Microsoft and get
| told "No" (or "Yes" but only under non-viable
| conditions)? Or did IBM never even bother to ask
| Microsoft about it? I have no idea, but my gut tells me
| the later may be more likely than the former.
| skissane wrote:
| OS/2 1.x was co-developed by IBM and Microsoft. There are
| some resemblances between OS/2 1.x and Windows 3.x APIs,
| because many of those APIs were actually designed by the
| same Microsoft employees - for example, most OS/2 API calls
| starting with Win* have a similarly named Windows 3.x API
| call, just without the Win* prefix. (Despite similarities
| like that, the APIs are incompatible; they probably would
| have been more compatible if it were not for IBM's
| influence - for example, OS/2 and Windows use different
| coordinate systems in their graphics API, because IBM
| insisted OS/2 had to use the same coordinate system as
| IBM's mainframe graphics software, GDDM.)
|
| Microsoft and IBM have cross-licensing agreements allowing
| use of OS/2 code in Windows and vice versa. Microsoft used
| this to include OS/2 compatibility components in old
| versions of Windows NT (newer versions have removed it);
| likewise, IBM used it to include a copy of Windows 3.x in
| OS/2 to enable running Windows 3.x applications. (The
| agreement did not include newer software they developed
| after their breakup, so IBM wasn't allowed to use the
| Windows 95 or Windows NT code in OS/2, nor was Microsoft
| allowed to use OS/2 2.x and higher code in Windows.)
|
| So, the odds of IBM trying to sue Microsoft over OS/2 APIs
| in Windows is zero. It would be precluded by the licensing
| agreement between them.
| curt15 wrote:
| Patents that make it into standards are still fair game for
| licensing. If copyright is understood to apply to APIs
| themselves (not just the text of the ISO documentation), then
| why wouldn't a similar sort of licensing practice apply?
| kevin_b_er wrote:
| Anything from the era of IBM PC compatible computing could now
| be owned directly by IBM as a copyrighted interface.
| ch_123 wrote:
| Thankfully there is very little of the PC or AT legacy left
| in current computers. Even backwards compatibility with the
| BIOS is starting to disappear from PCs.
| infogulch wrote:
| Are you sure? I thought Unix, for example, came from IBM
| APIs. Many crusty APIs underpinning our systems today
| originated from proprietary products that have been
| preserved through caked layers of compatible interfaces,
| like new cities built literally on top of old ones. Sure,
| maybe the only APIs that are left are stuffed away deep in
| some broom closet and we can just throw out the whole room,
| but how sure are you that the APIs shuffled away in a dark
| corner aren't vital components required to boot or
| something?
| trasz wrote:
| IBM never got Unix. There was this saying about AIX, "it
| will remind you of Unix". Unix as such came from Digital
| hardware, although Digital as company had some
| reservations adapting it.
| agseward wrote:
| IBM filed an amicus brief in support of Google -
| https://www.ibm.com/blogs/policy/google-oracle-amicus-brief/
| fanatic2pope wrote:
| Doesn't mean they don't have a plan to profit if it goes
| Oracle's way.
| suff wrote:
| The industry cares about platform compliance while minimizing
| cost per transaction. When has IBM ever been competitive on that
| metric and why is now any different?
| Zenst wrote:
| They shifted towards offering `services` more as in mid to late
| 90's, this is just a logical progression down that demise of what
| IBM once was.
|
| But the mainframe regular income - that has always been a bit of
| bread and butter for them and to wave that away, really.
| pm90 wrote:
| So it sounds like they're spinning out the Red Hat division as
| the "new" IBM, and shedding the "old" IBM as a different unit?
| TedDoesntTalk wrote:
| Does the spin off include Red Hat which they only recently
| purchased?
| Graphguy wrote:
| No
| myrandomcomment wrote:
| This is so sad. They have gone from one of the best HW / Systems
| engineering companies in history to a lost giant managed by
| people with finance degrees and no love for the engineering that
| built them. At this rate, they will end up like GE and RCA.
|
| This is a great loss.
| gbasin wrote:
| This is pretty smart. Cloud is driving the massive valuations for
| MSFT and AMZN, a standalone company will get a higher multiple
| here
| johnward wrote:
| Speaking as a former IBMer. I understand IBM wanting to be a
| player in the cloud space but I'm not sure they ever will be.
| Like who seriously uses IBM Cloud? I know some big corps
| probably accidentally get IBM cloud credits with their large
| IBM contracts but does anyone actually choose IBM in this
| space?
| LinuxBender wrote:
| It also depends on what they mean by cloud. If cloud is their
| Softlayer acquisition, I am not impressed.
|
| I would love to see them build out a real cloud solution,
| perhaps even using datacenters full of their z15's. I can't
| imagine anyone competing with that on commodity hardware in
| terms of deployment speed and connectivity speed between
| instances in the same location. It would be crazy expensive
| though and I doubt they would ever consider it and someone at
| IBM would have to write a web interface / API into the system
| that mimics the options of all the current cloud providers.
| pm90 wrote:
| They acquired RedHat, and with that came Openshift.
| [deleted]
| kache_ wrote:
| Also a former IBMer. IBM cloud has really good compliance for
| "legacy type" customers. Things like banks and governments
| where all of the hoops discredit other cloud providers.
| nunez wrote:
| I'll take a guess. DB2, mainframe, and Watson?
| [deleted]
| mrweasel wrote:
| IBM bought the best hosting company, at the time, SoftLayer,
| and transformed it into a the absolute worst.
|
| I see where they're going, if they're trying to learn from
| what went wrong with SoftLayer. IBM culture destroyed
| SoftLayer, so if they want another go at cloud, they do need
| that business to stay VERY fare away from the traditional IBM
| and their consulting business.
| vl wrote:
| Oracle tried cloud couple times and failed, and finally
| they opened huge cloud division in Seattle away from
| corporate mothership.
| pm90 wrote:
| Softlayer was a one trick pony. They had the best bare
| metals in the market. But their product was very poorly
| built and extremely hard to scale out or add features to.
|
| This is not unexpected. Startups will optimize for a few
| use cases and deliver, get acquired on those strengths only
| for the acquiring company to realize that ... the tech
| isn't easily scalable.
| treis wrote:
| Much of IT spending is controlled by people that aren't
| technical and don't really understand what they're buying. No
| tech firm is going to choose IBM cloud but plenty of
| corporations will.
| Aperocky wrote:
| Anyone who has been connected to the internet knows the
| current cloud standards are set by AWS and Azure (maybe
| with Google and Oracle thrown in there as decorations).
| treis wrote:
| Yeah but they're not really buying cloud. Theyre buying
| applications +consulting + support along with the cloudm
| libria wrote:
| Even for non-tech corporations, only those with the grayest
| of hair would consider IBM branding a safer bet than
| AWS/Azure.
| pm90 wrote:
| Not really. If you're eg a Retail corporation, you would
| not want to spend a dime on AWS. So it's usually not just
| tech that's involved in making these decisions.
| karambahh wrote:
| I heard (from IBM sales people) that they do sell cloud
| services to banks.
