How Samuel Palmisano of I.B.M. Stayed a Step Ahead

People probably don't know this yet: IBM probably has stopped R&#38;D for their software (DB2, WebSphere family, IBM JRE, LotusNotes, etc). They're just milking the license and support money. At IBM, the motto is: "It's not a bug, it's a feature" when you call their tech support. Sometime you get bitten by a bugfix that supposed to cure the problem for General Motors so the only excuse they can give for you is that "it's a feature (for GM)".<p>The latest WebSphere Community Edition is apparently just Tomcat + additional throw-in features. IBM HTTP Server is just Apache + IBM plugins (plugins for integration with WebSphere, WebSphere Portal, etc). I wouldn't be surprised if IBM rolls out new DB2 Community Edition based on PostgreSQL or something (they're not currently, but who knows...). They even have their own Hadoop thing going on too: <a href="http://www-01.ibm.com/software/ebusiness/jstart/hadoop/" rel="nofollow">http://www-01.ibm.com/software/ebusiness/jstart/hadoop/</a><p>With Open Source, they know that software has become a commodity. So why not invest with moderate expense in Open Source as opposed to keeping expensive Software R&#38;D? They did what they had done to their PC division. By the way, they still have their R&#38;D but probably operates at a different level of requirements.<p>"Combining research, specialized skills and sophisticated technology is the recipe behind I.B.M.’s Smarter Planet initiative, begun in 2008. It now has more than 2,000 projects worldwide, applying computer intelligence to create more efficient systems for utility grids, traffic management, food distribution, water conservation and health care."<p>This is probably one of the most crucial strategy at IBM. Once you're tightly integrated in the core function of a city, a town, a state, a country, it's almost impossible to replace you.<p>Microsoft is making in-road to the government too lately but judging from the progress, they're frying small fishes: Sharepoint for Intranet, a bunch of business processes, windows for desktops, MS Office for documents. Even with their cloud initiatives, Azure and Sharepoint for the Cloud, they're still stuck in that market: intranet.<p>IBM, on the other hand, is printing Driver's License and ID cards on behalf of the government (<a href="http://www.pss.gov.bc.ca/bcmp/id-card-production.html" rel="nofollow">http://www.pss.gov.bc.ca/bcmp/id-card-production.html</a>). They're charging per-printed-card by the way. So if you ever lost your card, government will charge you X and IBM will get a piece of that.<p>Check out IBM recent purchases: cloud, cloud, storage cloud, cloud, software for government (Curam: claim management system, social service, pension plan, etc).

&#62; In 2004, I.B.M. sold its PC business to Lenovo of China. Mr. Palmisano says he deflected overtures from Dell and private equity firms, preferring the sale to a company in China for strategic reasons: the Chinese government wants its corporations to expand globally, and by aiding that national goal, I.B.M. enhanced its stature in the lucrative Chinese market, where the government still steers business.<p>This doesn't surprise me, but I'm still blown away by this concept. It's highly unlikely that Lenovo happened to offer the <i>same</i> amount as whoever else was the true highest bidder, so this was essentially a huge extortion payment from IBM to China. The deal involved roughly $1 billion of assests, so it's not unreasonable to think that IBM paid of order $100 million to get into the Chinese government's good graces.

IBM leverages the hell out of open sources. They had that 1 billion dollars investment into Linux back then but they reaped massively from servers/mainframe, services, and projects riding on the free OS, while they saved on R&#38;D/maintenance on AIX and others.

On close examination, you may find that their Research Division is mostly just a patent shop.<p>Likely their 'services' work is mostly just 'help desk'.<p>Likely much of what they are doing is what they did decades ago called 'facilities management' or 'service bureau'.<p>Likely for new products, they find a small company with a good customer list, buy the company, and have the IBM sales force include that company's products in the list of products available. That is, they don't really try to 'develop' such products on their own.<p>So, in many companies, the CIO can 'bring in IBM' and go play golf.<p>Likely a good CIO could give faster results, more innovative and valuable results, at lower cost. But not all CIOs are good.