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IBM IT Technology

IBM Says its Future is in Services, Not Goods 234

Posted by Zonk from the shift-the-para-digum dept.
TFGeditor writes "An article at Technology Review quotes IBM exec Paul Horn saying that the company's business model is shifting from goods and products to software and services. From the article: 'Horn's challenge, then, has been to take a $6 billion research organization dedicated to work that advances technology products and get it to do work that benefits service businesses. IBM is thus in the process of answering an important question for all technology companies: can corporations perform useful research in the services arena?'"
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IBM Says its Future is in Services, Not Goods More

IBM Says its Future is in Services, Not Goods

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  • Service Unavailable?? (Score:5, Funny)

    by mr_don't ( 311416 ) on Tuesday April 12, 2005 @03:58PM (#12215813)
    When I clicked on the link it said:

    Service Unavailable

    • Don't worry! IBM has a crack team of their consultants working on the web server issue right now.

      If these guys are half as efficiant and technically adept as the ones they sent to my place of employment, I can assure you that the web server will be back online within six months for well under $15 million (costs may increase).

      Seriously, in my experience the only thing your average IBM consultant is good at is eating lunch. And some of them even manage to deliver that late and over-budget.

      • Well, obviously they didn't send the good ones to you. I'm an IBM consultant and I would have eaten YOUR lunch and charged you for it too.

        Eating their own lunch? I am shocked, because there's no money in that.

  • Necessity (Score:5, Interesting)

    by MyLongNickName ( 822545 ) on Tuesday April 12, 2005 @03:59PM (#12215825) Journal
    As products mature, it becomes more and more difficult to diferentiate yourself from your competitors. That translates to lower profit margins. IBM is simply recognizing that. The question becomes, will their services fall into the same trap? Or can they continue to specialize and keep profit margins up.
    • I wish them luck, but they have a ways to go. This Information Week survey [outsourcingpipeline.com] ranked IBM last among the top 12 big outsourcing service providers. The article suggests that IBM's customers are not that happy with the service yet.

      With IBMs large resources and historical expertise in service, they may be able to turn it around. We shall see.
      • Note that outsourcing is only a piece of the services offering of IBM. The outsourcing of which they speak is when a company outsources their entire IT department to IBM. This is a relatively small portion of IBMs services compared to their more typical consulting services where they provide more typical project based stuff.
    • Also interesting, because it's a return to their roots.

      Where did IBM make their big money from in their heydey? Service contracts.

      Selling the big iron was never the profit, it was always about the service contracts afterward.

      My experience in the defense industry was the same. It was no problem if you built the multi-million dollar systems at a loss, because the maintenance contract was where you made the money. I know of one UK product that finally turned a profit for our companies 10 years after d

  • They're only half right (Score:5, Insightful)

    by CSMastermind ( 847625 ) <freight_train10@hotmail.com> on Tuesday April 12, 2005 @03:59PM (#12215834)
    They do have a valuable point but the reason services will be so big in the future is because right now they haven't truly been explored. Most natural service markets can't exist without a goods market to back them up so in this regard they're worng. There will still be a strong goods market, it just won't be as fast growing as the services market.
    • Why do you claim service markets can't exist without a goods market? More and more, people have all the technology they need to have pretty much every type of content (interactive or not) delivered to their home without the need for physical goods. This means that education, news, entertainment, communication, and most business can be done over the internet.

      But honestly, I'm asking, why does there need to be a substantial goods market to back up these services (given that many people already have the tec
      • Most services are good based, meaning that they require a good to do their job, from cutting hair to programming this is true. Most other services that don't require goods still use them such as teaching. Technology is constantly improving, thus if service providers need to keep up they'll have to purchase goods. If an economy, or economic subsection, is almost entirely service based (an extreme version of specialization of resources) than they are open to be easily controlled by a cartel from where they
    • What I understand of it he may be right. As labor continues to move overseas due to cheap cost of operation there, we will need to fill gaps of employment. Economist have been theorizing for awhile now that America will become an almost completely service based economy. There are some who believe that we will be able to support ourselves on an economy of services. I do not know all the details of how that works, but the article seems to be pointing in that sort of direction. at least for IBM.

      Sure

      • So then I guess the next question is what is a service? I hope it doesn't include things like call centers, because those are already being shipped overseas as well.