|
| They are slowly replacing the mainframe contracts by
| (private) cloud contracts
| hchz wrote:
| My unit in IB bought such a thing and didn't do anything
| with the multi-million dollar outlay over the two years I
| was there.
| Nemo_bis wrote:
| Even if Microsoft or Amazon multiples are out of reach, if it's
| perceived as a shiny "cloud" company then it might get
| something like the average of a popular ETF or index which
| rides the "cloud" bandwagon, currently e.g. 3.5 on sales. With
| sales of 77 G$ in 2019, and 25 % lost to the spinoff, new IBM
| would get to 200 G$ of valuation, twice what it was before the
| announcement. (Are investors this gullible? Maybe.)
| https://www.bloomberg.com/opinion/articles/2020-10-08/bm-spi...
| tootahe45 wrote:
| It seems smarter to focus on something the top tech companies
| aren't all focusing on, especially when you were late to the
| game and others have better engineering teams. There will
| probably only be a few winners in the cloud wars..
| gbasin wrote:
| For IBM, that may not be true. They're a slow moving older
| company. Their primary asset is their brand (for older
| companies) and their distribution (their large network of
| large clients).
|
| That's a perfect opportunity to clone something and sell
| johnward wrote:
| I _think_ that 's what they attempted to do with Watson and
| Watson Health, but it didn't take off the way they were
| hoping. It seems like they were early in the "AI" space.
| sunstone wrote:
| Ah, the slow follower strategy.
| dgudkov wrote:
| Very interesting. As I understand it, IBM consistently avoids
| high-competition low-margin markets and focuses on low-
| competition, high-margin markets.
|
| This makes sense to me. Apparently, IBM is not good at high-
| competition/low-margin markets (and has never been), but they
| have been a huge R&D powerhouse for decades and probably remain
| so.
|
| Now I think, the previous CEO should've done this split years
| ago.
| danielovichdk wrote:
| Honest queston. What are IBM making money from?
| bluedino wrote:
| Governments and Fortune 500's. I see IBM branded POS systems
| all over still.
| jsperson wrote:
| In our case they are milking the past - and doing a good job of
| it. My current consulting customer has some kind of cloud
| mainframe agreement with IBM as the result of an acquisition. I
| don't know the specifics, but I'm integrating data off of it.
| It's not easy to work with and a lot of tools don't support it.
| My initial suggestion was migrating to AWS RDS, but there are
| too many existing integration points and business rules coded
| to make this cost effective. The cost of migration is something
| like 20x the annual platform cost.
|
| Edit: I should also point out that they provide stellar support
| and a great transition from on site hardware to their cloud
| service. They have always been great to work with - at an
| appropriately high price.
| 2OEH8eoCRo0 wrote:
| Good marketing that dinosaurs high up the corporate ladder fall
| for. I spend my day ssh'd into a Power 6 machine from a Windows
| 7 machine and using Clearcase and DOORs. I wouldn't wish this
| on my worst enemy.
| jacquesm wrote:
| So, where will Watson end up?
| microtherion wrote:
| "IBM, which has sought to make up for slowing software sales
| and seasonal demand for its mainframe servers, said it would
| now focus on open hybrid cloud and AI solutions"
|
| It would seem to me that the latter would cover Watson.
| danans wrote:
| > IBM will list its IT infrastructure services unit, which
| provides technical support
|
| What does technical support mean here? The IT help desk services
| that they marketed heavily about a decade ago, or all of their
| on-premises related services?
| maxharris wrote:
| Which IBM is making the mainframes? I couldn't tell by reading
| the press release.
| shaftoe wrote:
| Probably their "cloud" unit. Because renting time on a
| mainframe is the same thing, right?
| ehvatum wrote:
| Sir, the answer to your query is available via the internal,
| massive Java web application.
|
| Unfortunately, the web application is down.
|
| Everyone responsible has moved on to Google.
|
| So, in answer, nobody knows and nobody can ever know.
| DebtDeflation wrote:
| Since there seems to be a lot of confusion as to what is being
| spun off and what is being kept...
|
| Think of IBM as:
|
| - Hardware
|
| - Software/Cloud
|
| - Services
|
| Within "Services" you have everything from business/management
| consultants to application development teams to people who
| support IT infrastructure for clients as part of outsourcing
| arrangements.
|
| It's that last group, Infrastructure Support, that is being spun
| off.
| munificent wrote:
| I'm not a business person so forgive me if this is a dumb
| question. But if you have a company with an underperforming
| segment and you split it into two so you can spin off the worse
| half... what does that mean for the new company that represents
| that worse part? I can obviously see the upside for the business
| that jettisons the dead weight.
|
| But the dead weight is a company too. Does everyone who ends up
| working there just sort of accept that now they work at a company
| with worse financials and prospects?
|
| _Edit: All the replies are fantastic. Thank you._
| rvn1045 wrote:
| There is a lot of financial engineering that goes into
| situations like this and you have to look into it on a case by
| case basis. But often times investing in spinoff companies can
| be very profitable. In fact spinoff companies outperform the
| overall stock market - you can checkout the Bloomberg Spinoff
| Index.
|
| The book How to be a Stock Market Genius covers situations like
| this and gives some tools to analyze them if you are interested
| in learning more about it.
| arthurcolle wrote:
| Yup, that's a solid book on 'special situation investing' -
| despite the lame title
| sumtechguy wrote:
| I think someone said there is two ways to make money.
| Bundling and unbundling. This sounds like the second way.
| ethbr0 wrote:
| Attributed to Jim Barksdale: https://hbr.org/2014/06/how-
| to-succeed-in-business-by-bundli...
| sjg007 wrote:
| This is underrated.. everyone interested in startups
| should read this HBR interview.
| tupputuppu wrote:
| Large conglomerates like IBM usually trade their shares at a
| discount because they're poorly managed due to the sprawling
| size. Breaking businesses with little synergies usually makes
| the separate pieces better managed and thus more valuable.
| bob33212 wrote:
| They have a conflict of interest between the groups.
|
| The "Cloud/AI" group wants to sell the new buzzword products.
|
| The "Infrastructure Group" wants to sell the low innovation
| commoditized services and products.
|
| The sales people from both groups would be telling opposite
| stories on why you should go with them for your IT needs. So it
| is easier to split them up and let them compete in the market
| rather than compete internally . And it probably makes both
| markets bigger in the long run because they can focus and
| expand.
| sjg007 wrote:
| Not sure.. The business model is really hybrid cloud with
| cloud being the endgame. As a traditional mainframe customer
| you want your application to work both in house and in the
| cloud. If you can move everything to the cloud and it's
| managed for you, you don't really need IT services anymore.
| groby_b wrote:
| There's a lot of talk about how this is supposedly a good idea
| for both sides, but here's what actually happens:
|
| The people working in the "lesser" part take a _very_ close
| look at who the new management is, and what their market
| chances are. The most likely outcome here is "meh".
|
| At that point, most career-hungry people who have contacts in
| the other side of the company start extending feelers, because
| it's better to be in a growth area than in a steady ship if you
| want to have quick career growth. The few who've also got
| contacts outside the industry weigh the rest of the industry
| for their prospects.
