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IBM in Reverse, Ballmer Says

There's nothing worse than a boring actor, politician or CEO. That's why I'm such a fan of Steve Ballmer. Boring he's not. Nor is Steve shy.

In a recent interview, Mr. Ballmer analyzed IBM's business moves over the last decade or so and found them wanting. In particular, he wondered why IBM would purposely divest itself of businesses such as network hardware and PCs, and purposely become a smaller, less strategic company.

IBM's logic is these were low-margin businesses. But Microsoft has a different worldview: It will happily lose money or break even just to get into a market it sees as core. If it sticks with the plan long enough, it wins -- like it did with the Xbox.

Has IBM lost some of the sizzle it had back in the PC days? Share your thoughts at dbarney@redmondmag.com.

Posted by Doug Barney on 10/02/2009 at 5:58 PM


Reader Comments:

Tue, Oct 6, 2009

Laptop prices are tumbling, and they are becomming a commodity. As this continues, other scenarios will provide a bigger bang for the buck. These decisions are not based on emotion - they are based on constant study the options and numbers they will return. You need to be "timely agile" - not just agile. And you invest in "what matters most" toward your total desired business outcomes.

Mon, Oct 5, 2009 Mark Mammoth Lakes, CA

We use many IBM servers, but since they sold their desktop business to a Chinese company, have not bought Lenovos. I think IBM made a major mistake in getting out of this market.

Sat, Oct 3, 2009

I'll stick to the subject that Doug Barney posted for us to comment on, and suggest that the others do the same.

Why is Ballmer picking on IBM ? Perhaps it is because IBM is doing well these days, and he wants to negate any perception of that. IBM's brand now ranks higher than MSFT, and IBM is cruising along nicely in world-wide markets. You don't have to speak negatively against weak competitors - you do it to the successful ones.

MSFT has lived so long on the cash cow coat-tails of Office and Windows that they are losing some sense on how to successfully implement innovation. So, they arrogantly pushed their views of what Windows should be on to PC community - and , sadly, now have to mad-scramble to fix the powerful rebellion against Vista. This scenario has bolstered many competitors.

I think MSFT is very frustrated at the moment trying to break into the new things (they must). They've been attempting new things - but have not yet learned how to be highly successful with them. It is even possible that, out of desperation, they are attempting directions that they can't be successful in. Perhaps they need to start by spending some quality time looking inside - instead of lashing out.

Sat, Oct 3, 2009 DoktorThomas

IBM may be flexing into "iron" markets, but all the IBM equipment I have bought since my Selectric II (which still works) has been dog $h|t (only one PC still works). I may not run Apple or MSFT, but whatever I am doing in the future, it will be without IBM. Their moving on (out) doesn't matter; neither would their demise.

Sat, Oct 3, 2009

Talk about boring CEO. Big mouth does not make it an interesting CEO. Apple is gaining with a vision while he is running Microsoft into ground. Wall Street does not think much of him or his company. The company has almost become one trick pony.

Fri, Oct 2, 2009

The services element of the business is a bigger deal than PCs. IBM is focusing more there - and shines there. MSFT does not. Over the past year, IBM stock has gone from 96 to 119 (up 24%) while MSFT stock went from 21 to 23 (up 10%). Running a Smart Business means being smart enough and agile enough to successfully adapt to conditions. Nothing wrong with moving on from PCs to more sizzling arenas. MSFT's attempted adaptation was to get with yahoo to better compete with Google, and that certainly hasn't sizzled. IBM hasn't lost it's sizzle - it is just sizzling in a Smarter place. And as a result, we will all have a Smarter Planet.

Fri, Oct 2, 2009 john Eugene, OR

As a number of people have remarked / observed. 1. IBM has moved into open source, earlier than any other major vendor, supports open source with a good deal of manpower. 2. Moved out of pc hardware. 3. Had a better financial decade than Microsoft. Seems to be a trend line there somewhere.

Fri, Oct 2, 2009 Eagle Columbus, OH

Hmmm, I find Mr Ballmer's comments interesting. IBM has focused on their sweet spot, big iron, and leveraged that to extend beyond traditional bounds. Today's mainframe is an open system architecture capable of running multiple operating systems on the same machine. The only os that doesn't run there is Windows. Technically capable to run there, just lacking an agreement between IBM and MS. My perspective, MS remains proprietary which ironically got IBM in trouble back in the 80's. MS better review their own business model before throwing stones.

Fri, Oct 2, 2009

Darn, He's probably right... At least he is where IBM's midrange machine is concerned.. the system i they call it now, used to be the AS400 - even Microsoft ran it's business on those machines some years back.. MS tried to copy the AS400 with a integrated Database. Now IBM seems to be letting the system i drift at best, sure no signs of marketing it... so, what will be next - mainframe business? Big Blue used to have people to help it's customers in every town... no more - outsourced that too. MS keeps improving - pushing - never know what the future holds! Seen other giants fall lately haven't we.

Fri, Oct 2, 2009 Eduardo San Antonio, TX

I had been recommending IBM laptops and desktops for a very long time. To me it is really sad to have to let them go (they are not what they used to be, but that is a different story).
This first IBM product that I bought and recommended as a standard for my employer was a ThinkPad 560 (around 1996). From there, I was introduced to the server products and decided to stop buying HP NetServers and started buying IBM LAN Servers. If I had not bought a ThinkPad 560, I would have not changed my HP servers for IBM.
So I guess that the PC products were the ones that introduced me to the server products.

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