        Farming, of course, we will always do. We have ridiculous amounts of land in America to use for it. The question there is whether we can make it profitable. Right now, it's about the most subsidized thing around, isn't it?
        • Farming, of course, we will always do. We have ridiculous amounts of land in America to use for it. The question there is whether we can make it profitable. Right now, it's about the most subsidized thing around, isn't it?

          If we have ridiculous amounts of land, Brazil has insane amounts of land available for farming. Where we get one crop/year, they get 2 or 3. As long as prime farm land goes for $3k/acre here, we will have a hard time competing against 3rd world countries where land sells for pennies a

          • Farming in America is a perfectly competitive market, meaning that sale prices between firms naturally balance themselves out. To ensure added stability the US has many controls and regulations in place to mantain price levels. For the most part it's not worth it to ship food in from outside the US that can be grown at home and it's also not worth it for us to ship farm products elsewhere because anybody with the money to buy it doesn't need it. That's why millions of pounds of food is destroyed each yea
        • From my econ textbook: "Service- An activity that results in a benifit to the buyer but does not result in a material good being exchanged."

          Yes a call center would provide a service. So would education, entertainment, construction/repair, and certain IT/Programming jobs.
    • With a sufficient level of physical infrastructure (goods) there are still a number of different value adds (services) that can be offered.

      An example might be that your internet experience is dependent on goods (modem, computer) but is enhanced by the existence of services such as google (which is currently free).

      In complex organisations the opportunity for services is greater.

      In addition some of those things that have previously been considered to be goods will become services. Going back to the PC exam
    • i think the point is that the profit margin for good will be tiny. and if it is tiny, you have no money for R&D so you can differentiate yourself. services doesn't yet have that issue.
      • Sure services do. I'm not sure what industry you work in so I'll use a generic computer example. And ISP provides a service. I'm sure you can remember when there were tons of 56k ISPs all in the same market. The profit margin in that industry did get very tiny and many of them went out of business because they didn't have the money to develop technology that would differentiate themselves. Diamonds on the other hand, are controled by a single company, and their profit margin is huge. The difference be

  • differences? (Score:3, Interesting)

    by grumpyman ( 849537 ) on Tuesday April 12, 2005 @04:00PM (#12215835)
    I feel that in IT, in most cases, services are the goods.

  • What about this question? (Score:5, Interesting)

    by slapout ( 93640 ) on Tuesday April 12, 2005 @04:00PM (#12215836)
    Who's going to do R&D and develop new products? Seems like everyone is getting out of the development business and going into the patent holding/suing one.
    • From IBM's standpoint they are getting R&D for free from the open source community. That is where much of the new products are getting produced.
    • Companies building OS solutions for consortiums. Linus is smart, and has a good business model that will work for a while.

    • New Standards (Score:3, Interesting)

      by bstadil ( 7110 )
      IBM is perfectly positioned to be the champion of new notably middleware standards.

      They can expand their R&D and with no real axe to grind they can secure that new and needed standards gets approvel quicker. Their interest is the quality of the standard that they can then offer their clients as a new service.

      Take a look here [ibm.com]and you will get a good feel for the Future IBM

  • Not too surprising (Score:5, Insightful)

    by HMA2000 ( 728266 ) on Tuesday April 12, 2005 @04:01PM (#12215847)
    Unless IBM wants to focus on competing with the ever growing chinense and other low cost manufactures they have no choice but to get out of hardware. Hardware is becoming increasingly commoditized and that means it will become a very difficult business to carve out a living in.

    Not to mention IBM has some incredible hardware and software people on staff that would be far better employed helping those with problems in a consulting role.

    • Re:Not too surprising (Score:3, Interesting)

      by LWATCDR ( 28044 )
      " Unless IBM wants to focus on competing with the ever growing chinense and other low cost manufactures they have no choice but to get out of hardware."
      That is only the Intel/AMD market. How much value added can you do with the Intel/AMD platform? They all have sound. They all have IDE and now SATA. They all have USB. You may be snazzy and add Firewire. Now in the PowerPC market IBM can add value. Look at the Cell, G5, and Power series. IBM simply does not want to be a me too company selling cheap PCs anymo
    • ..."IBM has some incredible hardware and software people on staff..."