|
| Meanwhile, middle management isn't stupid and knows this is
| happening. Large turf wars break out, everybody trying to
| secure the most interesting projects for their teams so they
| can attract the best remaining people. The resulting office
| politics drive most of the remaining people who have options
| outside to leave as well, because it's a cesspit.
|
| At this point you have created a solidly mediocre company.
| It'll likely plod on for a long time, on a slow downward slope.
| Every calculates what comes first, implosion or retirement, and
| chooses accordingly.
|
| Life is, for lack of a better word, solidly grey.
|
| But sure, on paper it's a great opportunity for both sides.
| tekkk wrote:
| They can be bought or they can buy other companies that are
| specialized in the same area for synergies. Also it is
| generally easier to manage smaller organizations so the
| underperforming half here could become a bit nimbler. Generally
| speaking it helps when people have some clear focus were it a
| company or life in general.
|
| I'm not saying that these all are necessarily true here. Time
| will tell. And about the people, if the culture was bad before
| it would stay the same regardless. If it takes a turn for
| worse, then I guess it was inevitable either way.
| dpedu wrote:
| The HP / HP Enterprise split a couple of years ago is another
| example of this. Their messaging at the time wasn't so clear,
| but it became obvious they were divorcing the successful
| printer/office segments from the struggling enterprise ones.
|
| > But the dead weight is a company too. Does everyone who ends
| up working there just sort of accept that now they work at a
| company with worse financials and prospects?
|
| I was on the HPE side - pretty much! This typically doesn't
| come as a surprise, though. The free swag with the new company
| logo makes it a little better, though.
| poulsbohemian wrote:
| What was awful was that HPE had some solid products and could
| have been a great company, but management at all levels was
| _so bad_. I was at an HP partner at the time and it was years
| of watching a train wreck as they muddled along running their
| acquisitions into the ground.
| microtherion wrote:
| I was also thinking about HP, but a considerably earlier
| split, when Agilent was spun off in the late 1990s. I think
| the motivation was the same, to divorce the dynamic
| printer/PC segment from the stagnant electronics segment.
|
| But many people at the time thought Agilent was more in line
| with traditional HP values than HP was, and over the long
| run, they appear to have performed better than HP.
| crazygringo wrote:
| It's not really a "worse" part that's "dead weight".
|
| Companies split when two halves just have such vastly different
| objectives and futures that, at an organizational practical
| sense, it no longer makes sense for the same
| board/CEO/management to be running them together.
|
| Splitting them up lets both halves select
| boards/CEOs/management that is best for them, and pursue
| strategies that are best separately. The "underperforming"
| segment may now perform better now that it's free to use
| AWS/Azure/Google cloud tools instead of just IBM's... it can
| enter into strategic alliances it couldn't before... it can
| merge with another company that wouldn't have made sense
| before.
|
| As for the people who work there... they're still employed so
| nothing really changes day-to-day.
|
| But the main point is that this _frees_ the "worse part", if
| you still want to call it that, to do what is _best_ for it. It
| may very well turn out to thrive and be a huge success. It 's
| still a normal business like any other.
|
| If it were truly dead weight it wouldn't be spun off -- it
| would be shut down and everyone would be laid off. The fact
| it's being spun off or split means it's expected to be a viable
| business on its own. Nobody can predict the future -- who
| knows, it might outperform the cloud part long-term.
| animationwill wrote:
| >> The "underperforming" segment may now perform better now
| that it's free to use AWS/Azure/Google cloud tools instead of
| just IBM's...
|
| The contrary point of view is that this means that either:
|
| 1. crapIBM will need to pay betterIBM for access to continue
| using the ERP, QRadar, Remedy, licenses, etc tools they use
| today. This is better for betterIBM and worse for crapIBM
|
| 2. crapIBM will need to stop using betterIBM's tools, and
| have to quickly negotiate new licenses/tools and spend 6+
| months of their first fiscal year just moving platforms
| (moving SAP has often been a 2 year failed IT challenge, good
| luck). This will make crapIBM continue to look worse, making
| betterIBM's leadership look good for divesting themselves of
| it.
| pickle-wizard wrote:
| I used to work for IBM. When working on customer
| engagements the services teams are required to pay for IBM
| software that it uses. This goes back to the consent decree
| with the Justice Department after the anti-trust
| investigation in the late 70s. So splitting up won't effect
| that.
| pfortuny wrote:
| But (honest question) can the services business NOT offer
| an IBM product?
| 2sk21 wrote:
| Most certainly - IBM will happily support software
| products from companies with competing products like
| Oracle and SAP in service agreements.
| vosper wrote:
| Why couldn't they just agree to let each other use the
| other's tools for free / massive discount for some limited
| period, or even in perpetuity? It doesn't have to be one
| company shafting the other?
| dragonwriter wrote:
| > Why couldn't they just agree to let each other use the
| other's tools for free / massive discount for some
| limited period, or even in perpetuity?
|
| A big point of splitting up is so that (in both
| directions, to the extent that it applies) cross-unit
| costs aren't baked into operations. Subsidies like you
| suggest directly undermine that.
| vl wrote:
| Interesting, Google spun off many companies under
| Alphabet umbrella, but essentially continues to provide
| base tooling/compute/IT support to them.
| megablast wrote:
| You really need to look up the definition of words.
| AnimalMuppet wrote:
| That would be a more useful comment if you pointed out
| the flaws in the definitions that vl is using.
| dragonwriter wrote:
| > Interesting, Google spun off many companies under
| Alphabet umbrella, but essentially continues to provide
| base tooling/compute/IT support to them.
|
| Those aren't actually spinoffs in the sense of what IBM
| is doing; "Google" was effectively just renamed
| "Alphabet", with its core business in a new subunit
| called "Google". They are all still within the same
| corporate ownership structure. Its an _internal_
| organizational change, not a separation into separately-
| owned organizations.
| alexdean wrote:
| It's not that simple, for example Waymo has external
| investors alongside Alphabet,
| https://blog.waymo.com/2020/03/waymo-raises-first-
| external-i...
| marc__1 wrote:
| Even if they 'spun off' businesses, they still have
| transfer pricing schemes among each and every subsidiary
| of Alphabet. This is just BAU for small and large
| organizations
|
| [1] https://www.pwc.com/m1/en/blog/intangibles-tax-risks-
| opportu...
|
| [2] https://prospect.org/economy/decisive-tax-defeat-for-
| the-mul...
| marc__1 wrote:
| As a shareholder you may require the business to
| guarantee that every deal negotiated with customers and
| suppliers are defined on an arm's length basis or face
| negligence or wrongdoing.
|
| Every holding has transfer pricing [1] as BAU, and I can
| assume that it is also the case for IBM
|
| [1] https://en.wikipedia.org/wiki/Transfer_pricing
| dalore wrote:
| That way betterIBM can extract as much value out of
| crapIBM as they can.
| bobthepanda wrote:
| Well, as an example for the original POV, I believe
| printerHP is doing much better than cloudHP. So it's
| possible that cloudIBM will flame out.
| kofejnik wrote:
| I fully expect cloudIBM to be mostly irrelevant with
| their watson and cloud vaporware; and boringIBM to do
| boringly ok with their IT services
| QuesnayJr wrote:
| Is it clear that boringIBM will keep services, rather
| than cloud IBM? I can't figure it out from the
| announcement.
