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Bill Bennett


IBM 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 IBM 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.

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

IBM hardware not only victim

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. 

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.




One thought on “IBM hardware sales stumble

  1. Enterprise software giant SAP reported first-quarter results that, like IBM, fell well short of market expectations. However, the company says much of the revenue shortfall is down to currency, not poor sales.
    Meanwhile, it says its shift to the cloud is progressing with its software-as-a-service business growing profitably. Total revenue from cloud services is up 38 percent, although it is still relatively small only accounting for six percent of total revenue.
    SAP was ahead of the enterprise computing old guard with its cloud investments. The company has tipped almost US$8 billion into buying up cloud businesses including paying more than US$4 billion for Aruba, a cloud-based business data specialist.
    Nevertheless, like rivals Oracle, SAP faces challenges from cloud software companies eating into its once lucrative core business.
    SAP brought its cloud services to New Zealand last year. At the time the company, which in the past has mainly sold software to huge corporations, said it is now targeted smaller businesses with its cloud services.

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