      One of them is mentioned in the article--Rob Barrett. He's my son-in-law.
    • Not to mention IBM has some incredible hardware and software people on staff that would be far better employed helping those with problems in a consulting role.

      Keep wishing. Researchers of that calibur rarely want to work as business/IT consultants, and if IBM tries to assign them to such a role, they'll go elsewhere.

  • New news? (Score:4, Insightful)

    by op12 ( 830015 ) on Tuesday April 12, 2005 @04:01PM (#12215848) Homepage
    Is this really new information? Those IBM ads for their consulting services have been on for a long time now, and the more recent commercials even tout these services as the new (side of) IBM.

    • Re:New news? (Score:3, Insightful)

      by Michalson ( 638911 )
      Mod parent up. IBM has always been a service company. The hardware and software they sell is/was nothing but a vehicle for expensive long term service contracts. While they made a profit on that server they sold you, the real bread and butter was that extended warrenty they convinced you to add on. It's the main reason IBM never liked the home PC market, you just couldn't take customers out to play a round of golf while getting them to sign up for a bunch of service plans. Instead customers bought the hardw
      • AFAIK the days when IBM supplied hardware (or software) doing B2C are long gone. They have focused on business-to-business for many years now. And secondly, if someone says that "the future is in service" (future = IBM's future), then that's anti-news. I remember reading Lou Gerstner's book about IBM's turn-around (I think the title was "Who says Elephants can't dance?") and hey, service is what this is all about. But that's a transition that IBM made, heck, more than a decade ago if I remember correctly, e

  • They're just announcing this? (Score:4, Interesting)

    by Jeff Hornby ( 211519 ) <jthornby AT sympatico DOT ca> on Tuesday April 12, 2005 @04:01PM (#12215860) Homepage
    Hasn't IBM been earning more than half its revenues from services for over a decade? And they're just getting around to announcing it now?

    More news: Microsoft has announced they're going to be a software company. GM is showing some interest in making cars. Walmart is going to start selling stuff.
    • I was just thinking the same as IBM does not make its money from selling computers or even selling compilers but the support contracts that come with them.

    • Re:They're just announcing this? (Score:5, Funny)

      by Skyshadow ( 508 ) * on Tuesday April 12, 2005 @04:07PM (#12215937) Homepage
      Actually, they sent out the annoucement a couple of years ago. It just happened to make its way out of the Lotus Notes server today...
    • > GM is showing some interest in making cars.

      It's true that they make lots of cars, but that's not where their money is. GM's automotive division actually loses money, and did so even before the current troubles. GM's profitable division is the GMAC financing arm. Operationally speaking, GM is actually a bank.
      • GM's profitable division is the GMAC financing arm. Operationally speaking, GM is actually a bank.

        A few years ago, I heard it was the other way around (and that if GMAC was a bank and regulated like a bank, it would be in a world of hurt).

        To see this, just think back about a year or two ago about the 0% financing available. The GMAC arm lost money on every sale, but presumably made it up on volume.

  • Yeah, right (Score:5, Insightful)

    by Capt'n Hector ( 650760 ) on Tuesday April 12, 2005 @04:02PM (#12215866)
    With billions invested in chip fabrication, they're not going to be abandoning that business anytime soon. With their name recognition in other hardware sectors, they're not going to abandon those markets anytime soon. Maybe I'm out of the loop, but when someone says "software," is IBM one of the first things you think of? I could imagine EXPANDING into software and services alongside hardware, but then we're back in the 90s selling "solutions".

    • Re:Yeah, right (Score:4, Insightful)

      by SydShamino ( 547793 ) on Tuesday April 12, 2005 @04:27PM (#12216197)
      >> when someone says "software," is IBM one of the first things you think of?

      When someone says "IBM software", I pause, look at my email client on the other monitor (Lotus Notes), and begin to cry...
      • The software of interest isn't going to be comparatively low value items such as that, but more in things like business process engineering, grid, data mining, etc. Thus stuff that keeps governments and large businesses working.
    • You could be right.

      They could also "spin off" the hardware business into it's own entity, or sell it outright to an appropriate firm. That way there's two companies fighting different battles, with no chance of one dragging down the other.

      Remember a companies executive branch has one mission: Increase shareholder value , not re-live the glory days.