| animationwill wrote:
| I think you're right
| crazygringo wrote:
| When a company is spun off, oftentimes the parent company
| still continues to own a minority stake, and/or
| shareholders will wind up with shares in both.
|
| It's in nobody's interest for "betterIBM" to succeed at the
| greater expense of "crapIBM". With so much shared ownership
| (at least in the medium-term, practically speaking),
| shareholders want _both_ to succeed.
|
| That's the whole point -- shareholders think both halves
| will do better as separate entities, and it's in nobody's
| interest for one half to exploit the other.
|
| Surely your "crapIBM" will continue to have access to
| "betterIBM"'s tools at a reasonable price, but they'll
| _also_ be free to migrate to better ones, as they choose,
| at the pace that is most profitable for them.
|
| It's win-win because that's the entire point of the split
| in the first place. The two resulting entities aren't even
| competing with each other, they're in totally different
| markets.
| hamburglar wrote:
| If you ever personally split up a company, I strongly
| advise you to hire a branding consultant. :D
| mceldeen wrote:
| I know a couple of people who are in the process of riding
| companies down, so to speak. They're pretty close to retirement
| (if not already able to retire), they like their coworkers, and
| are comfortable where they're at. They're happy to man the ship
| as it slowly sinks. This might be the case for a good many
| IBM'ers on the "underperforming " side.
| jacquesm wrote:
| That's roughly how I feel at times about our society as a
| whole. We went up for 56 years and we've been going down for
| the last 19.
| WJW wrote:
| Weirdly, I feel about the same but the downgoing part only
| started around 2015. We met once at a company you were
| doing due diligence at, so I happen to know that you are
| about 15 years older than me. Maybe it's just an age thing
| and we're getting grumpy? :)
|
| After all, complaining about the state of the world
| decaying goes back to at least the ancient Greeks.
| jacquesm wrote:
| Yes, but from the perspective of those Greeks they were
| dead on! But good point about grumpy old people :)
|
| Nice to meet you again, mail in profile.
| the-dude wrote:
| Were you thinking about Plato or Socrates?
|
| Apparently, both didn't say this :
| https://quoteinvestigator.com/2010/05/01/misbehave/
| WJW wrote:
| I was thinking of one of those, it's a shame they
| apparently did not say it. However, I recently learned
| that the Torah apparently also claims that each
| generation is more degenerate than the last so perhaps I
| can fall back onto that :)
| nabla9 wrote:
| It's not underperforming segment. It's just naturally lower
| margin business segment. Splitting it off to new owners and
| CEO's who are interested developing the business to different
| directions increases the value of that business.
|
| IBM has done this before. They sold personal computer business
| to Leonovo in 2005.
| guenthert wrote:
| I read the article and it doesn't make sense to me, but I
| wouldn't expect it to, as I know next to nothing about
| business. I however expect this to be similar to the
| Siemens/Infinion Technologys split a number of years ago: there
| might have been administrative reasons, but at least as
| important was the appearance to potential investors. Siemens
| (and IBM) are huge, diverse, slow moving entities with
| comparatively stable outlook and correspondingly low
| expectations of gains, while Infinion (and the new former IBM
| Cloud entity) are younger, more specialized, riskier, but
| potentially much more profitable companies, which attract a
| different crowd of investors / investing strategies.
| unishark wrote:
| It's more like dumping a great business making a lot of money
| to focus the company on the sexy hot thing with higher
| projected growth that will hopefully attract a much higher
| stock valuation.
| aj7 wrote:
| Chinese buy it and happily run it.
| varjag wrote:
| Oftentimes it's more like a corporate equivalent of divorce.
|
| There are distinct, often contradictory interests. Each half
| figures it's the other one dragging them down, which might be
| true completely, partially, or not at all. And it's clear who
| has their head in the clouds in this case ;)
| flurben wrote:
| It does not directly answer your question, but an illustrative
| example is DuPont's spinoff of Chemours in 2015.
|
| Chemours was loaded with "assets" like dangerous chemicals, and
| their accompanying lawsuits. (One phrase used in a later
| lawsuit was: "unlimited exposure for historical DuPont
| liabilities")
|
| Chemours' market cap was initially valued at $3b and quickly
| crashed to $0.75b. But then Trump was elected, it started
| looking like the liability from dangerous chemicals would be
| less than previously believed, and eventually this company,
| which was designed to fail because of open-ended liabilities,
| was valued as high as $10b.
|
| https://www.macrotrends.net/stocks/charts/CC/chemours/market...
| Phobophobia wrote:
| Honeywell divested from the defense sector a couple decades
| ago, spinning off "Alliant Techsystems" and sending debt along
| with the new company. ATK went on to be successful, merged with
| Orbital Sciences as equals (2015), and then was acquired by
| Northrop Grumman (2018). Financial Engineering, as one
| commenter put it, is quite nuanced and interesting.
| jpm_sd wrote:
| Have you ever worked at a really big company?
|
| If you're in the under-performing division, you already know.
| You've already accepted that you work there. You feel it in
| your bones.
| goatinaboat wrote:
| _But the dead weight is a company too. Does everyone who ends
| up working there just sort of accept that now they work at a
| company with worse financials and prospects?_
|
| Yes, this is a thing https://en.wikipedia.org/wiki/Bad_bank
|
| No reason any company can't do it, not just banks
| ivalm wrote:
| Yeah, the jettison something that is too valuable to just
| shutdown, but if you are part of that org unless it turns
| around it will suck.
| [deleted]
| pmart123 wrote:
| There is a very real risk that companies spin off completely
| dead weight (see Honeywell's spinoff of Garrett). eBay spinning
| off PayPal a few years ago is an example on the opposite end.
| Assuming the management team is acting in good faith, it
| usually is because the two divisions lack synergies and have
| different potential growth trajectories and paths. For
| instance, the fast growing division might not be able to spend
| enough money because investors view the overall company as a
| slow, stable grower while the stable division is upset that the
| fast growing division is sucking up its profits to grow. In
| cases like these, it might not be a dead business, but
| something like eBay.
| rkagerer wrote:
| _We divested networking back in the '90s, we divested PCs back in
| the 2000s, we divested semiconductors about five years ago_
|
| Is it just me or does anyone else feel over the decades they've
| been divesting some of the best (long term) building blocks? A
| company with vertically integrated silicon, compute, networking,
| cloud, AI, Enterprise etc. seems like it could have such an edge
| if only they had focused those engineering capabilities on
| consolidated, high-margin end products.
|
| I see the other big players going the opposite direction. e.g.
| Google and Amazon are building their own silicon for an edge in
| Cloud and AI.
|
| So-called SexyIBM is just another cloud company without a
| distinguishing barrier to entry. Sure, their growth will look
| good on paper for a few years, but when Cloud becomes
| commoditized (which I think is already happening), the
| capabilities which could have created the kind of real innovation
| that opens up whole new industries will have all been cleaved
| away.
