Ginni is very unlikely to turn around the company. She is a livelong IBMer. Just like Sam Palmisano before her. And both have been undoing the good work that Lou Gerstner did and continued the bad work he did.

IBM is a financial engineering company... now, if it could become a sales company again...

You hit on it. IBM has a legacy of great financial engineering and sales. This isn't all that bad, if they admit that they're a value company rather than a growth company, the best thing to do is provide sales and service while returning money to shareholders.

From the article:

Ginni’s Rules 1. Don’t protect the past. 2. Never be defined by your product. 3. Always transform yourself.

#2 seems to lock them in as a Finance, Sales and Services company.

Yea, they should have done this from beginning instead of hiring Sam.

I think she's doing a good job in some respects. Such as Watson -- it's good strategy to invest in areas that will see future growth.

But at the same time, what's paying the bills is their consulting & services business. And there they're laying-off high-skilled workers (because they're expensive) in favor of fresh-outs and newbies (because they're cheap). That's not a good strategy. You can't starve the cash cow for too long. The result is that their sales people are making promises the technology people can't keep.

It seems to me that a big risk in IBM's strategy is losing the technological foundation on which most of its current revenues are based and/or not communicating a strategy for that technological base to its customers.

The importance of "big data"/cognitive computing cannot be overstated but it needs hardware on which to run. The neuromorphic computing research is interesting but for the time being the real advances in the field are being made with more conventional hardware and I'm not convinced we yet have a good enough understanding of this field to create an effective new hardware architecture for it.

As for cloud computing it certainly has advantages for many types of customers but I think many of the large businesses that represent the lion's share of IBM's customer base will be wanting to maintain their own computing infrastructure for the foreseeable future. They simply will not be willing to trust 3rd parties with their sensitive data, especially in light of the lack of legal protections in the US for data that is in the hands of 3rd parties.

So where does this leave IBM's current (or prospective) customers ? x86 is gone. If IBM's strategy is to push POWER as the way forward, that would be great, but are they really doing that or are they going to let POWER wither ? Will customers need to put Lenovo hardware in their data center to manage their POWER systems ? Some customers probably won't be willing to do that (in the US, at least, for other countries trusting Chinese vs. US companies may look like comparable risks).

I suspect that a major selling point for IBM's software and services has been its ability to provide the full range of hardware needed to run a data center, from servers to SAN storage. If their transition plans involve giving up this advantage then I think this transition will be a very rocky and risky one that will result in many of their customers looking elsewhere.

IBM has been divesting from hardware for quite some time. I think that they have really learned from the "IBM compatible" commoditizing that occurred three decades ago. A similar trend has taken over the data center.

Yes, IBM's customer's need hardware. However, I think that the profit margins simply aren't that lucrative anymore, and IBM is right to be focusing on the high-margin software market.

There will always be some customers that want/need non-commodity big iron, but such use-cases are becoming more and more rare. It wouldn't surprise me if IBM sees its hardware offerings as little more than accessories they can offer to support their software offerings.

I wonder if they plan to change the mood of IBMers, it's dismal and it looks like in a death spiral.

the moral of the IBMers does NOT contribute to the $20 EPS so therefore is irrelevant. Firing people... ooohhh sorry RA-ing them does.

You know you are stuffed when execs talk with euphemisms like Resource Action. They are no longer proud of what they are doing, they hide behind words.

Can someone please explain why IBM raised their long term debt by almost $8bn in last one year , while keeping their revenues and gross profits almost static ? I am assuming that the interest rate for that $8B is pegged at near zero rate -- what happens when the rate goes up by one percent ?

the money was raised to buy back shares. That is actually a better investment (saves on dividents, and you don't have to bring back any cash to the US). But yes... what if interest rates rises... either buy back less shares (or sell them again), but that is not really an option with the EPS target.

Maybe some IBM exec can answer this for us

There are a lot of comments that betray the facade, and show the old IBM. Comments on keeping busy and reinventing careers shows a tremendous internal focus.

“Our internal metric is we look to sign one to two new customers a week,” he says. “That keeps us going, keeps us busy.”

“It [Watson] will reinvent careers and reinvent industries,” says Rometty. “It is the third era of technology.”

The newly launched IBM Cloud PaaS offering mentioned in the article: https://bluemix.net/.

bluemix looks actually quite good... but I wonder if it is enough (ie. can it make up for the billions lost in hardware sales) and how long before these things get commoditized? And we all know how good IBM is at that!!!