      Soko

    • Re:Yeah, right (Score:3, Informative)

      by powerlinekid ( 442532 ) *
      IBM is actually the largest software developer in the world. Difference is that its mostly internal stuff (damn near everything here is IBM made).

  • Technology "review" is right... (Score:5, Interesting)

    by Skyshadow ( 508 ) * on Tuesday April 12, 2005 @04:02PM (#12215869) Homepage
    IBM has been pursuing this for a couple of years now. I mean sure, their consultants pushed their own technology, but they were always willing to push it to the side in a heartbeat if they thought it would get them a single penny more. The fact that this is news in 2005 is a little bizarre.

    Of course, if IBM has decided to full-on push their consultants, it might help them to find a few who aren't complete morons. Based on my experience, IBM is well on their way to becoming the new Anderson.

  • Don't RTFA... Spyware... (Score:4, Interesting)

    by profet ( 263203 ) on Tuesday April 12, 2005 @04:02PM (#12215870)
    Gotta love the spyware contained in the article.

    Avenue, A Inc. Whatever that is.

  • Bill Gates... (Score:2, Funny)

    by Jinsaku ( 729938 )
    ..only beat IBM to this decision by about 25 years.

  • Google! (Score:4, Interesting)

    by xiphoris ( 839465 ) on Tuesday April 12, 2005 @04:02PM (#12215875) Homepage
    Google has been conducting its research extensively in the services area. Google labs [google.com] contains a plethora of useful services Google's researching, with new ones coming almost every month. A few ones that interested me: Google sets [google.com] allows users to enter a few items (apple, banana, orange) and Google will find more from that set (pear, kiwi). Google ride finder [google.com] allows you to find taxis and limousines by tracking their positions in realtime. All of these services are available to the public so Google can get feedback on their "research".
  • IBM is fast becoming a company that doesn't actually make anything, and this pretty much confirms that. And that's pretty sad, being that this company pretty much invented computing for the the business sector, and brought personal computing to the general public.

    They're making lots of cash right now, but one day, perhaps sooner than they think, this approach is going to come back and bite them in the ass. And then there might not be an IBM.
    • out of interest how exactly is this going to bite them in the ass?
      When a company sets their IT infrastructure they buy x amount of servers. And then the income for IBM stops.
      If a company requires 24x7 service then they sign a contract and keep paying IBM continually for years...

    • International Business Knowledge. (Score:2, Insightful)

      by Anonymous Coward
      "IBM is fast becoming a company that doesn't actually make anything, and this pretty much confirms that."

      Welcome to Alan Toffler's "Idea Economy". Forseen over twenty years ago. The only problem is that the nature of the "commodity" means that people respect "Knowledge"* and the products of knowledge (IP)*1 even less than they do physical goods.

      *See previous "/." stories on universities, and the glorification of not knowing the subject matter.

      *1 See stories on copyright and patents, let alone trade secre

    • Re:International Business MACHINES (Score:5, Interesting)

      by nacturation ( 646836 ) <nacturation AT gmail DOT com> on Tuesday April 12, 2005 @04:22PM (#12216146) Journal
      And, in other news, the 3M (Minnesota Mining and Manufacturing) Corporation announces that it doesn't really do much mining these days either.
  • seems to be all about helping out your customers with every little thing they might need, while perhaps stopping just short of giving their passwords to the wrong people [slashdot.org]. There seem to be plenty of areas that merit more services research, if big companies can't seem to get past stuff like that. Or maybe IBM could just get into offering online courses in Remedial Critical Thinking for help desk staff.
  • IBM makes a boatload of cash off the patents that research generates. Selling/renting out their patents is a service - isn't it?

  • A reaction to Jack Welch leaving GE? (Score:5, Interesting)

    by The-Perl-CD-Bookshel ( 631252 ) on Tuesday April 12, 2005 @04:06PM (#12215926) Homepage Journal
    I think that this is a good move by IBM because after Jack Welch left GE there are some doubts about GE as a consulting firm. IBM could jump in and push technology (to help processes and quality) over restructuring and quality focus seminars as the panacea for a company's problems.

    Also, if anyone watched the Masters golf tournament they saw at least 10 commercials for IBMs consulting services. After seeing them buy up all of that expensive advertising time the conclusion is simple: IBM believes that services are the future and they are getting a jump on the competiton with advertising dollars, marketing generalizations and dare I say "slashvertising."