| btilly wrote:
| They really had no choice about divesting PCs. IBM was on
| Microsoft's bad side so was being charged more for Windows than
| competitors, and PCs already had razor thin margins. After they
| sold off their PC business, Microsoft had no reason to charge
| extra for Windows and that became a viable company.
| seunosewa wrote:
| > IBM was on Microsoft's bad side so was being charged more
| for Windows than competitors
|
| I thought the DoJ investigation stopped Microsoft from doing
| such things. What am I missing?
| ansible wrote:
| IBM killed their own PC business by going with the MCA bus,
| and not allowing 3rd parties to make expansion boards without
| a license. And the PS/2 series was quite expensive at the
| time.
| chromatin wrote:
| Yes, this quote stuck out for me immediately as I thought of
| the custom network hardware run at Google, AWS, etc.
| dreamcompiler wrote:
| IBM used to be an engineering-first company. But people are
| expensive and engineers are some of the most expensive people
| there are. So when the bean counters took over IBM, they
| decided to get rid of their expensive people and replace them
| with cheap, fungible labor. Then IBM embarked on a series of
| experiments about how they could continue to make money with
| said cheap labor. This is the result.
| ASalazarMX wrote:
| The pitch must have been like "hey guys, do you want to make
| some products, or do you want to make some money?"
| Accujack wrote:
| Very well put. The same management philosophy happened to
| Boeing, and I think more quietly to many companies thought
| too big to fail in the last 50 years.
| kelnos wrote:
| The difference on impact is interesting. Boeing is an
| important company because they are one of a tiny number of
| companies that makes the world's commercial airplanes.
| Arguably their transformation into a useless junk-heap of a
| company that can't build good products has been underway
| for a while, and that's a huge problem for aviation.
|
| IBM is one of many, and their decline wouldn't really
| matter all that much in the grand scheme of things.
| drawkbox wrote:
| Hard to create value when ditch or reduce power from the
| value creators and end up nothing but value extractors.
|
| Companies taken over and run by value extractors
| (finance/business/marketing) over the value creators
| (engineers/product/creatives) end up in this stagnated,
| picked apart state when the grace from the value creation or
| product wears off.
|
| Value extractors need to learn that you must first create
| value before you extract it. The reason value extractors
| originally were attracted to the project/product is usually
| that it has created value.
|
| R&D has very little value to an MBA so it is cut, but long
| term it is all the value of the company. Value extractors
| kill the whales before they even can grow up.
| bsder wrote:
| > IBM used to be an engineering-first company.
|
| I would argue that this was _never_ true--even from
| inception. _HP_ was an engineering-first company--not IBM.
|
| IBM was about sales and marketing--they would rent and
| finance equipment for you even _way_ back.
|
| Now, IBM had world-class engineering, but people forget that
| a _lot_ of the major companies had great engineering until
| the 1980s.
| TheCondor wrote:
| This is very true. It was even proudly stated in new
| employee orientation when I joined the company in the late
| 90's.
|
| It was always sales oriented and engineering was something
| they had to do to deliver some of the things they sold.
| This may be the first CEO that was actually an engineer.
| Accujack wrote:
| IBM is going to fade away.
|
| They're divesting lower performing (but not money losing)
| ventures in order to not hide the performance of their higher
| performing pieces. This is so they can show the unsustainable
| growth that stock holders (still) demand from corporations.
|
| They'll look great on paper for a while as you say, at least
| until their cloud business fails for some reason. When you
| average growth over a whole company, you do mask high
| performing parts with low performing ones... the same is true
| of cash flow and revenue.
|
| If you get rid of parts of your company that are solid
| performers but aren't doing as well now, then you're getting
| rid of some of your safety net in the hope you won't need it.
|
| IBM's most impactful business (in terms of wide use) is
| probably their research labs. Many, many chips today use SOI
| and copper interconnect technologies. That sort of research
| doesn't apply much to the cloud, but maybe they're hoping their
| AI stuff will.
| agumonkey wrote:
| Let's call them Elppa Corp.
| segfaultbuserr wrote:
| I prefer HAL Corp.
| lizknope wrote:
| IBM still designs their own silicon.
|
| They still make chips in the POWER architecture and the Z
| architecture for mainframes.
|
| https://en.wikipedia.org/wiki/POWER9
|
| https://en.wikipedia.org/wiki/POWER10
|
| https://en.wikipedia.org/wiki/IBM_z15_(microprocessor)
| nradov wrote:
| IBM failed to leverage their silicon designs for driving down
| their cloud costs. As long as the IBM cloud runs mostly on
| third-party hardware they have no sustainable competitive
| advantage.
| Zenst wrote:
| Sony PS/3 was a bold move though in that vain.
| gridlockd wrote:
| Running on third-party hardware is leveraging _comparative_
| advantage. Like Itanium, POWER is more expensive and there
| are very few reasons you would want to run on it.
| Definitely not a good fit for Cloud.
|
| Full vertical integration isn't necessarily good business.
| Even Apple doesn't do its own manufacturing.
| pm90 wrote:
| Additionally, the article doesn't mention IBM research, which
| I assume will continue to stay with IBM.
| mywittyname wrote:
| IBM is a very capable company when it comes to technology
| R&D. But they've always seemed to struggle to develop those
| capabilities outside of high-end consulting work.
|
| IBM had the technical chops to create the likes of ARM,
| nVidia, or any number of big tech companies. They just never
| seemed to have the leadership capabilities to get out of
| their comfort zone. I understand the idea of keeping a
| business focused, but Alphabet and MS don't seem to struggle
| with managing a diverse portfolio of companies.
| mulmen wrote:
| I wonder how IBM looked at 22 and 45 years old.
| relaxing wrote:
| The answer probably depends on where you define the
| "birth" of IBM - the founding of the companies that
| merged to create IBM, the date of the merger, or the date
| they changed the name and/or began producing business
| machines with the name "IBM" on them.
|
| In the context of the thread, it's reasonable to say that
| both at 22 and 45 IBM had strong leadership (Watson Sr.)
| that successfully managed a diverse group of
| subsidiaries. Although in neither case are there any
| products like a modern digital computer involved.
| boogies wrote:
| Like Nazi allies, according to some Holocaust survivors:
| https://en.wikipedia.org/wiki/IBM_and_the_Holocaust
| https://en.wikipedia.org/wiki/IBM_during_World_War_II.
| rusk wrote:
| At 45 I guess they were expanding into Europe.
| [deleted]
| GnarfGnarf wrote:
| Yep, selling Hollerith card equipment to Germany in the
| 30's and 40's.
| mulmen wrote:
| That math doesn't work out. IBM was formed in 1911. 45
| years old would be 1956.
|
| Also doing business in Europe in the 1930s doesn't mean
| that's when they _expanded_. That business could have
| been decades old by then.
|
| Some quick reading of the history of IBM and subsidiaries
| suggests they were doing business in Europe by the 1920s.
| dn3500 wrote:
| I've been trying to figure out whether the mainframe business
| is being spun off or retained as part of this split. Haven't
| been able to figure out whether IBM even manufactures this
| equipment. I know they outsource the chip fab now. I'm not
| even sure what the mainframe is called any more, they seem to
| change the name every couple of years. IBM Z? zSeries? System
| Z? Something with a "Z" in it I think.
