


IBM Says its Future is in Services, Not Goods 234
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?'"
Service Unavailable?? (Score:5, Funny)
Service Unavailable
Re:Service Unavailable?? (Score:2)
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.
Re:Service Unavailable?? (Score:2, Funny)
Eating their own lunch? I am shocked, because there's no money in that.
Re:Service Unavailable?? (Score:4, Interesting)
We use ZOS, OS/400 & AIX and have done so for the last 10+ years, with no downtime caused by OS failure. In fact I can only remember one outgage caused by these servers, somebody ignored some disk pack erorrs when they should have called the engineer for a replacement. Needless to say said person was lucky to keep their job and was on probabtion for 6 months.
We use DB/2 and have never ever lost a record or had any downtime caused by DBMS failure.
We use MQSeries and have never ever lost a transaction or had down time caused by messaging software fail.
So prehaps you might wish to think a little larger when looking at IBM software. In fact it's hard to think of another company which provides such high quality enterprise software. The downside is cost measured in many many $$$$.
Re:Service Unavailable?? (Score:2)
Re:Service Unavailable?? (Score:2)
Necessity (Score:5, Interesting)
Re:Necessity -- IBM is in last place (Score:3, Insightful)
With IBMs large resources and historical expertise in service, they may be able to turn it around. We shall see.
Re:Necessity -- IBM is in last place (Score:2)
Re:Necessity (Score:2)
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)
They might be closer to all right (Score:3, Insightful)
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
Re:They might be closer to all right (Score:2)
Re:They're only half right (Score:2, Insightful)
Sure
Re:They're only half right (Score:2)
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?
Re:They're only half right (Score:2)
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
Re:They're only half right (Score:3, Insightful)
Re:They're only half right (Score:2)
Re:They're only half right (Score:2)
Yes a call center would provide a service. So would education, entertainment, construction/repair, and certain IT/Programming jobs.
Re:They're only half right (Score:2)
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
Re:They're only half right (Score:2)
Re:They're only half right (Score:2)
differences? (Score:3, Interesting)
Re:differences? (Score:2)
Without goods, the services have no where to run.
What about this question? (Score:5, Interesting)
Re:What about this question? (Score:3, Insightful)
Re:What about this question? (Score:3, Interesting)
Re:What about this question? (Score:2)
New Standards (Score:3, Interesting)
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)
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)
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
Re:Not too surprising (Score:2)
One of them is mentioned in the article--Rob Barrett. He's my son-in-law.
Re:Not too surprising (Score:2)
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.
Re:Not too surprising (Score:2)
New news? (Score:4, Insightful)
Re:New news? (Score:3, Insightful)
Re:New news? (Score:2)
They're just announcing this? (Score:4, Interesting)
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.
Re:They're just announcing this? (Score:2)
Re:They're just announcing this? (Score:5, Funny)
Re:They're just announcing this? (Score:3, Interesting)
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.
Re:They're just announcing this? (Score:2)
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)
Re:Yeah, right (Score:4, Insightful)
When someone says "IBM software", I pause, look at my email client on the other monitor (Lotus Notes), and begin to cry...
Re:Yeah, right (Score:2)
Re:Yeah, right (Score:2)
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:2)
They could also "spin off" the hardware business into it's own entity, or sell it outright to an appropriate firm.
You mean like the sale of IBM's PC division to Lenovo of China [computerworld.com.au]?
Re:Yeah, right (Score:3, Informative)
Re:Yeah, right (Score:2)
Technology "review" is right... (Score:5, Interesting)
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)
Avenue, A Inc. Whatever that is.
Re:Don't RTFA... Spyware... (Score:3, Informative)
Re:Don't RTFA... Spyware... (Score:2)
Bill Gates... (Score:2, Funny)
Google! (Score:4, Interesting)
International Business MACHINES (Score:2, Insightful)
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.
Re:International Business MACHINES (Score:2, Insightful)
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)
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)
The services sweet spot... (Score:2)
Patents (Score:2)
A reaction to Jack Welch leaving GE? (Score:5, Interesting)
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."
Re:A reaction to Jack Welch leaving GE? (Score:2)
IBM Global Services (Score:2, Interesting)
They should follow GM ;) (Score:4, Insightful)
http://www.financialsense.com/editorials/reality/2 004/november.html
Re:They should follow GM ;) (Score:2, Informative)
http://www.forbes.com/forbes/2005/0425/112.html
IBM? (Score:3, Funny)
Re:IBM? (Score:2)
I've already trademarked, copyrighted, and registered the domain so shutup!
Linux's entry into the mid-market (Score:4, Insightful)
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 over Goods? (Score:2)
Goods: Money.
So Services not Goods, equals.....what? Free prostitutes?
(note, this is humor, I happen to disagree with IBM's assessment)
Re:Services over Goods? (Score:2)
Predictions begin to come true (Score:2)
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
Everything Real and Tangible will be in Asia (Score:2, Insightful)
a) Produce Nothing.
b) Consume Everything.
c) Print lots and lots of worthless dollar bills.
Re:Everything Real and Tangible will be in Asia (Score:2)
Re:Everything Real and Tangible will be in Asia (Score:2)
d) Cheap, uneducated 3rd world labor force.
Re:Everything Real and Tangible will be in Asia (Score:5, Informative)
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.
Re:Everything Real and Tangible will be in Asia (Score:2)
Re:Everything Real and Tangible will be in Asia (Score:5, Insightful)
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
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.
Re:Everything Real and Tangible will be in Asia (Score:2)
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.
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
Re:Everything Real and Tangible will be in Asia (Score:3, Interesting)
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
Re:Everything Real and Tangible will be in Asia (Score:2)
(barely more than 50% of the people in this country voted for GWB; hell, less than 50% voted for him the first go around
Re:Everything Real and Tangible will be in Asia (Score:3, Informative)
I think there's a general consensus that American higher education (undergraduate, postgraduate, and professional) is still the class of the world. Both its quality and its accessibility to outsiders play a role. When American, European, Asian, and African students all start flooding into the burgeoning universities of India, China, France, or wherever else, that consensus will change. But the
Capability & Maturity Model research could ben (Score:3, Insightful)
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)
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)
I suppose they are simply repeating the mantra. This is definately not a new thing for IBM.
Communicating = Reading Slashdot (Score:4, Funny)
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)
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.
Great Link! Mod parent up! (Score:2)
Services, the only way to battle warez (Score:2)
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)
Pax Requiem IBM
History repeats itself (Score:5, Insightful)
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...
1997 called. (Score:2)
They were probably working on it before 1997, but that sounds like a good year.
Service-Based Economy (Score:2)
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.
No capitol for investment (Score:2)
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
Re:Nothing to see (Score:2, Funny)
Well Duh! (Score:2)
short term (Score:5, Insightful)
For IBM slightly higher Short term profits are indeed in services. since much hardware these days is commoditized.
The only reason IBM could get away with just repackaging commondity software and hardware is because they have no competition for innovation. They can just innovate in services and not worry.
But what is IBM going to do when some other company say toshiba decides to sell goods_services and some toshiba engineer invents a holographic terrabyte on a chip memory and they wont sell it to IBM. IBM is giving up its 100 year formula for why people by IBM. IBM means you have an assured path to the best service and hardware. Long term profits are in goods+services.
as the parent poster implied. This sounds like what happened to ATT and HP.
Spot on (Score:2)
Re:Is that why they outsourced R and D to China? (Score:2)
Re:Who's going to make the goods (Score:2)