  • IBM Global Services (Score:2, Interesting)

    by Anonymous Coward
    I recall been told some years back (around 2000 give or take) that for a long time IBM Global Services was the only division that was profitable on a consistent basis. Even back then the writing was on the wall for the PC group (which had not shown *ANY* profit for years before, and up till its sale was still unprofitable.)

  • They should follow GM ;) (Score:4, Insightful)

    by TheNarrator ( 200498 ) on Tuesday April 12, 2005 @04:07PM (#12215941)
    GM learned long ago that making physical stuff is a pain in the rear because of unions and pension obligations and became a mortgage lenders (GMAC) that makes cars as a hobby.

    http://www.financialsense.com/editorials/reality/2 004/november.html

    GM's total revenues were $185.5 billion with a corresponding net income of $3.8 billion. However, only $1 billion of this net income came from automotive sales. The $2.8 billion balance came from financing and insurance operations (including mortgage lending). In other words, only 26.3% of General Motors' net income came from automotive sales. Clearly, GM has become a financial services company (that happens to also manufacture automobiles) and its future success is directly linked to its ability to compete in the financial services industry. After all, America now has a finance/debt-based economy.

  • IBM? (Score:3, Funny)

    by MrVictor ( 872700 ) on Tuesday April 12, 2005 @04:08PM (#12215950)
    It seems that they should consider changing their name to IBSS - International Business Software Services
    • It seems that they should consider changing their name to IBSS - International Business Software Services

      I've already trademarked, copyrighted, and registered the domain so shutup!

  • Linux's entry into the mid-market (Score:4, Insightful)

    by G4from128k ( 686170 ) on Tuesday April 12, 2005 @04:09PM (#12215970)
    As much as U.S. IT folks hate outsourcing (actually it's offshoring that they dislike), it is a way for Linux to penetrate those mid-sized business that don't have the IT to handle OSS themselves. If a mid-sized company outsources customer care, finance & accounting, HR, etc. , then they don't care about the "source" of the underlying software at the provider as long as the service provider does a good job at a decent price. I would suspect that some outsourcing service providers -- IBM certainly -- leverage Linux for its low-cost per seat and economies once you have the scale to support it. The rapidly growing outsourcing providers also offer a greenfield opportunity for Linux -- if you are starting an outsourcing company from scratch then you have the opportunity to pick whichever OS works best without as much an issue of retraining and entrenched workforce.

    Once Linux builds up a competent portfolio of business software (some outsourcing service providers also sell their software), that software will attract non-outsourcing businesses to Linux
  • Services: Prostitutes
    Goods: Money.

    So Services not Goods, equals.....what? Free prostitutes?

    (note, this is humor, I happen to disagree with IBM's assessment)
  • With software becoming open source, it can't be delivered as a product anymore because anyone can get it. However, customized software, and/or software maintenance is starting to become a necessity in the software world.

    Companies stop selling software, and begin selling their services (even if this involves DEVELOPING software).

    But it's not much different... if companies don't charge by selling their software product, they'll charge for the time spent writing it. (Of course, nobody says you cann't charge
  • One day, America will be a big 'service economy' where we:

    a) Produce Nothing.

    b) Consume Everything.

    c) Print lots and lots of worthless dollar bills.
    • So it will be a society made up entirely of bloggers? That IS frightening!
    • You forgot one:

      d) Cheap, uneducated 3rd world labor force.

    • Re:Everything Real and Tangible will be in Asia (Score:5, Informative)

      by razmaspaz ( 568034 ) on Tuesday April 12, 2005 @04:55PM (#12216530)
      a) Produce Nothing.

      If we could only get rid of farm subsidies we would be doing this already.

      b) Consume Everything.

      Except the services we sell to all the other countries who have no clue how to efficiently produce their goods., build their power plants, feed their ever growing populations, and cure their sick. We currently have the best university system available (with the exception of possibly England - but theirs is not as widely avaliable) and that translates into the best educated country in the world. Which translates into valuable services. And I would much rather live in a country full of doctors and biologists and engineers than a country of assembly line workers and farmers. The aforementioned jobs all translate to a higher quality of life.

      c) Print lots and lots of worthless dollar bills.

       Is a dollar bill worth anything right now anyway? It is just good faith and the accepted exchangable value.