| justapassenger wrote:
| Vertical integration is a hot term, but unless you have long
| term monopoly in the market, it's more likely to be a losing
| strategy. If you bet on wrong direction, you're in much deeper
| troubles, as you cannot switch to other vendor that went other
| direction (switching vendors is also hard, but much easier than
| rebuilding and catching up on your internal R&D).
|
| And you lose power of market and economy of scale. Vendors can
| focus on developing their tech to be better, for everyone, as
| they get bigger R&D budgets, and you can just focus on
| improving things that are your true market advantage, not
| fighting in commodities market.
|
| Note, that doesn't mean that IBM is doing right thing. But
| vertical integration is extremely overhyped.
| gigatexal wrote:
| Yeah. Mainframes are arguably the most vertically integrated
| products there are and yet they're a dying breed in a rent-
| maximizing at best industry than a growing one.
| heimatau wrote:
| > A company with vertically integrated...seems like it could
| have such an edge
|
| Yes but I guess it was the IBM board whom decided that they
| could better invest in the money with various initiatives.
| IMHO, they are now (and for ~15 yrs) only choosing a safe
| route, not an innovative route.
| [deleted]
| all_blue_chucks wrote:
| IBM is just a conglomerate of neglected acquisitions that share
| branding ("watson" etc.). It hasn't been a single coherent
| company in decades.
| [deleted]
| tupputuppu wrote:
| The pieces they've divested haven't been valuable as part of
| IBM. They've fit their new owners businesses better. Thus
| they've been more valuable with their new owners, which is why
| IBM sold them.
| bluedino wrote:
| It's funny how back in 2005, IBM sells their PC/server division
| to Lenovo. Lenovo is currently the largest PC maker. During
| this time Dell has been bought and sold and re-bought.
| jcheng wrote:
| "Largest PC maker" has been a pyrrhic title for many years
| now. Lenovo's market cap is $8 billion, Dell's is $51
| billion.
| frank2 wrote:
| And IBM's is currently $117 billion.
| ogre_codes wrote:
| Yep.
|
| And the value of Dell's business isn't in selling PCs, it's
| in other services around the PC.
| rbanffy wrote:
| Lenovo's margins are still razor-thin. The thing that bothers
| me most about IBM keeping POWER and Z is that I can't afford
| either, because the margins are eye-watering.
| StillBored wrote:
| Fine, thin margins. So grow your market share and revenue,
| which is exactly what they did.
|
| Since ~2005 they have ~5x'ed their revenue. Which is pretty
| significant if you consider one of IBM's big problems has
| been declining revenue. Proving the problem with the
| business wasn't the business itself but IBM management.
| JohnL4 wrote:
| Lenovo is chinese, right? How many other (big) chinese
| companies have been through Dell's cycle as you describe it?
| marmaduke wrote:
| Where is Dell making its computers? When I track shipments
| they seem to be coming from China.
| rbanffy wrote:
| I don't think they make their own hardware. They design
| it and then farm out manufacture.
| symlinkk wrote:
| What do they even design? All of the components inside
| their computers are off the shelf products from other
| companies.
| vel0city wrote:
| Speaking of their servers, their motherboards and chassis
| seem to be of their own design. Often times these layouts
| are pretty proprietary and designed exactly around the
| design of the chassis. They do some level of
| customization of firmware on the devices they go with, as
| there's usually Dell firmware on things like hard drives
| which integrates more with their own management tools.
| Arguably their software stack of actually managing fleets
| of their hardware is something they design, along with
| the actual remote access controller systems they put on
| the boards.
| criddell wrote:
| Clayton Christensen has written and talked about how Dell
| sold their business piece-by-piece. Each individual step
| seemed like a good move - it lowered costs and increased
| profits. Until one day the companies they outsourced to
| had it all and they started selling better computers for
| less money than Dell.
|
| https://www.forbes.com/sites/stevedenning/2011/11/18/clay
| ton...
| ansible wrote:
| > _We divested networking back in the '90s, we divested PCs
| back in the 2000s, we divested semiconductors about five years
| ago_
|
| Motorola followed that path. They sold off their computer
| business in the early 1990's. Analog electronics (On Semi), and
| then the semiconductor business (Freescale, now NXP). Finally,
| they split the government biz (Motorola Solutions) from the
| phones, and that was first sold to Google, and what remained
| then went to Lenovo.
|
| Motorola was a gigantic powerhouse, and through mismanagement,
| is a shadow of what it was. Such a shame.
| momokoko wrote:
| IBM has not been a "company" in decades.
|
| It is a financial engineering project. When you see it through
| that lens all of this makes much more sense.
| setpatchaddress wrote:
| That's a real shame. Most large, old American companies have
| fallen into that trap. Notably RCA (gone) and GE (going).
|
| I hope Apple doesn't eventually succumb. Tim Cook's successor
| matters.
| DocTomoe wrote:
| Apple is already on it's way to the trashheap. There's a
| reason why innovation has essentially stopped and now comes
| down to "a few megapixels more in the camera", while
| quality control - both in their hardware as well as their
| software - has taken a big hit.
|
| I guess they will succumb faster than the old Xerox-age
| market leaders, because they are not focussed on consulting
| (= making other companies believe their constantly
| syphoning money from them brings value).
| nemothekid wrote:
| > _There 's a reason why innovation has essentially
| stopped and now comes down to "a few megapixels more in
| the camera"_
|
| How is literally designing your chips to a point where
| they could be desktop class to replace x86 not
| innovation? What other company is doing this?
|
| I can't imagine a "finance company on the out" deciding
| that they will bring all chip development in house.
| echelon wrote:
| > _How is literally designing your chips to a point where
| they could be desktop class to replace x86 not
| innovation?_
|
| That's more a sign that the company wants more profit by
| owning the top to bottom stack.
|
| Perhaps they saw the existing chipsets as not delivering
| what they wanted or not scaling to fit demand, but it's
| still an investment not directly tied to product (their
| core competency).
| mschuster91 wrote:
| > That's more a sign that the company wants more profit
| by owning the top to bottom stack.
|
| They pretty much had their hands tied. Intel failed to
| deliver for years now, and AMD never had a competitive
| offer on mobile and still does not.
| chipotle_coyote wrote:
| > That's more a sign that the company wants more profit
| by owning the top to bottom stack.
|
| Is bringing mobile/embedded and now desktop-class CPU
| design in-house really something one does as a cost-
| saving measure? Apple wants _control_ over their entire
| stack, and sure, that relates to their business as a
| whole, but if this was _solely_ about profit maximization
| surely there would be better strategies.
|
| > it's still an investment not directly tied to product
|
| I'm not sure I follow your reasoning here. Are you
| arguing it's not a direct investment because the CPUs
| aren't products in and of themselves, but rather
| components for other products? If so, I don't agree --
| Apple's investment in, say, case tooling/manufacturing
| processes and equipment exclusive to their products is
| surely an investment directly tied to those products,
| right? The CPUs are likewise components exclusive to
| Apple products. That seems to me to be a pretty direct
| investment.
