I think this is important. The link below will go to the archives
Monday- for a $ or so you can still retrieve it.
The grail of the high margin business is back in focus.
"Either you innovate or you're in commodity hell"
How? By taking IBM Research right into the customer's office - see the example of FinnAir - an appealing data mining example for an industry famous for being less than sure about its next six months existence. "From a supplier to our data centre to a partner"
Note Armonk's carefully orchestrated desire to distinguish Palmisano from Gerstner.
My view: A balance sheet mechanic joined at the hip with a corporate lawyer; a world expert at keeping his boss off the charge sheet of the SEC. A corporation can tolerate this treatment safely for only a limited time, so boss and lawyer both
move smartly on.
So much for the new IBM.
Now its back to building client relationships for long term mutual growth, back to education investment particularly for the
business consulting people who will build with clients.
I bet the average age profile for IBM will begin to cease dropping quite so fast.
It would have been easier for Sam if he had got there just a couple of years earlier. I am sure that we are seeing client corporate unease with the company that saw its people both retired and active as a reservoir for expense cutting, or profit shore up.
How do you assess the risk of huge investment in a corporate agreement when your potential new partner's people run in fear of their jobs?
"Sixty-two percent of IBM's revenue came from outside the US" the articles author reminds us. Outside the US the concept of
a tiny
corporate elite enriching itself with fortunes is just not tolerated in the same way as the myth prone internal view of the American dream.
Sam is also up against a time problem. The Chinese are coming and their recent decision to develop new corporate standards, (home grown video compression and transmission), involving no less then 21 universities for a government sponsored standard is one straw in the wind. This is economic warfare with new rules
and they outgun IBM's R&D investment capability, by many orders of magnitude. They claim to wish to avoid licence payments, maybe
and maybe they are reaching for the levers of market control.
After all with a bilateral agreement with India they could reach a domestic population that exceeds all the 'advanced' Western domestic markets combined.
I believe Armonk is sensitive to concerted and reasonable pressure from a lobby group like ours for the first time since
1992. The vulnerability to adverse publicity, of being deemed to have broken faith is real. To get to the client relationships he wants in sufficient numbers in time Sam must move fast and with a new 'Happy Ship' IBM. I think he will be listening, he has to.