Pressure on IBM as hardware sales stumble

IBM blamed weak hardware sales for the poor start to its year. The company turned in  the lowest first quarter revenue for five years. Sales were US$22.5 billion.

Significantly hardware sales fell 23 percent to US$2.4 billion.

IBM has struggled with hardware as it attempts to move into more lucrative markets such as cloud computing and big data. The company’s Systems and Technology business unit, the division responsible for most hardware sales, has now been in decline for more than two years.

IBM an industry barometer?

The news is a worry for the wider technology industry. Historically IBM has been an industry barometer, where it goes, others follow.

While this is no longer the case, the company's woes reflect what is going on elsewhere in traditional enterprise computing.

Most of the enterprising computing old guard trailing in IBM’s wake, including Hewlett-Packard, Oracle, Cisco and EMC face equally difficult transitions away from depending on now-commoditised hardware towards cloud and similar services. 

Spending on traditional enterprise computing hardware is falling

Enterprise computing spending continues to spiral down as companies shift more and more workloads to software-as-a-service and other cloud-based technologies as they wind-down in-house IT. When they make the shift, many of the larger companies choose newer partner companies.

There’s also a move away from big projects towards smaller upgrades showing a quicker return on investment.

During the first quarter IBM sold its low-end server business to Lenovo and talked openly of selling its software defined network operation, although that didn’t happen. It also talked of investing US$1.2 billion in cloud computing.