| scottlocklin wrote:
| >How is literally designing your chips to a point where
| they could be desktop class to replace x86 not
| innovation? What other company is doing this?
|
| IBM for one; https://en.wikipedia.org/wiki/Z/Architecture
|
| I mean you asked, and it was obvious. Z is a more
| interesting architecture by far than the turd Apple is
| shipping.
| hugi wrote:
| I recently started developing my own chips and put them
| on all my desktops. Thinly sliced potato, hot oil, a bit
| of salt... Delicious.
|
| Seriously though, some people just don't like Apple and
| they make a lot of noise about it.
| drfuchs wrote:
| There's 2 trillion USD betting that you're wrong, and
| virtually zero betting that you're right (AAPL Short
| Percent of Float = 0.00% as per Nasdaq). Buy some puts
| and you'll make a killing.
| mulmen wrote:
| Apparently GE sold off _trains_ which seems like a pretty
| good business to own?
| jonas21 wrote:
| Out of all the business lines GE has sold off over the
| years (computers, appliances, financial services,
| lighthing, television, etc.), why _trains_?
| ahi wrote:
| The business lines you offered as examples are low margin
| commodities or stuff GE really sucked at. Trains seems
| like a reasonable high margin line of business for a
| company that is actually good at industrial engineering.
| mulmen wrote:
| They needed cash and it's a profitable business so they
| sold it.
| senko wrote:
| GE was a slow-mo train wreck for years (pun intended).
|
| Recently read "Lights out", about their problems in the
| last ~20 years, fascinating read, heartily recommended.
| cultus wrote:
| And yet Jack Welch somehow came to be looked upon as a
| management guru instead of someone who gutted the long-
| term viability of GE in favor of financialization.
| loganfrederick wrote:
| Luckily I think history is doing its job in changing how
| Jack Welch's legacy will be remembered. I don't think
| students or upcoming businesspeople are really learning
| Welch's approach anymore.
| beambot wrote:
| GE Transportation still exists, just in a different form.
| It's called Wabtec:
| https://en.wikipedia.org/wiki/Wabtec_Corporation
|
| Just because it didn't retain the name "GE" doesn't mean
| the business is gone.
| mulmen wrote:
| Yes it exists but GE doesn't own it.
| charwalker wrote:
| If it was train lines including rail ownership I can see
| why they would want to drop out. Logistically that's a
| nightmare unless it's totally private.
|
| Then again around here the rail lines are mostly owned by
| grain/grass farmer groups who ship product by rail and
| can load from their farm directly. Passenger lines that
| share the rails wait for those trains.
| mulmen wrote:
| It was the business that builds trains.
| boris wrote:
| Exactly, IBM is a company run by finance, not technical
| people. They survive despite, not because of what they do.
| cmsj wrote:
| Not to nitpick, but the current CEO has a PhD in Electrical
| Engineering and started working at IBM Research in 1990.
| Supermancho wrote:
| I'm sure lots of people at IBM have EE degrees throughout
| it's existence. That hasn't caused the company to behave
| any differently. When approached by IBM to help my
| company build out our cloud infrastructure, we had
| salient measured targets and the reps (and subsequent
| "technical people to answer our questions") who presented
| were woefully inept. I was the Director of Engineering,
| what did they think they were doing pitching me
| butterflies and rainbows? What IBM has done for decades,
| like all the other parasitic remnants of industry
| (Oracle, Yahoo, arguably Apple, etc), and no CEO is
| changing that culture.
| ezequiel-garzon wrote:
| _like all the other parasitic remnants of industry
| (Oracle, Yahoo, arguably Apple, etc)_
|
| Would you mind sketching the case for Apple as an
| example?
| pishpash wrote:
| They are indeed incompetent, since a large chunk of
| competent people won't go there any more. But what kind
| of financial voodoo is keeping them afloat? Is it another
| Sears in waiting?
| whymauri wrote:
| The CEO is one piece of the administrative puzzle for a
| company that large (>100k employees).
| Sylamore wrote:
| can confirm, IBM (GTS at least) has more people dedicated
| to ensuring you _project_ your future billable hours and
| will directly reduce your performance rating for not
| providing the projections every 2 weeks than if you miss
| client deliverables consistently.
| 1MachineElf wrote:
| You're absolutley right about GTS, but it's clear that
| the services offerings from IBM aren't what top level
| commenter here is praising.
| sushshshsh wrote:
| good thing its much easier to project future billable
| hours compared to actually delivering value quickly in
| 2020 ^.^
| edem wrote:
| Can you elaborate on that? I worked for IBM for a little more
| than a year and it was deeply disturbing, but I don't really
| understand what's happening under the hood.
| Minor49er wrote:
| Can _you_ elaborate on what was deeply disturbing about
| your experience? Your comment has me curious.
| bob33212 wrote:
| Large companies allocate some percentage of their budget to
| "modernization" or "IT improvements" IBM tries to grab as
| much of that budget as possible and then to spend a little
| money as possible internally delivering results. So they
| end up selling "Watson AI" or implement a "24/7 Cyber
| Security Operation Center". They don't give a shit how
| useful or long term successful those products or services
| are. They only care about how big the contract is and how
| high their margins are on the contracts.
| echelon wrote:
| Why is IBM's stock soaring? This is the sign of a dead
| company barely walking.
|
| Furthermore, IBM has been in this state since the 90s,
| right? How are they still lumbering around? Why do
| companies fall for their sales pitch?
| plorkyeran wrote:
| IBM's stock is down 30% since 2013 and is only up 10%
| from its post-dotcom crash 2000 number. They pay decent
| dividends so it's been an okay place to park some money,
| but it's the opposite of soaring.
| bob33212 wrote:
| IBM stock is performing terribly compared to other
| technology companies from 15 years ago GOOG,AMZN,APPL.
|
| They deliver a good story to other inefficient companies.
| Those companies can tell their board that the "new Watson
| AI will optimize their operations in Q4"
| stefan_ wrote:
| That sentence struck me as well, mostly because people continue
| to make tons of money in networking, "PCs" and semiconductors.
| It's not that they didn't "fit the integrated value
| proposition", it's that IBM has terrible leadership.
|
| No bets needed for what band of clowns will lead the hip,
| "value proposition" part of the company of course.
| grouseway wrote:
| How about this then: IBM realized they're a bunch of clowns
| and can't compete in these industries so they made the smart
| move and got out.
| jacobwilliamroy wrote:
| Vertically integrated monopolies are inefficient because
| practically, what you really have in a vertically integrated
| monopoly is a bunch of separate companies, all following a
| single, centralized entity and paying tribute to that entity.
| There is an opportunity for profit here, for shareholders, but
| very little room to actually improve technology, provide
| utility to users. Every product in that monopoly becomes less
| of a computer, more of a mouse-trap to keep people in the
| ecosystem. If your monopoly has even a single component which
| can interoperate with other monopolies, then you're basically
| subsidizing a whole layer of infrastructure.
|
| Plus this practice paints a huge target on your back for anti-
| trust action, as you are seeing now with the other monopolies.
| The bigger your monopoly gets, the more potential profit there
| is for whatever government agent can bust you up. This could
| result in promotion, christmas bonus, maybe even a corner
| office with a window. Very high stakes.