      • Regarding b): I think you are overly optimistic regarding the uniqueness of the US and its abilities. Just recently I read an article about the huge problems European companies are having in China: They want to do business there because it's obviously a huge market, but their Chinese "partners" almost immediately copy all the sophisticated machines they sell there to the last screw and start churning them out themselves - at adequate quality and with service and all, but much much cheaper the dump European

      • Re:Everything Real and Tangible will be in Asia (Score:5, Insightful)

        by fbg111 ( 529550 ) on Tuesday April 12, 2005 @06:57PM (#12217954)
        Except the services we sell to all the other countries who have no clue how to efficiently produce their goods., build their power plants, feed their ever growing populations, and cure their sick.

        And once they learn how to do all that stuff, what will they need us for? Or do you think they'll never catch up?

        We currently have the best university system available

        That depends on government funding for research, funding which is being cut across the board left and right these days. DARPA [slashdot.org], NSF [cra.org], etc, are all cutting funding, especially for pure university-based research which is the most crucial in maintaining America's long-term technological leadership, academic quality, and even tax base that is required for additional funding. Without pure research, technological advancement and the steady stream of neato gadgets we take for granted will dry up.

        and that translates into the best educated country in the world.

        Sure, that's why American students are always at the top of every published academic ranking and consistently win international contests. I won't bother to link to the recent /. stories on this.

        Which translates into valuable services.

        An economy can't survive on services alone. There is only one way of creating wealth, and that is by taking raw materials and applying work and ingenuity to turn them into something worth more than the sum of their parts. We used to do take wood and iron and turn it into ships and trains; now we take sand, aluminum, and copper and turn it into microchips. Voila, wealth is created. At best services allow you to ween a little more value out of the products you've created, especially if you see custom software (eg IT consulting) as an enabler of hardware, or something that helps you get more value out of your hardware. At worst, services are simply a wealth transfer, with no additional wealth created at all.

        Don't buy into the malarky that America can prosper as we have without actually making anything. As funding is diverted from pure research to military expeditions and whatnot we undermine our base of future product innovation and development, while China learns our manufacturing techniques through outsourcing and educates hundreds of thousands of engineers and scientists in our universities, who are capable of bringing their education, research, and innovativeness home and away from the US.

        As American CEO's sometimes cannibalize their companies' future for immediate stock price gains and golden parachutes, so our recent presidents, CEO's, and financiers seem to be doing to our entire country.
        • a) Produce Nothing.

          If we could only get rid of farm subsidies we would be doing this already.

        Because doing so would be such a great idea: Outsource our food supply to a potentially hostile nation.

        • b) Consume Everything.

          Except the services we sell to all the other countries who have no clue how to efficiently produce their goods.,

        Whoa... wait a second. Isn't efficient production of goods *the whole point* of outsourcing? I know you don't mean to say Taiwan doesn't know how to produce electronic

        • Whoa... wait a second. Isn't efficient production of goods *the whole point* of outsourcing? I know you don't mean to say Taiwan doesn't know how to produce electronics efficiently or Japan doesn't know how to produce cars efficiently do you?

          What I mean to say is that Taiwan is efficient at producing electronics because American companies created the processes to efficiently create those electronics.

          Well, you have me there. We are the bread basket of the world here in America... though that might have

  • Capability & Maturity Model research could ben (Score:3, Insightful)

    by MarkEst1973 ( 769601 ) on Tuesday April 12, 2005 @04:23PM (#12216159)
    My company is currently going through CMM Level 2. I can't tell you how much evangelizing I've done regarding standard processes.

    The cost of building custom applications needs to drop dramatically. Standardizing how they are built is one step towards this goal. Further research into this can also reduce the cost.

    Very competitive bids can be made by a service organization when their cost to produce the service is low, whether that service is network maintenance, custom application design, or what have you.

    At least that works on the small scale of our consulting company with a few million in revenue. I should imagine such a thing would scale to a larger company and make them even more competitive.

  • OpenSource forces even M$ to Services? (Score:3, Interesting)

    by rewinn ( 647614 ) on Tuesday April 12, 2005 @04:48PM (#12216456) Homepage

    Open-Source may help drive even the biggest software company toward a service model, by putting downward pressure on the market-determined price of software licenses.