| kevindong wrote:
| Vertical integration is high risk, high reward in that if each
| component in the stack is a market leader in their industry,
| the overall company becomes exponentially more valuable.
|
| On the other hand if any component is non-competitive, the
| other components in the stack are still obligated to give that
| unperformant component their business. Which reduces the
| pressure to perform and causes the overall company to gradually
| become less competitive.
|
| I think a good example of this would be Intel designing chips
| and also owning the fabrication plants. It's no secret that
| Intel has been to fabricate their chips for a while now.
| SkyMarshal wrote:
| That was my first impression too. It was extraordinary that
| that comment was said positively by the CFO, rather than
| critically by a shareholder or journalist.
|
| Apple, Google, Amazon are all proving the value of vertically
| integrated product lines, while IBM chooses short-termism.
| dralley wrote:
| >I see the other big players going the opposite direction. e.g.
| Google and Amazon are building their own silicon for an edge in
| Cloud and AI.
|
| IBM still designs chips - what they divested was their
| semiconductor manufacturing (fab) business.
| Accujack wrote:
| They actually design tech that goes in other companies'
| chips.
| lsllc wrote:
| Like Boeing there are too many MBAs and not enough engineers in
| charge!
| Graphguy wrote:
| I see this type of comment thrown around a bit, but a quick
| pass of the senior management suggests otherwise.
| https://newsroom.ibm.com/executive-bios? Not a whole lot of
| MBAs and a decent amount of engineers.
| sushshshsh wrote:
| Ask those managers when the last time they wrote a line of
| production code was :)
| ponker wrote:
| Even the most technical CEOs like Bill Gates stopped
| writing code pretty early in their careers
| [deleted]
| rhizome wrote:
| If you loosen your sense of "MBA"...
|
| - Rometty (Chair): Technical degrees, held technical
| positions for first 10yrs at IBM, then in sales for the
| 90s, two decades working primarily with finance customers
| and she worked the PWC acquisition.
|
| - Krishna (CEO): EE, Idea guy.
|
| - Whitehurst (Pres): MBA
|
| - Boville (SVP Cloud): Business degrees (UK)
|
| - Browdy (SVP Legal): IP attorney
|
| - Foster (SVP Services): Art degree, Accenture guy
|
| - Gherson (SVP): Management degrees
|
| - Gil (Dir IBM Research): EE/CS
|
| - Kavanaugh (CFO): MBA
|
| - Got bored
|
| One trait is pretty dominant: decades at IBM
| lol636363 wrote:
| You don't need MBA to have MBA mindset. A lot of computer
| science grads use their degree to get foot in the door
| and then move into management positions.
|
| At IBM, to do anything you need to get permissions from 5
| different semi-tech approvers. They have not done any
| real work in a while but read a few blog posts and come
| up with their own policies that contradicts each other.
| It is a pita to want to produce high quality code.
|
| And that is just middle management. All those people
| higher up can define tech words but hardly anyone can
| actually explain the definition of those tech terms.
| x87678r wrote:
| Ironically Whitehurst came from Red Hat.
| Graphguy wrote:
| The loosening lens is a bit of strawman argument. I would
| hope someone at the level has experience with the
| business side of things... Pichai and Nadella weren't
| tapped to run their business straight after shipping a
| release.
|
| Also, Howard joined in May (which is an important
| one...because this press release is about Cloud not about
| HR/patents.)
| ethbr0 wrote:
| Yeah! Why differentiate in quality, when we can blame all
| holders of a type of degree?!
| skolsuper wrote:
| It's perfectly fair. If they had hired all chefs into upper
| management, one could say "too many chefs and not enough
| engineers!", regardless of the quality of the chefs.
| jodrellblank wrote:
| Only if you think "Master of Business Administration" and
| "Chef" convey equal amounts of business administration
| skill. The exective board page linked above is 22 people,
| even if all of them held MBAs could it really be that 22
| expert business administrators is too many for a global
| company with 350,000 employees?
| wahern wrote:
| "The secret of Costco's success revealed! (hint: no MBAs
| need apply)", https://washingtonmonthly.com/2013/06/09/the-
| secret-of-costc...
|
| "... Costco does not hire business school graduates--thanks
| to another idiosyncrasy meant to preserve its distinct
| company culture. It cultivates employees who work the floor
| in its warehouses and sponsors them through graduate
| school."
| https://www.bloomberg.com/news/articles/2013-06-06/costco-
| ce...
| 1MachineElf wrote:
| As a former IBMer, I completely agree with that sentiment.
| Little of what IBM is _good at_ is _sexy_ but that doesn 't
| change the fact that they lead on many vertically integrated
| things. Turning back on those things will hurt them in the long
| run.
| rbanffy wrote:
| IBM still has plenty of sexy hardware stuff - mainframe and
| POWER (AIX not so much) are pretty impressive.
|
| That z/OS has tens of millions of lines of code surprised me
| the other day. It's not like it needs to support 23 brands of
| mouse and dozens of GPU architectures.
| devdas wrote:
| It's backwards compatible to really old versions. It
| wouldn't surprise me if 70% of that code was emulators for
| previous versions of the OS.
| segfaultbuserr wrote:
| Even IBM S/360 is still being emulated.
| trasz wrote:
| There's not much compatibility for old versions of the OS
| - IIRC anything older than the hardware itself is not
| supported at all. Backwards compatibility is for user
| code.
| rafaelturk wrote:
| Couldn't agree more! I actually believe that only the divested
| business unit, NewCo, will survive
| johnnyAghands wrote:
| Wow I literally handed in my two weeks today -- this is either a
| very good move or bad... I'm thinking good still.
| prepend wrote:
| Is there ever an example of this working out well? Either for the
| "good part" that is kept? Or the "bad part" that doesn't get to
| keep the name?
|
| The only one I can think of is Phillip Morris International,
| Kraft, and Altria that all split out of Phillip Morris. But I
| think that was because of all the tobacco litigation.
|
| I've seen this happen quite a bit and it always seems to be a
| sign of a declining company. IBM splitting off Lenovo and disk
| units. HP splitting off enterprise/automatic.
|
| These kind of transformations just seem like accounting tricks
| for restructuring debt away from some parts into others. It's
| curious how this split has $5B planned in expenses. That seems
| really high.
|
| Maybe Google successfully bought and then shot out Motorola and
| Boston Dynamics. Their Alphabet reorg didn't seem to actually
| change companies.
| reducesuffering wrote:
| eBay and PayPal
| Nemo_bis wrote:
| Just this week, spinning off Siemens Energy created about 15
| GEUR of paper money out of thin air.
| https://www.reuters.com/article/us-siemens-energy-spinoff-id...
| balozi wrote:
| How well is this plan working out for HP/HPe?
| envolt wrote:
| Remind me of the Andrew's Intel story, when they decided to stop
| focusing on memory and moved entirely to building micro-
| processor, which worked out pretty-pretty well for them.
|
| Looks like it's best of both word situation for IBM.
| manicpolymath wrote:
| I'm curious what the new name will be. I want it to be
| International Cloud Business Machines (ICBM).
| cblconfederate wrote:
| HAL
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