    A Seattle Times review of Microsoft's Linux lab boss ends with a comment by IDC's Al Gillen: "...open-source software is going to help drive the acquisition cost of software down toward zero," he [Gillen] said, a shift that will require software companies to move "over to a maintenance and support model."

    "Pluged in to Microsoft's biggest rival" - Seattle Times [nwsource.com] (May require no-cost signup to view.)

  • repeat (Score:2)

    by wardk ( 3037 )
    Lou Gerstner I recall was a catalyst for the current emphasis on services, but that was what, well over a decade ago.

    I suppose they are simply repeating the mantra. This is definately not a new thing for IBM.

  • Communicating = Reading Slashdot (Score:4, Funny)

    by PineHall ( 206441 ) on Tuesday April 12, 2005 @04:54PM (#12216522)

    Meanwhile, Maglio began to investigate what systems administrators actually do. He found that they spent between 60 and 90 percent of their time communicating with other systems administrators about systems issues.

    Whew! I am glad that they equate reading Slashdot with communicating.

  • A Nation of Salesmen (Score:4, Interesting)

    by pjkundert ( 597719 ) * on Tuesday April 12, 2005 @05:38PM (#12217060) Homepage
    As long as IBM continues to Create, rather than simply Vend, they will be OK. Unfortunately, (as HP discovered), it is very difficult to not lose one's technical edge, when ones corporation is run by a bunch of stuffed shirts...

    An excerpt from A Nation of Salesmen [findarticles.com], by Earl Shorris:

    I saw that selling, in all its forms, has achieved dominion over the world in our time, not only determining the economic spirit of the nation but deeply affecting its social, political, cultural, and moral life. I saw that America has become the land of the salesman, Homo vendens, who is both dangerous and afflicted.

    Under the dominion of Homo vendens, we are no longer free to know the world. The salesman now informs us. In the mix of mind and matter that is perception, the information comes not from our senses encountering reality but from the salesman. Thus we have lost the world.

  • This is the only way to battle warez; sell access to a website rather than code itself.

    As someone who is aware of what the world would be like without warez I've never shared my observation.

    It seems another person has relised the evolution.

    However, it opens up the possibility of a more sane world regarding IP.

    I doubt that world will be relised.

  • IBM Says its Future is in Services, Not Goods (Score:5, Funny)

    by TechnoGrl ( 322690 ) on Tuesday April 12, 2005 @06:05PM (#12217367)
    TRANSLATION: We've fired so many of our development team in order to increase compensation for our highest level execs that we can no longer be innovative so we're going to "market" bullsh*t ideas as "value added services".

    Pax Requiem IBM

  • History repeats itself (Score:5, Insightful)

    by vanyel ( 28049 ) * on Tuesday April 12, 2005 @06:05PM (#12217370) Journal
    Does anyone remember Control Data Corporation? Used to be, a long time ago, there were two main players in computers: IBM handled business and CDC handled scientific computing, with some gnats flying around, though DEC was more of a dragonfly ;-). The world changed, however, and CDC waned in the 80's. Their spin: "We're going to go into services, not hardware". I think they're a vague memory in the absorption history of another company now (Hmmm. I guess not quite so vague, but I've not heard them mentioned anywhere in ages: CDC Wikipedia entry [wikipedia.org])

    Amusingly, COBOL programming on a CDC Cyber put me through college. When I was about to graduate (81) and doing the interview thing, I'd been put in touch with a head hunter that specialized in finding positions for Cyber programmers. I went to an interview in Dallas, TX, and although it went well, when I came back, I said "no, I want to work with microcomputers, not mainframes." I got the classic "there's no future there" response. I've always wondered what became of her...
  • They want their business model back.
    They were probably working on it before 1997, but that sounds like a good year.


  • Want fries with that?
    ==

    PS The new must login requirement for foo.slashdot.org is surely an added inconenience to encourage existing subscribers to pay up.
  • The common belief everywhere else in the world besides u.s. is the reason you try to make money on services instead of products is because you don't have enough capitol to invest in products.

    Unlike a service, says the rest of the world, a product requires vast amounts of capitol to design and test. It takes capitol to build a factory to make a product. It takes capitol to build initial batches of the product for the initial sales.

    Being a debtor economy, u.s. doesn't have the capitol needed to make produ

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